Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
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TDS on Faculty Payments: Salary Under Section 192 or Professional Fees Under Section 194J? ITAT Cochin Clarifies the Law
The Income Tax Appellate Tribunal (ITAT) Cochin has issued a clarifying ruling on the correct Tax Deducted at Source (TDS) treatment for payments made to faculty members. The case examined whether such payments should be classified as salary under Section 192 of the Income Tax Act, attracting employment-based withholding, or as professional fees under Section 194J, which applies to fees for technical or professional services. The ruling provides practical guidance for educational institutions and businesses engaging faculty or trainers, helping determine the appropriate TDS rate and compliance obligations based on the nature of the engagement and contractual relationship.
NC Contractor Pushes For Employee Retention Credit Refund
A North Carolina contractor is pursuing a refund claim in court related to the Employee Retention Credit (ERC), a pandemic-era payroll tax relief program. The case involves disputed eligibility and the IRS's denial of the contractor's ERC claim, reflecting broader tensions around the agency's aggressive review and moratorium on processing ERC refunds. With thousands of ERC claims still pending and the IRS scrutinizing eligibility, this litigation highlights the contested landscape around ERC qualifications for contractors and businesses that experienced operational disruptions, and could have implications for similarly situated employers awaiting resolution of their own claims.
How TDS Software Handles Large-Scale Compliance for Users
This article examines how TDS (Tax Deducted at Source) software manages large-scale compliance requirements for users in India. It covers how specialized TDS software automates the calculation, deduction, and filing of TDS returns, handling bulk transactions and multiple deductees efficiently. The software addresses compliance challenges such as generating Form 16/16A, filing quarterly returns, and managing corrections. For tax practitioners and businesses dealing with high volumes of TDS transactions, such tools reduce manual errors and ensure timely compliance with Indian Income Tax Act requirements. The piece highlights automation capabilities that streamline the end-to-end TDS compliance workflow at scale.
Policy paper: Changes to reporting of benefits in kind from April 2027
HMRC has published a policy paper outlining changes to the reporting of benefits in kind (BIK) from April 2027. From that date, employers will be required to report and pay Income Tax and National Insurance Contributions on most benefits in kind via payroll software in real time, rather than through the existing P11D process. This mandatory payrolling of benefits represents a significant shift in employer compliance obligations, aiming to simplify reporting and improve accuracy. Employers and payroll professionals will need to update systems and processes ahead of the implementation deadline.
Karachi consumers pay over Rs26bn income tax through electricity bills in FY26
Karachi electricity consumers have paid over Rs26 billion in income tax through their electricity bills during the first months of FY2026, highlighting the significant use of utility bills as a withholding tax collection mechanism in Pakistan. The electricity bill serves as a vehicle for advance income tax collection, with rates varying based on consumption levels and taxpayer status. This mechanism has become a major revenue source for Pakistan's Federal Board of Revenue, reflecting the government's strategy of leveraging utility payments to broaden the tax base and improve compliance among otherwise hard-to-reach individual taxpayers.
John Healey should cut National Insurance, not raise the personal allowance
This article argues that reducing National Insurance contributions would be a more effective and economically beneficial policy choice than raising the personal allowance in the UK. The piece examines the comparative merits of both approaches, likely addressing impacts on workers, employers, and the broader tax system. It advocates for NI cuts as the preferred mechanism for putting money back into taxpayers' pockets, challenging conventional assumptions about income tax threshold increases as the default tax relief measure.
How Startup Companies Can Use R&D Tax Credits to Reduce Payroll Taxes
Startup companies can leverage R&D tax credits to offset payroll taxes under IRC Section 41(h), a provision particularly valuable for pre-revenue or loss-making businesses with no income tax liability. Eligible qualified small businesses (QSBs) can apply up to $500,000 annually against employer payroll tax obligations. The article outlines qualification criteria, credit calculation methodology, and strategic timing considerations for maximizing benefit. This mechanism allows startups to receive immediate cash flow relief rather than carrying credits forward, making R&D investment more financially viable for early-stage companies in sectors like technology and life sciences.
Strategic QSB Election Timing to Maximize R&D Tax Credit Value for Life Sciences Companies
Life sciences companies structured as qualified small businesses (QSBs) can optimize R&D tax credit value through strategic timing of the QSB election, which allows credits to offset payroll taxes instead of income taxes. The article examines how election timing relative to a company's tax year, funding rounds, and projected profitability affects the quantum and utility of credits claimed. Key considerations include the $500,000 annual cap, the five-year QSB eligibility window, and coordinating elections with anticipated transitions to profitability. Proper planning can materially improve cash flow for pre-revenue life sciences entities conducting significant qualifying research activities.
Moving abroad for work: the UK tax questions everyone should ask
A Saffery podcast addressing key UK tax considerations for individuals relocating abroad for work. Topics likely cover UK tax residency rules, the statutory residence test, implications for income tax obligations, potential double taxation issues, and planning considerations for employees moving overseas. The content targets individuals and HR/mobility professionals navigating the complexity of cross-border employment, including questions around split-year treatment, domicile status, foreign income reporting, and employer payroll obligations for internationally mobile employees.
IRS raises standard mileage rates for remainder of 2026
The IRS has announced increased standard mileage rates effective for the remainder of 2026. These rates are used by taxpayers to calculate deductible costs of operating a vehicle for business, charitable, medical, or moving purposes. The mid-year adjustment reflects rising fuel and vehicle operating costs. Taxpayers and employers using the standard mileage method for expense reimbursements and deductions will need to apply the updated rates for the second half of the year. This change affects individual filers, self-employed persons, and businesses that reimburse employees for work-related driving, impacting personal income tax deductions and employer reimbursement policies.
