Employers can make small gifts to employees WITHOUT paying tax or National Insurance on the money involved.
The basic rule is that an employer can now provide what are termed “trivial benefits” (e.g. a bunch of flowers, a box of chocolates, a meal out) without having to declare them on the expenses/benefits declaration form P11D and without any tax or National Insurance for either employer or employee.
The employer will also be entitled to claim income tax or corporation tax relief on the cost.
The three key conditions are:
You are now asking “Can directors/shareholders in their own company enjoy trivial benefits themselves?”
Yes they can but the new rules impose an exemption limit of £300 if such benefits are provided to a director or “office-holder” of a close* company or to members of their family/household.
* “close” = 5 or fewer shareholders/participators
Maybe get your company to fund your Christmas meal or summer outing? Could do but make sure all rules are followed so HMRC cannot challenge.
As always – discuss with us if you want more advice but, whatever your plans, we wish you all the best of times in this festive season.
So….that was it. A Budget.
Skipping over all the macro technical stuff, getting down to things that affect people at the sharp end, most personal and company tax rates etc were already set by previous Budgets.
However, the personal allowance will increase in April 2018 to £11,850 and the 40% higher tax rate threshold rises to £46,350. (NOT in Scotland)
One change of note is the Capital Gains “indexation allowance” for companies will be frozen as at January 2018.
The VAT registration threshold is the highest in Europe at £85,000. It remains at that figure for two years.
Enterprise investment Scheme incentives are to be increased for tech start up companies.
Further improvements announced to business rates including steps to mitigate the colloquially named “Staircase” charge. That said there was no announcement about how management of the so-called rates relief already in place will improved.
With effect from April 2019 digital businesses paying royalties to a low tax jurisdiction will be subject to income tax on those payments here in the UK.
On housing there was an announcement to “increase the supply of land” to build more homes, some figures proposed on future building but I sort of switched off there for a moment with a feeling of déjà vu. Previous similar pledges have all failed abysmally so why this one should be any different is beyond me.
Anyway, apparently, the government wants 5 new “garden towns” to be built. No doubt after long research, one or more feasibility studies etc. so don’t hold your breath.
Also on housing first time property buyers will pay NO Stamp Duty Land Tax on purchases up to £300,000 and nothing on the first £300,000 of any property costing up to £500,000.
This week the “Office of Tax Simplification” issued a report suggesting that the VAT registration threshold – currently £85,000 – be LOWERED perhaps down to £26,000, the so-called “official” national average wage.
That would mean any self employed person or buiness at that level of sales – BEFORE deducting expenses – would be required to register for VAT, charging their customers and submitting quarterly VAT Returns.
Official estimates say that would cause another MILLION businesses to register.
Would you, or anyone you know, be amongst them?
Then there is the prospect of “Making Tax Digital” (MTD).
At the moment only VAT registered taxpayers are required to join MTD from April 2019 and start making quaterly Returns. If you are not VAT registered then you won’t be required to make quaterly Returns until at least 2020.
So what happens if the VAT registration threshold is lowered to the point where you have to register? Looks like you will also have to join MTD in April 2019.
Make no mistake. Both will be huge burdens on the small buisness.
Maybe lobbying your MP may be the way to go.
I’ll leave you to draw your own conclusions and ponder what action you would need to take if all this goes ahead as suggested.
On 13th July 2017 the Financial Secretary to the Treasury and Paymaster General announced that Making Tax Digital for VAT will come into effect from April 2019.
From that date all businesses with a turnover above the VAT threshold (currently £85,000) MUST:
•keep their VAT records digitally and
•provide their VAT return information to HMRC by using new MTD functional compatible software which will need to be bought externally as HMRC will not provide it (and it’s not available yet)
He also confirmed that MTD will be available on a voluntary basis to other businesses for both VAT and Income Tax (as if….).
So there you have it ….be ready for mandatory online filing using your new software from April 2019. Or else.
HMRC makes new announcents about the impositon of this new system.
At the heart of it under the new timetable:
Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes.
This means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system.
Full text here ….
Lord help us all.
The government has bowed to pressure from all sides and announced that its infamous quarterly filing system “Making Tax Digital” is postponed from April 2018 until AT LEAST 2020 (ex. for VAT from April 2019).
That’s it. Nothing more to add really.
Let us know if you’ve got any questions or comments on it though.
The brakes should be put on MTD say the House of Lords Finance Bill Sub-Committee. It’s all going to fast and has not been properly tried and tested. And so say all of us……
Lord Hollick, Chairman of the Sub-Committee, said……..
“Many small businesses and landlords are simply unaware of or not ready to cope with the additional administrative and financial burdens that will be imposed by digital taxation.
“We welcome the Government’s announcement in the Spring Budget that the scheme would not apply to businesses with a turnover below the VAT threshold until April 2019. However, this does not go nearly far enough and it needs to further delay the scheme’s implementation, and take a more incremental and gradual approach based upon the evidence from the pilot.
“This scheme coincides with changes to business rates and dividend taxation, all of which will impact some small businesses.
“A full pilot will ensure the software works and provide hard evidence of the additional financial and administrative burdens on businesses. It will also provide evidence in place of the widely disbelieved assessment of costs and benefits of the introduction of Making Tax Digital.
“We are sceptical of the benefits to small businesses of regular digital reporting. We recommend that the scheme remains optional for businesses with a turnover below the VAT threshold.”
That said….will the government listen …. IMO two chances of that ….. slim and none.