To calculate the Wear And Tear Allowance

As per the recent changes, tax year 2017/18 will be the first tax year when people in the UK will not be able to claim the 10% wear & tear allowance. However, there is still an outstanding value of old furniture fixtures and fittings which a sole trader landlord owns personally. Now, landlords who own old furniture fixtures and fittings are finding it difficult as a few have not been able to claim a full writing off expense as they have claimed only 10% of the rents previously.

HM Revenue and Customs (HMRC) abolished the Wear and Tear Allowance for furnished residential properties starting April 2016, thereby, replacing it with ‘replacement of domestic items’ relief. Therefore, the new relief will be pertinent for landlords filing their 2016/17 tax return, which are due for submission to HMRC by 31 January 2018. The all new ‘replacement of domestic items’ relief be made available to all landlords who let-out a private house – both furnished and unfurnished (including flats, apartments etc.) This is different from the wear and tear relief, which only applies to fully furnished properties. There are certain conditions surrounding the ‘replacement of domestic items’ relief – please contact DNS Accountants to get more information and advice on how the relief works in practice. Now, landlords can only claim the actual costs spent on repairs, rather than a blanket 10% reduction for wear and tear.

UK state pension

To be entitled for a UK state pension, a person needs to be employed or self-employed in the UK or have National Insurance Contributions (NIC) for a definite minimum number of years. These years of NIC are referred to as ‘qualifying years’ and depending on the age of a person the number of years needed to qualify for a minimum pension varies. There are three main categories of pensioners in the UK:

1. Women born prior to 6th April 1950; Men born prior to 6th April 1945: People in this category reached their pension age (65 for a man and 60 for a woman) before 6th April 2010. In order to get a pension, a man needs at least 11 years NIC whereas a woman needs a minimum of 10 years NIC. With the beginning of tax year 2017/18, it is too late for people belonging to this group to make any extra payments; however, there may be some credits for number of years of education, apprenticeship from age 16 onwards

2. Women born on or after 6th April 1950 and prior to 6th April 1953: Men born on or after 6th April 1945 and prior to 6th April 1951: In this group, men reach the pension age at 65 and women reach pension age anywhere between 60 & 63. People in this group get some pension for every year of NICs. To be eligible for a full pension, 30 years’ contribution is required and for one year a person gets 1/30th of a full pension which stands at £113 per week. Between two and seven deliberate contributions can be made to top-up the contributions depending on an individual’s pension date

3. Women born on or after 6th April 1953 and Men born on or after 6th April 1951: In this group, the pension age for men is progressively increasing, starting at 65 for men and 63 for women. People in this group reached their pension age on 6th April 2016, and will need a minimum of 10 years’ NIC. To be eligible for full pension of about £160 per week, 35 years are needed. Also, an individual can make a minimum of 10 voluntary payments to top up the pension contributions

Voluntary contributions are a good means of investment. The standard Class 3 contribution costs around £700 for each year purchased, and this is earned back in less than 4 years once the pension starts. The Class 2 contribution, typically available to people employed, costs only £143 for each year, and is earned back within the first year of pension. An individual must have worked for 3 years in the UK, or stayed in the UK for 3 continuous years to meet the criteria. A partial pension is merely pro-rated based on the number of qualifying years an individual has. For example, if a person has 10 qualifying years, then he /she would be eligible for a pension equal to 1/3 of the full pension amount.

These ‘be eligible’ years provide information regarding Category A Pension. In addition, a spouse or civil partner receiving a Category A pension may be permitted to receive a Category B pension even if they have never worked / stayed in the UK, or yet visited the UK themselves. The Category B pension is based on a percentage of the Category A pension being acknowledged by the main pensioner.

The content is originally posted at:

https://contractor-accountants.blogspot.in/2017/05/to-calculate-wear-and-tear-allowance.html

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