Here’s How Much Americans Pay in Taxes Over Their Lifetime
An analysis of lifetime tax burdens for Americans, examining how much the average person pays across all tax types over their lifetime. The study likely covers federal and state income taxes, payroll taxes, sales taxes, and other levies, providing context on the cumulative tax load relative to lifetime earnings. This type of research helps individuals and policymakers understand the overall fiscal pressure on households and can inform debates around tax reform, retirement planning, and wealth accumulation over a working life in the United States.
Hiring Freelancers? How a CRA Audit Can Turn Contractors Into Employees, Costing Businesses Thousands in Back Taxes
Canadian businesses hiring freelancers face significant tax risks if the CRA reclassifies contractors as employees during an audit. Such reclassification triggers liability for unpaid payroll taxes, CPP contributions, and EI premiums, potentially costing thousands in back taxes and penalties. The article outlines key factors the CRA examines to distinguish employees from independent contractors, including control, ownership of tools, chance of profit, and risk of loss. Businesses are advised to review worker agreements, ensure genuine contractor independence, and maintain proper documentation to withstand CRA scrutiny and avoid costly reassessments.
National Insurance Manual
HMRC's National Insurance Manual provides comprehensive guidance on National Insurance contributions (NICs) in the UK, covering rules for employers, employees, and self-employed individuals. The manual addresses NIC rates, thresholds, exemptions, and administrative requirements. It serves as an authoritative reference for payroll professionals, tax advisers, and businesses managing UK payroll obligations. Topics include Class 1, 1A, 1B, 2, and 4 contributions, along with special cases such as directors, expatriates, and specific industry arrangements. This is a key resource for ensuring compliance with UK National Insurance legislation.
Official Statistics: National Insurance contributions
UK government official statistics publication covering National Insurance contributions (NICs), including rates, thresholds, and main features for employees, employers, and the self-employed. The dataset provides historical and current NIC parameters, supporting analysis of the UK payroll tax system. This resource is relevant to tax professionals and policymakers tracking changes to NIC structures, including recent reforms such as rate adjustments and threshold freezes that affect both workers and businesses across the United Kingdom.
MDDP Webinar: B2B Reclassification into Employment: Dispute, Penalties and Tax Impact (VAT & Personal) (July 15)
A webinar hosted by MDDP examining the tax consequences when B2B contractor arrangements are reclassified as employment relationships. The session covers dispute resolution processes, applicable penalties, and the dual tax impact spanning both VAT and personal income tax. Reclassification can trigger VAT deregistration, reverse previously reclaimed input tax, and create personal income tax and payroll tax liabilities for the engaging party. This is a significant compliance risk area, particularly in jurisdictions with active labor and tax authority enforcement of disguised employment, making it relevant for businesses relying heavily on self-employed contractors.
Should You Outsource Your Payroll?
The article examines the decision of whether businesses should outsource their payroll function, weighing cost, compliance, and efficiency considerations. It highlights the complexity of payroll tax obligations in the UK, including PAYE, National Insurance contributions, and auto-enrolment pension requirements, which make accurate processing critical. Outsourcing can reduce the risk of costly errors and penalties from HMRC, ensure up-to-date compliance with changing legislation, and free internal resources. However, businesses must carefully assess provider reliability and data security. The piece ultimately positions outsourcing as a viable option for businesses seeking to manage payroll tax compliance more effectively.
Apply to pay voluntary Class 3 National Insurance contributions for periods abroad
This UK government guidance covers the process for individuals to apply to pay voluntary Class 3 National Insurance contributions for periods spent living or working abroad. Class 3 NI contributions allow individuals to fill gaps in their National Insurance record, which can affect entitlement to the State Pension and other benefits. The guidance outlines eligibility criteria, how to apply, deadlines, and the rates applicable. This is directly relevant to UK expatriates and those who have lived abroad seeking to maintain or complete their NI contribution record for pension purposes.
HMRC email updates, videos and webinars if you’re self-employed
HMRC offers a suite of educational resources—including email updates, videos, and live webinars—targeted at self-employed individuals in the UK. These resources cover key personal tax obligations such as Self Assessment filing, income tax, National Insurance contributions, allowable expenses, and Making Tax Digital requirements. The guidance helps self-employed taxpayers stay informed about deadlines, compliance obligations, and available reliefs, supporting HMRC's digital engagement strategy for the growing self-employed population.
Punjab introduces simplified tax deduction system for digital payments
Punjab has introduced a simplified tax deduction system targeting digital payments, aimed at streamlining withholding tax processes for transactions conducted through digital channels. The initiative reflects efforts by provincial authorities in Pakistan to modernize tax collection mechanisms, reduce compliance burdens, and improve revenue capture from the growing digital payments ecosystem. By simplifying deduction procedures, the system seeks to encourage broader adoption of digital transactions while ensuring tax obligations are met efficiently. This move aligns with broader national efforts to digitize Pakistan's tax infrastructure and expand the tax base through technology-enabled solutions.
Guidance: Joint and several liability — taxation of coronavirus support payments — CJAS/FS1
HMRC guidance on joint and several liability notices relating to the taxation of coronavirus support payments (CJAS/FS1). This covers situations where individuals or directors are made jointly and severally liable for incorrectly claimed COVID-19 support payments such as CJRS (furlough) or SEISS grants. Where a company has received support payments it was not entitled to and subsequently becomes insolvent, HMRC can issue notices to connected persons to recover the overpaid amounts, ensuring tax compliance around pandemic-era government financial support schemes.
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