Archive for the ‘Uncategorized’ Category

Goodbye 2017-18 and hello to 2018-19

Thursday, February 14th, 2019

The deadline for filing 2017-18 self-assessment tax returns without paying a penalty for late submission has passed (31 January 2019).

But a new and pressing deadline now presents itself: 5 April 2019.

As we have outlined in previous posts, most tax planning needs to be considered and actioned before the end of the tax year to be effective. For example, have you considered the following?

Tax planning options for 2018-19

Income tax:

  • If your income is approaching £100,000 have you considered the loss of all or part of your personal tax allowance?
  • If you receive child benefits, and the income of either parent is set to exceed £50,000 you will have to repay all, or part of the benefits received and file a self-assessment tax return.
  • Have you maximised payment of pension contributions?
  • Have you considered the tax advantages of making charitable donations?
  • If you have unused personal allowance, and your spouse (civil partner) is a basic rate taxpayer, have you considered transferring part of the unused tax relief?

Capital gains tax:

  • Have you fully utilised your tax free exempt amount for 2018-19, £11,700?
  • Could you transfer assets that you are about to sell into joint ownership with your spouse and divide the gains between you?
  • If you have purchased a second home during 2018-19, have you considered your private residence relief options?

Inheritance tax:

  • Have you utilised the various annual, tax-free gifts exemptions for 2018-19?
  • If your personal circumstances have changed during 2018-19 (marriage, divorce, bereavement) have you changed your Will and/or considered the IHT consequences?
  • Have you made any significant gifts in excess of tax-free limits? What are the IHT consequences?

Holiday let property owners

  • Have you checked your occupancy numbers for 2018-19? Will you still qualify for the various Furnished Holiday Lets tax advantages?

The above list is the tip of the tax planning iceberg. Every tax payer’s circumstances are unique and require individual attention and consideration.

 

If we have not yet had an opportunity to discuss your tax planning options for 2018-19 please call; once the 5 April 2019 deadline passes so too do the majority of your options to reduce your tax liability for 2018-19.

What was all the fuss about?

Tuesday, February 12th, 2019

Last year, the 23 May 2018 to be precise, the UK adapted the General Data Protection Regulations (GDPR). The deadline created a rush of publicity and activity as businesses across the UK pored over their data processing systems, making changes to accommodate the new rules.

After the deadline, its as if the curtain came down on GDPR and we moved on to consider other pressing issues, Brexit for example.

ICO has not been idle

But the Information Commissioners Office (ICO) have not been idle. The ICO have created an “Action we’ve taken” page on their website. Using their new powers, the ICO have been quick to up their audits and investigations since May 2018. Political motivated organisations, regional police groups and other data processors have come in for closer scrutiny and where necessary fines and winding up notices have been issued.

For example, an organisation received a penalty of £200,000 and an Enforcement Notice for breaching ICO regulations by sending out nearly fifteen million unlawful SMS marketing messages to subscribers.

By the end of last year, the ICO had 79 cases under investigation, and on 17 December 2018, new powers were adopted through amendments to the Privacy and Electronic Communications Regulations 2003. The ICO says:

The new law allows the ICO to serve monetary penalties, of up to £500,000, on directors and senior officers of companies held responsible for making nuisance calls or sending nuisance messages or emails.

The new data protection regulations are here to stay

GDPR, and its enforcement by the ICO, is here to stay. In the coming months we will probably see an increasing number of cases bought by the ICO as their initial enquiries turn into litigation and the issue of penalty notices. Readers should also be advised that the GDPR has now been absorbed into UK law by the Data Protection Act 2018 (DPA). Even if we leave the EU and abandon its legislation the DPA will still apply. Data regulation and enforcement, it would seem, is here to stay.

Happy days

Thursday, February 7th, 2019

In what amounts to a single-issue mini-budget the Treasury posted a welcome announcement for the manufacturers and consumers of alcoholic products last week. They said:

The Chancellor announces that alcohol duties are frozen

From today, (1 February 2019) taxes on beer, cider and spirits are frozen for another year, keeping costs down for industry and consumers alike.

  • alcohol duty cuts and freezes over the last six years have provided £4.4 billion of support to pubs and drinks industry,
  • a typical pint of beer is 14 pence cheaper than if taxes had risen in line with inflation.

Beer lovers, brewers, and landlords alike can raise a toast today as Dry January comes to an end and alcohol duties are frozen for another year.

The Chancellor, Philip Hammond, during a visit to an independent brewery in Liverpool, praised the contributions made by the British beer and drinks industry to the economy and communities, including local pubs.

Previously announced in the 2018 Budget, the freeze will keep costs down for beer, cider and spirits, and builds on the numerous cuts and freezes to duty by the government since 2013. The move has saved the public an average of 14 pence on every pint of beer, 4 pence on a pint of cider and £1.50 on a bottle of Scotch whisky.

