Welcome. Croeso.
Greetings.
Here are some thoughts on tax, money, accountancy, financial stuff and, to lighten the mood, music and maybe some humour.
Please join the conversations with whatever is on your mind but keep it courteous and “family” rated. Everything is moderated so comments will be expunged if they go too far.
Take care and good luck to everyone in whatever you choose to do in life.
WARNING – HMRC TO CHARGE INTEREST ON YOUR INSTALMENTS
If you are planning to use “instalment arrangements” to pay self-assessment tax bills you can spread debts up to £30,000 – but you will pay interest from February 2021.
During the crisis, self-employed people who made payments-on-account could put off their July 2020 payment until January 2021. Now they can spread this one – and the additional tax due in January – over 12 monthly instalments.
There’s no interest on the deferred payment-on-account between July 2020 and January 2021 but interest at 2.6% will be charged on all outstanding amounts from 1st February 2021.
NEWS JUST ANNOUNCED
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.
Chancellor’s statement today, 8 July 2020
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.
*******************************
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.
*******************************
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.
*******************************
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.
*******************************
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.
HMRC doubles down on undeclared foreign income crackdown
Warning from CityAM a few days ago. Take note.
A Labour budget in all but name
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:
- The giveaways will be supported, in the main, by colossal levels of borrowing not detailed on the speech (wonder why?)
- Many promises to give more funding to help rough sleepers, roads, schools, the NHS and for “gigabit broadband” but NO money for social care.
- Entrepreneurs’ Relief “lifetime allowance” is reduced from £10M to £1M.
- National Insurance threshold lifted from £8,632 to £9,500 meaning fewer people will pay.
- National Insurance relief for employers who take on veterans.
- The previously announced corporation tax cut from 19% to 17% in April 2020 will now NOT happen.
- Business rates are “suspended” for properties with a RV of under £51000.
- 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.
- VAT on digital publications, including newspapers, books and journals, is scrapped from December 2020.
- 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.
- 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.
BIG tax trouble for Spanish holiday homes post brexit
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.
“Making Tax Digital” update
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.
NEW VAT “REVERSE CHARGE” PROCEDURES
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 1st October 2019.
It is designed to combat VAT fraud in the building and construction sector.
From 1st 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.
