Taxaccount; views from the village.

Making Tax Digital (MTD) is already operational for VAT registered businesses over the VAT threshold £85,000.

It will be extended.

Well we knew it was coming, covid or no covid, brexit or no brexit.

From April 2022 MTD will be extended to ALL VAT registered businesses with turnover below the VAT threshold.

From April 2023 MTD will apply to ALL self-assessment tax returns for businesses or property income of more than £10,000 a year.

That may seems like a long way off but we all know time passes quickly.

Our advice is to make sure your tax affairs are up to date as quickly as possible – and stay that way – AND ensure that books/records are organised, spick & span.

Preparation is the key. Always.

I very much doubt HMRC will provide the necessary software to handle the new rules. That means everyone will have to buy their own software and learn how to use it in a compliant manner.

At the moment our Making Tax Digital clients are using a variety of different software. The hope is that companies will increase their program offerings to the public to accommodate these new requirements.

Obviously if you need any help or guidance on this MTD nonsense as time goes by just let us know.

A few brief notes on The Chancellor’s speech today.

He announced the second phase of the government’s economic response to Covid19 – a “plan for jobs”.

Employers who bring back furloughed staff and employ them until at least the end of January 2021 will get a £1,000 bonus per employee.

Will this encourage employers to bring back staff? We doubt it.

The third phase of the Covid19 response is expected in the autumn with a budget and spending review.

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To help boost the economy the Chancellor announced an immediate six-month Stamp Duty holiday. Stamp Duty is cut on properties up to £500,000 until 31 March 2021.

Looking back at the experience of the last temporary stamp duty cut in 2008 this may not work.

Studies showed that the 2008 cut increased transactions by 8% but, more significantly, the increase was offset by a substantial downturn when the holiday ended.

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Under the Green Homes Grant many thousands of homeowners could receive vouchers of up to £5,000 for energy-saving home improvements with the poorest getting up to £10,000.

The Government will pay at least two-thirds of the cost of any home improvements that save energy.

Homeowners will be able to apply online for the Green Homes Grant from September.

The scheme is not available to renters.

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VAT will be cut from 20% to 5% on domestic tourism and hospitality sectors.

VAT on food and drink (excluding alcohol), accommodation, and visits to attractions will be reduced from for six months.

He also announced an “Eat Out to Help Out” scheme for the month of August that will give people a 50% discount at participating restaurants, cafes and pubs between

The scheme will operate Monday to Wednesday for a maximum of £10 per person.

Businesses can register for the discount online and will be reimbursed for the 50% discount they give to customers.

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A six-month work placement scheme is to be started for people on Universal Credit, aged between 16 and 24, who are at risk of long-term unemployment.

Firms will get a £2,000 bonus for each apprenticeship role they create, with a £1,500 bonus for apprentices aged over 25.

Warning from CityAM a few days ago. Take note.

HMRC doubles down on undeclared foreign income crackdown

The Chancellor has delivered his first Budget today, 11th March 2020.

Factoid ….until now the UK has not had a Budget for a whole year. That has not happened for over 250 years, since 1768, but we are in uncharted waters.

A brief summary of some main practical points are:

1. The giveaways will be supported, in the main, by colossal levels of borrowing not detailed on the speech (wonder why?)
2. Many promises to give more funding to help rough sleepers, roads, schools, the NHS and for “gigabit broadband” but NO money for social care.
3. Entrepreneurs’ Relief “lifetime allowance” is reduced from £10M to £1M.
4. National Insurance threshold lifted from £8,632 to £9,500 meaning fewer people will pay.
5. National Insurance relief for employers who take on veterans.
6. The previously announced corporation tax cut from 19% to 17% in April 2020 will now NOT happen.
7. Business rates are “suspended” for properties with a RV of under £51000.
8. The pension “taper allowance” – which has caused so many problems with high earners such as senior doctors and surgeons refusing to work overtime – has risen by £90,000 from £110,000 to £200,000.
9. VAT on digital publications, including newspapers, books and journals, is scrapped from December 2020.
10. Statutory Sick Pay (SSP) now starts on “day 1” of illness/self isolation, not after “day 3”, and there will be help for the self employed.
11. The new Structures and Buildings Allowance (SBA) rises from 2% to 3%.

No doubt more will come out in the small print so get in touch with us if you see, read or hear anything that affects you directly. We can advise.

UK residents who own holiday homes in Spain will suffer after brexit as the Spanish tax system is harsh on non EU/EEA people.

For example…… rents received in Spain by UK resident individuals (or companies):

Pre brexit – deductions are allowed for most property costs and tax is charged at 19%.