As well as the duty freeze, the Treasury also announced at Budget that it will be looking at the Small Brewers Relief to make sure the scheme continues to support the country’s smallest beer makers, helping them to grow and expand into new markets. A survey asking small brewers for their views on the relief was launched this week.

In addition to pubs, the duty freeze on cider will support the economies of British rural communities and help fuel investment and innovation in whisky and gin producers.

Cynics may infer that any increase in alcohol production is designed to help us cope with other government interventions in the coming months? They are probably right.

Happy days…

How to cope with recession

Tuesday, February 5th, 2019

Recession literally means “the act of going back, of receding…”

Economic pundits have hijacked the word to mean “a period of temporary economic decline during which trade and industrial activity are reduced…”. It is usually heralded by a fall in Gross Domestic Product (GDP).

According to many commentators on the state of the UK economy we are about to revisit recession.

The cause this time around is not the failure of the banking system, but our imminent withdrawal from the EU. Most informed sources on either side of the remain-leave debate are resolved that our exit from the EU will slow-down economic activity in the UK in at least the short term, and there is a possibility that we will experience a “temporary period of economic decline”.

If so, how do we cope with recession?

On a personal level, we generally cope best with physical stress if we are fit and healthy. Our suggestion for weathering economic stress is roughly the same: we need to get financially fit. For example, we would suggest that businesses large and small should be considering:

  • Selling any assets that are no longer used in your business – convert redundant assets into cash and free up space.
  • If you have spare floor space, what are the opportunities for sub-letting? Convert unproductive real estate into an income stream.
  • How much credit do you allow customers? Could you reduce your average days credit allowed and shift your money from your customers’ bank accounts into yours?
  • Do you have a three to five year business plan? Has it been tweaked to reflect the effects of a Brexit slowdown?
  • Have you undertaken a risk assessment of the impact of disruptions to your supply lines?

This is by no means a comprehensive list of to-dos. Every business will likely experience their own unique challenges in the weeks ahead, what is clear is that we should be getting match fit to face these challenges.

And as we have said before, this getting-prepared activity will not be wasted whatever the politicians finally decide is the best course for our EU exit. There are no downsides to being financially fit, it will always allow you to hit the ground running.

  1. we haven’t spoken to you about the challenges that your business may be facing in the coming months, call now so we can start to create your business fitness training program. If recession becomes a reality, we would suggest running at the front of the pack is the best place to be.

What are your tax planning options for 2018-19?

Monday, February 4th, 2019

Options for adopting 99% of tax planning opportunities for 2018-19 ends on 5 April 2019, just a couple of months away.

This applies equally to individuals and all businesses with an accounting year end close to, but prior to 5 April 2019.

More importantly, this planning option applies to all taxes: Income Tax, Capital Gains Tax and Corporation Tax; and in some cases, to National Insurance and VAT.

Organise a tax planning review now.

If your personal or business tax affairs are complex, make sure you avail yourself of this moment of reflection before 5 April 2019. Once the date is passed, there is no chance the clock can be turned back.

2019 will likely be marked out as the year when our present relationship with the rest of Europe changes, once again adding to the usual pressures faced by UK businesses. There has never been a more opportune moment to take time out from running your business to consider your planning options for the current tax year.

As time is limited please call now to discuss your options.

Are you ready for the VAT filing changes?

Monday, February 4th, 2019

A reminder that from 1 April 2019, VAT registered traders with turnover in excess of the current VAT registration limit, £85,000, will need to file returns after 1 April 2019 linked to HMRC’s Making Tax Digital (MTD) systems.

Accounts software providers have been working at some pace to change their software, so they “speak” to HMRC’s MTD servers using a dedicated link called an API (an application program interface).

If we complete your VAT returns, you can be assured that we will be using approved software. If you manage your own VAT filing, you should check with your software supplier to make sure they are going to provide the MTD, VAT filing facility.

Any issues please get in touch as we can either take over this chore for you or advise which software to use.

Any mention of software thus far in this article refers to your account’s software. It does not include spreadsheets. Spreadsheets create a particular issue for filing VAT numbers via MTD. If the data in the spreadsheets is linked electronically to the final VAT filing software all is well. If you have to cut and paste data from a spreadsheet into accounts software this will not be sufficient for MTD purposes. However, HMRC has said that they will allow a period of time – a soft landing – for businesses to have digital links in place on or before 31 March 2020.

Do get in touch if you are struggling to achieve MTD compatibility before 1 April 2019.

What is the government doing to prepare us for Brexit?

