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CCH Personal Tax : HMRC Exclusions 2018/19

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Article No:000011007
Question
What are the known HMRC exclusions for 2018/19?
Answer
Information as at 24/10/2019.  We will update this article as new information is made available to us by HMRC throughout the 2018/19 season.  Please check back often for updates. 

The latest HMRC list of exclusions as at October 2019 is available for download at the end of this article.


In the CCH Personal Tax 2019.2 update the following exclusions were deleted and are no longer active for 2019:
  • 80 to 84, 86 to 89, 91 to 95, 97
In these cases the computation for 2018/19 is now correct.

In the CCH Personal Tax 2019.2 update the following have been updated or added; we are identifying these where possible and have taken the following actions.  Please read the notes below the list for further guidance as your client's liability may be incorrect.

 
Exclusion IDDetailsWK Action
56The Personal Savings Allowance is not allocated where the taxpayer is liable to additional rate tax but after deduction of reliefs and allowances, is liable at a rate below additional rate. We were not able to update the computation to rectify this issue. When accessing the Online filing window a warning message appears advising the user of the exclusion ID and to file a paper return.
57A non-UK resident with 'other dividend' income INC5 or Bonus issues of securities and redeemable shares (but not Loan write-offs) in AOI13 does not receive the 7.5% tax treated as paid as part of s811 calculation to identify maximum tax payable.We have updated the calculation for this and when accessing the Online filing window a warning message appears advising the user to file a paper return.
85A customer with a Lump Sum payment who also has an amount of non-savings income of less than £16,500 may benefit from setting reliefs and allowances against the non-savings income rather than the Lump Sum.We have implemented the change but the following warning appears on the online filing window:
It will be more beneficial to allocate the personal allowances against the Non savings income rather than the Lump Sums. This is Exclusion 85 for 2019, Please file on paper.
96Applies to Scottish customers that have made pension payments with relief at source or Gift Aid payments who receive Relief by extending the basic rate limit. We have updated the calculation for this and when accessing the Online filing window a warning message appears advising the user to file a paper return.
99The taxpayer completes one SA100 page for all instances of pensions, an SA102 for each instance of employment, and an SA102(M) for each instance of Minister of Religion income. They will complete INC12 for tax for occupational pension, EMP2 for tax on employment, and MOR3 for tax on salary or stipend.When accessing the Online filing window a warning message appears advising the user of the exclusion ID and to file a paper return.
100It was not possible to implement Exclusion 100 as it is not possible to disclaim personal allowances in Personal Tax.All mention of Exclusion 100 (a WK 'dummy exclusion' for earlier years) has been removed from 2019 onwards.
101A taxpayer with Gains (AOI4 & FOR43) for which there is notional tax will benefit from allocating reliefs and allowances against savings income where this sits in the basic rate band and this results in more dividends taxed at 7.5% but less Gain taxed at 20% OR the Personal Savings Allowance nil band moving from the savings nil band at basic rate to cover Gains in the higher rate.We have implemented the change but the following warning appears on the online filing window:
For a taxpayer with Chargeable Event Gains with notional tax it will be more beneficial to allocate reliefs and allowances against the savings income where this sits in the basic rate band and results in more Dividends at 7.5% but less Chargeable Event Gains taxed at 20% or the Personal Savings Allowance nil rate band moving from Savings nil rate band to cover Chargeable Event Gains taxed at the higher rate. This is Exclusion 101 for 2019, Please file on paper.
102Where a taxpayer has Chargeable Event Gains (with notional tax) in the higher rate band and dividend income, and where the allowances are not being set against dividends in the nil band but are set against Gains instead then the notional tax is restricted. It results in increased liability compared to if the allowance reduced the dividends in the nil bandWhen accessing the Online filing window a warning message appears advising the user of the exclusion ID and to file a paper return.
103Where the tax payer is UK resident and there is non-savings and savings greater than the extended basic rate limit, and there are reliefs and allowances of more than the extended basic rate limit (usually £34,500) some of those are set against dividend income when it is more beneficial to set against non-savings or savings income.We have implemented this change however it may give rise to false positives. The following message appears as a warning on the online filing window:
This return may fall under Exclusion 103. The formula provided by HMRC to identify such cases may give rise to false positives. To override this exclusion go to Tax Return Other Information > Additional Details and override the exclusion
104This affects taxpayers where the SA tax calculator is calculating the maximum tax payable under s811 ITA and there is a relief e.g.  Venture Capital Trust shares, Enterprise Investment Scheme, SEED Enterprise Investment Scheme, Community Investment Tax relief, or Social Investment Tax Relief in stage 9.When accessing the Online filing window a warning message appears advising the user of the exclusion ID and to file a paper return.
105This affects taxpayers who have received the Marriage Allowance Transfer but it has been removed from the calculation where it would be more beneficial to retain MAT_IN in preference to the beneficial ordering of allowances to reduce liability at higher rate.We have implemented this change however it may give rise to false positives. The following message appears as a warning on the online filing window:
This return may fall under Exclusion 105. The formula provided by HMRC to identify such cases may give rise to false positives. To override this exclusion go to Tax Return Other Information > Additional Details and override the exclusion
106This applies to Scottish taxpayers with income in the additional rate before deducting reliefs and allowances. The reliefs and allowances must be more than the non-savings income minus maximum of savings income that could be in the savings starter rate.We have implemented the change but the following warning appears on the online filing window:
It will be more beneficial to allocate the reliefs against savings income rather than non-savings income. This is HMRC Exclusion ID 106 for 2019. Please file on paper.

Notes
  • For exclusions listed above in red we have trapped the scenario but not been able to adjust the computation.  In these circumstances we have advised the adjustments to allow users to manually calculate the position and inform customers. We recommend that a white space note is also made to advise HMRC accordingly.  However, if you choose to override the exclusion via Tax Return Other Information, Additional Details, the system would allow the return to be submitted online, but with an INCORRECT liability figure.                                     
  • For the exclusions where we have updated the computation, this will now give the correct liability figure, but will result in a rejected return because HMRC's system has not yet been corrected.  A paper return will be required.

Attached below are the HMRC published lists of excluded and  special cases as at October 2019.  Special cases are where HMRC have provided a workaround to reach the correct liability, excluded cases are where they cannot provide a workaround (although see our notes above where we have been able to correct some of these scenarios).
File Attachment 3 
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