Post brexit – NO deductions allowed, tax of 24% is levied on gross rental income.

There are many other nasty Spanish tax consequences of brexit.

Be warned everyone.

This is NOT advice of any kind but simply a “heads up” to highlight an issue.

The “Help To Buy” ISA investment opportunity ends on 30th November 2019.

If you don’t get one before that date then you won’t be able to.

Open an account with just £1 in it, to keep your foot in the door, and you can add more later if you want.

This from Martin Lewis will explain……

https://www.birminghammail.co.uk/news/midlands-news/martin-lewis-last-gasp-warning-16998323

Good luck and pass on the tip to any family or friends who may benefit from it.

The chancellor’s statement on 13 March confirmed two things about the timing of Making Tax Digital (MTD)………….

1. MTD for VAT will go ahead as planned from April 2019….BUT ….

2. MTD will NOT be made mandatory for any other taxes or businesses in 2020 as was originally feared.

My guess is not that HMRC are being generous in any way. More likely they know they cannot possibly be ready for any more MTD upheavals that soon.

For those of you in the construction industry who may not know. This is a BIGGIE.

A new VAT “reverse charge” will be introduced in the UK for building and construction services with effect from 1^st October 2019.

It is designed to combat VAT fraud in the building and construction sector.

From 1^st October 2019 a customer within the construction industry CIS scheme, who purchases a supply of construction services, will have to pay the supplier’s VAT charge directly to HMRC rather than paying it to the supplier.

This prevents the supplier from charging the customer what purports to be VAT then absconding with the VAT, not paying it to HMRC.

Example of new rule – NOW, you carry out CIS work for another company. You send them an invoice plus VAT. They pay you.

AFTER the change your invoices will need to be worded according to the new rules and the paying company must pay your VAT charge straight to HMRC, not to you.

Supplies made to “end users”/final customers, supplies made between “connected parties” and supplies between landlords and tenants will all be excluded from the new rules.

This reverse charge will only affect supplies made at the standard or reduced rates where payments are required to be reported through the CIS.

The construction services covered by the reverse charge are those falling within the usual definition of “construction operations” in CIS. This is a wide definition which includes construction, alteration, repair, extension, demolition or dismantling of buildings or structures and infrastructure such as roads, railways and waterways. It also includes painting and decorating.

The process involved, the way in which VAT invoices are to be worded and the way these invoices are recorded in your VAT Returns will change from the start of this new rule.

Please take whatever steps you believe are necessary so you don’t forget. Perhaps some diary notes would be helpful.

NB: a few specified services are excluded from this change including professional services of architects, surveyors and certain consultants.

Good luck and do call us if you need any help with this.

BUDGET SUMMARY 29.10.18

• Hammond said austerity is “finally coming to an end”
• Growth forecast for 2018 was downgraded to 1.3% from 1.5% in March
• Growth forecast for 2019 raised from 1.3% to 1.6% and annual forecasts raised to 1.4%, 1.4%, 1.5% and 1.6% in 2020, 2021, 2022 and 2023 respectively.
• Most economic commentators describe these figures as anything from “poor” to “woeful”

There is much Budget news online. Some of the aspects impacting on individuals and small companies listed below in bullet points.

Remember …other new tax legislation was already planned to come into effect so what’s mentioned below is the new stuff from yesterday.

Hammond had plenty of “will be”, “in the future” and so on. Very little “now”.

Budget plans dependent on a Brexit deal. If no deal then who knows what will happen? Most likely some sort of “emergency” Budget speech next March.

For now …….

Personal tax

• The tax free personal allowance threshold increases from £11,850 to £12,500 in April 2019 (a year earlier than planned).
• The 40% higher rate income tax threshold also increases from £46,350 to £50,000 in April 2019.
• Both rise in line with inflation thereafter.
• Starting tax rate for savings remains kept at £5,000 for 2019/20.

Comment …these tax changes put more in the hands of the higher paid than the basic rate taxpayer though this is mitigated somewhat by increases in National Insurance.

Good examples of that the Budget may mean in individual situations……

https://www.theguardian.com/money/2018/oct/30/budget-2018-what-it-means-for-you

• National Living Wage increasing by 4.9%, to £8.21 an hour, from April 2019.

Capital Gains Tax

• “Lettings relief” can reduce the CGT on the sale of a property that was, at some point, used as your main home but which you have since rented out as residential accommodation.
• In future this relief will only apply where the owner of the sold property was in shared occupancy with their tenant.
• This means that landlords will probably no longer be able to claim the £40,000 lettings relief on their Capital Gains Tax (CGT) bill when selling a qualifying property.
• The change will apply from April 2020.
• In a further tax hike, from April 2020, the 18 months’ “PPR main residence relief” exemption period, on sale of your main home, is to be reduced further to 9 months.