Monday, February 4th, 2019

According to a recent announcement on the GOV.UK website, preparations include:

  • Recruitment of 700 new staff to work on EU Exit policy using additional funding allocated by HM Treasury for Brexit preparedness.
  • Passing of new legislation to lay the groundwork for our future outside the EU with 57 out of 63 required statutory instruments required by Exit day, including new laws for a nuclear safeguards regime that will maintain the UK industry’s ability to trade in the nuclear sector while ensuring the UK remains on track to meet its international obligations on day one of exit.
  • Laying of legislation and the putting in place of new measures to ensure a robust and effective product safety and metrology regime post-Exit by the Office for Product Safety and Standards.
  • The publication of 28 technical notices, including oil and gas, climate change, company law and state aid. These will continue to be updated. These notices also include guidance about what actions businesses need to take in order to carry on exporting and importing a range of goods and services,
  • Continuing to work closely with the UK research community to maintain collaboration with the EU while laying legislation to ensure laws governing areas like employment rights and renewable energy remain world-leading after we leave.
  • Retaining a general system for recognition where UK regulators will be required to recognise EEA and Swiss qualifications which are of an equivalent standard to UK qualifications in scope, content and level.
  • Working with Ofgem, the Northern Ireland Utility Regulator and interconnector operators to put in place arrangements that aim to ensure that electricity and gas continue to flow across borders through interconnectors.
  • Signing Nuclear Cooperation Agreements (NCA) with Australia, Canada and the United States. The NCAs allow the UK to continue civil nuclear cooperation when current European Atomic Energy Community (Euratom) arrangements cease to apply in the UK.
  • Protecting our climate ambition by taking steps to ensure that, if we leave the EU Emissions Trading Scheme, on day one companies will still have to report their carbon emissions and there will be a carbon tax of equivalent impact – to make sure that these important emissions don’t increase as a result of a no deal scenario.
  • Publishing a package of secondary legislation in December to ensure our energy laws function effectively after exit day, including: European Network Codes, Electricity and Gas Acts, and EU regulations under the Third Energy Package.
  • £92 million of funding work on the development of options for a UK Global Navigation Satellite System; and
  • Working with Cabinet Office, DExEU and other departments to ensure all business sectors are appropriately informed on all major issues.

What can you give away before the end of the tax year?

Monday, February 4th, 2019

You can give away £3,000 worth of gifts each tax year (6 April to 5 April) without them being added to the value of your estate. This is known as your ‘annual exemption’.

You can carry any unused annual exemption forward to the next year – but only for one year.

Each tax year, you can also give away:

  • wedding or civil ceremony gifts of up to £1,000 per person (£2,500 for a grandchild or great-grandchild, £5,000 for a child)
  • normal gifts out of your income, for example Christmas or birthday presents – you must be able to maintain your standard of living after making the gift
  • payments to help with another person’s living costs, such as an elderly relative or a child under 18
  • gifts to charities and political parties

You can use more than one of these exemptions on the same person – for example, you could give your grandchild gifts for her birthday and wedding in the same tax year.

Small gifts up to £250

You can give as many gifts of up to £250 per person as you want during the tax year as long as you have not used another exemption on the same person.

Tax Diary February/March 2019

Monday, February 4th, 2019

1 February 2019 – Due date for Corporation Tax payable for the year ended 30 April 2018.

19 February 2019 – PAYE and NIC deductions due for month ended 5 February 2019. (If you pay your tax electronically the due date is 22 February 2019)

19 February 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 February 2019.

19 February 2019 – CIS tax deducted for the month ended 5 February 2019 is payable by today.

1 March 2019 – Due date for Corporation Tax due for the year ended 31 May 2018.

2 March 2019 – Self assessment tax for 2017/18 paid after this date will incur a 5% surcharge.

19 March 2019 – PAYE and NIC deductions due for month ended 5 March 2019. (If you pay your tax electronically the due date is 22 March 2019)

19 March 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2019.

19 March 2019 – CIS tax deducted for the month ended 5 March 2019 is payable by today.

Government fiddles over Brexit

Tuesday, January 29th, 2019

Leaving aside the fact that there were no violins available, it’s interesting to seek a comparison between the supposed musical antics of Nero in AD64 as Rome burned and our government, preoccupied with important political matters as British industry slips ever closer to the cliff edge of a no-deal Brexit.

There are just under 60 days left until the present withdrawal deadline is reached, 29 March 2019.

Last month, HMRC published an update for businesses on what to do before 29 March in the event that we disengage from the EU with no agreement.

They suggest that there are three actions you should be considering now:

According to HMRC this is what you should do

 

  1. Register for a UK Economic Operator Registration and Identification (EORI) number at www.gov.uk/hmrc/get-eori. You’ll need an EORI number: to continue to import or export goods with the EU after 29 March 2019, if the UK leaves the EU without a deal; before you can apply for authorisations that will make customs processes easier for you – we’ll tell you more about applying for these early next year.
  2. Decide if you want to hire an agent to make import and/or export declarations for you or if you want to make these declarations yourself (by buying software that interacts with HMRC’s systems). If you want to: declare through an agent, contact one to find out what information they’ll need from you; use software to make declarations yourself, talk to a software provider to make sure that their product meets your needs, depending on whether you import, export or both.
  3. Contact the organisation that moves your goods (for example, a haulage firm) to find out if you will need to supply additional information to them so that they can make the safety and security declarations for your goods, or whether you will need to submit these declarations yourself.

Readers in Northern Ireland should take note that the instructions are slightly different.