(No changes to the 36-month final period exemption available to disabled people or those in a care home.)

Pensions and ISAs

• The maximum lifetime investment into pensions – the “lifetime allowance” – increases 2019/20 in line with CPI to £1.055 million.
• (no changes to pensions tax relief)
• Individual Savings Account (ISA) annual investment limits remain unchanged at £20,000.

Business equipment investment

• The “Annual investment allowance” (AIA) increases for two years to £1 million for qualifying expenditure on plant and machinery between 1^st January 2019 and 31^st December 2020.

VAT

• VAT registration threshold frozen for a further two years meaning it will remain at £85,000 until 2022.

Other business note

• Reforms too on business rates and the apprenticeship levy.

Stamp duty and housing

• All first-time buyers purchasing shared equity homes of up to £500,000 are to be exempt from stamp duty.
• £500m to be provided for the Housing Infrastructure Fund designed to enable a further 650,000 homes to be built.
• New partnerships with housing associations in England intended to deliver 13,000 homes.
• Guarantees of up to £1bn for smaller house-builders.

Universal Credit

• Work allowances for universal credit to be increased by £1.7bn.
• Hammond says “2.4 million working families with children to benefit by £630 a year”.
• An extra £1bn to be provided to help welfare claimants transfer to the new benefit.
• Chancellor insists this controversial system is “here to stay”.

Other general Budget notes …..

• Beer, cider and spirits duties to be frozen.
• Wine duty to rise by inflation, 8p, in February 2019.
• Tobacco duty will continue to rise by inflation plus 2%.
• A packet of 20 cigarettes up by 33p at 18.00 GMT on Budget day.
• A 10g pack of cigars goes up by 17p.
• Fuel duty frozen for ninth year.
• Remote Gaming Duty increases to 21% for online gambling on “games of chance” from 2019.
• New 2% “digital services tax” from April 2020 on UK revenues of profitable companies with global sales of more than £500m.
• Private finance initiative (PFI) contracts to be abolished in future. New centre of excellence to manage existing deals “in the taxpayer’s interest”.
• An extra £160m for counter-terrorism police.
• An extra £1bn for armed forces, for cyber-capabilities and the UK’s new nuclear submarine programme.
• £10m for mental health care for veterans, to mark the centenary of the Armistice which brought World War One to an end.
• £1m to fund school trips to World War one battlefields.
• £1.7m in Holocaust education programmes to mark the 75th anniversary of the liberation of Bergen-Belsen concentration camp in northern Germany.

• Confirmation of an extra £20.5bn for the NHS over the next five years.
• A minimum extra £2bn a year for mental health. New mental health crisis centres, providing support in every accident and emergency unit in the country. More mental health ambulances and a 24-hour mental health crisis hotline.
• All ONLY if the UK leaves the EU with a deal.
• £10m for air ambulances.
• A £30bn package for England’s roads, including repairs to motorways and potholes BUT ONLY a one-off £400m “bonus” to help schools buy “the little extras they need” “this year”.
• NO announcement of extra funding for main school issues such as staff salaries/recruitment/retention, building repairs or for front line policing.
• Opening the use of e-passport gates at airports, currently available to people from Europe, to those from the USA, Canada, New Zealand, Australia and Japan.
• Air Passenger Duty to be indexed in line with inflation.
• A new tax will be introduced on certain plastic packaging.
• £60m will be provided for planting trees in England.
• £10m will be provided to deal with abandoned waste sites.
• Extra £500m will be provided for preparations for leaving the EU.

Lastly ….a new commemorative 50p coin to be issued to mark the UK’s departure from the EU. No comment.

This is another Making Tax Digital (“MTD”) update  …..the taxman has FINALLY agreed what a good idea it would be to contact all VAT registered taxpayers, advisors and others to warn them about the upcoming start of MTD.

Only 6 months to go before kick off but, hey, better late than never I suppose. I know some will say “too little, too late”.

Their tweet said …”VAT registered businesses with a taxable turnover above the VAT threshold (£85,000) will need to keep digital VAT records and send returns using #MTD compatible software from April 2019.”

There are exceptions and workarounds to make this MTD journey simpler than it sounds but the main issue is that the necessary software to do the job is STILL not available. Many software companies say their products will be “ready” for launch day but who knows what will happen between now and then?

For example Jon Thompson (Chief Exec and Permanent Secretary of HMRC) says that HMRC will make a decision, at their October board meeting, as to whether or not MTD for VAT goes ahead as planned next April.

It might not even happen. (Gets my vote)