Making Tax Digital Delayed until 2020

Making Tax Digital Delayed.jpg

The Treasury have delivered what is potentially good news for many (yes, you have read that correctly).  Making Tax Digital, or MTD to give it its affectionate moniker, has been both delayed and reduced in terms of requirement.

For businesses that are VAT registered, VAT returns will still have to be submitted via MTD compatible software from 1 April 2019, but in terms of quarterly reporting for tax and national insurance (NI) purposes,  MTD has been delayed until at least April 2020.

The new timetable for income tax and NIC reporting is as follows, although the £85,000 small business threshold is subject to change.

Annual turnover

Old timetable

New timetable

Over £85,000

6 April 2018

At least April 2020

From £10,000 – £85,000

6 April 2019

At least April 2020 but on a voluntary basis

Companies

1 April 2020

At least April 2020

It appears that the Government have quite enough on their plate without launching MTD and undoubtedly many taxpayers will welcome the delay!

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Tax and Your Company Car

Tax Company Car.jpg

There are many factors which will influence your choice of company car. These can include the distance you travel, terrain covered, the price, your lifestyle and perhaps even your clients. However, is tax ever a consideration?

The start of the tax year saw an increase in the company car rates and indeed the rates are increasing quite significantly year on year. Assuming however that you have some degree of choice over the car make and model, you can influence the tax that you pay.

The two factors which determine the tax charge attached to a company car are the list price of the vehicle and its CO2 emissions.

The table below shows the benefit in kind charge for cars with various, hypothetical,  list prices and CO2 emissions.  The rates applicable to the current tax year (2017/18) have been used.

List price CO2 emissions Fuel type Benefit in kind value
£17,000 102g/km Petrol £3,230
£25,000 99g/km Petrol £4,500
£25,000 117g/km Diesel £6,250
£35,000 0g/km Electric £3,150
£50,000 41g/km Electric/Petrol £4,500
£50,000 155g/km Diesel £16,500

In addition to the company car benefit there is also a fuel benefit if the employer provides fuel for private use; the value of the fuel benefit is affected by the CO2 emissions but not by the list price.

Although tax will not be the only issue affecting your choice of company car, perhaps it ‘auto’ be a consideration?

If you’d like any more information please contact Green & Co Accountants.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Don’t Be a Lottery Loser – Protect Your Syndicate Winnings

 

Tax on lottery winnings.jpg

If you and your employees club together to take a chance on the Lottery by operating a workplace syndicate, but you do not have a formal agreement in place, a large win could cause tax issues in the future.

If ever you are fortunate enough to win the jackpot, the winnings will undoubtedly be collected and distributed by a nominated individual, normally the same person who buys the tickets.  However, if by some stroke of misfortune, that person dies within 7 years of the win, HMRC could argue the distributions were technically gifts, particularly if no written agreement exists.  In that event the gifts would be treated as failed Potentially Exempt Transfers (PETs) and therefore subject to Inheritance Tax.

Admittedly this is not an everyday occurrence, but it can happen, and HMRC are likely to chase all those who shared in the winnings for any resulting liability.

Verbal agreements can of course be valid, but they are much more difficult to prove, so if you are a part of a syndicate, it is wiser to draw up a document, showing all members, the amount of the stake each pays and how any winnings are to be shared.  It should always be updated when new members join to ensure they don’t get caught out by the IHT trap.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

HMRC Cash Crackdown

Cash crackdown.jpg

HMRC has shopkeepers in its sights at the start of a new crackdown on cash payments.

Returns submitted to HMRC by shops and restaurants, whom it believes may not be declaring all of the cash payments they take, are to be crosschecked against the number of card payments taken.

HMRC estimate around 30% of transactions in these business are paid for in cash, and it is thought that investigations will centre on businesses recording more than 90% of their transactions are paid by card.

There are concerns, however, that the new plans could lead to lengthy and unnecessary investigations which could be financially damaging for small businesses.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Doctor, Doctor: Are Medical Expenses Tax Deductible?

doctor doctor are medical expenses tax deductible.jpg

The question of whether medical expenses are tax deductible is one which is frequently posed and we can consider this using the example of a self-employed farmer who seeks treatment from a chiropractor. She believes that the treatment will improve her ability to farm and therefore queries whether she can claim a deduction for this in her accounts.

HMRC do recognise that taxpayers need to be in good health in order to carry on their trade, this allows them to earn an income on which they will pay their taxes. However HMRC’s approach to medical expenses typically follows that applied to costs incurred for food and clothes.

In this instance the farmer’s medical expense will not be tax deductible as the treatment will positively impact her personal life and therefore the expenditure cannot be wholly and exclusively incurred for business purposes.

If you require any further information please contact Green & Co Accountants.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Gwent Landlord Forum – 31 May 2017

pfrlob1503794_-_logo_for_eventbrite_v7

2017 is flying by and changes to Landlord regulations seem to be keeping pace. So we would like to invite you to attend the 3rd Gwent Landlord Forum of this year, taking place on Wednesday 31 May between 6pm and 8pm, at The Parkway Hotel and Spa.

As always, our invitation goes out to all who may be interested so if you know someone who is a landlord or thinking about becoming a landlord, please do pass this invitation on to them – we are always happy to welcome new guests.

Speakers

Neil Soundy of Neil Soundy Financial Services Limited will be talking about:

  • Buying via Limited Company/Special Purpose Vehicle (SPV)/Trading Company.
  • Lower rental coverage requirements via Limited Company/SPV.
  • Buying Multi Unit Block or HMO.
  • Basic taxation on Limited Company Buy To Let (BTL)
  • Use of Tenancy in Common on existing personal BTL’s
  • Possibility of transferring existing personal BTL’s to Limited Company.
  • Airbnb for landlords

Daniel Bellis, Policy Officer with the Residential Landlords Association (RLA) will be speaking about:

  • The Renting Homes Act and how they are creating standardised contracts across the rental sector.
  • He will also cover other changes, such as Fit for Human Habitation regulations, changes in abandonment procedure and changes to joint contracts.
  • With over 20 different regulation still to finalise before landlords start using the new system, a lot has already changed since the Act was first passed.

Eventbrite - Gwent Landlord Forum

For any enquiries about this event, please contact Katie Williams at Green & Co on 01633 871122, Email: katie@greenandco.com.

Some Employee Perks Are Being Lost and It Could Be Costly

Green & Co

Green & Co feature in the South Wales Argus discussing the tax changes for employee perks.

The new tax year has seen a raft of changes, with more legislative reform scheduled to come into effect over the next few years.

From changes in dividends, stamp duty, and national insurance (with a U-turn thrown in for good measure) the way that people are taxed is an ever-evolving landscape. However, it’s not just directors, landlords and the self-employed who have been targeted with new legislation.

Barrie Kenyon, partner at Green & Co Accountants and Tax Advisors said: “From 6th April, the tax and employer national insurance advantages of a salary sacrifice or salary exchange scheme was removed. This means that any employees who have swapped their salary for benefits, which typically include additional holiday days, will now pay the same tax as if they were buying them out of their post-tax income. The Chancellor, Philip Hammond, announced the changes in the autumn statement believing the previous schemes were unfair. From earlier this month, they have started to come into effect.

“However, these changes do not affect those employees who have reduced their salary for pension contributions, childcare purposes such as vouchers, workplace nurseries or directly contracted childcare, the cycle to work scheme and ultra-low emission company cars with co2 emissions of or less than 75g/km.

“The schemes were seen as attractive to both employees and employers, with reduced tax liabilities benefiting both parties.”

Mr Kenyon stressed that there were some caveats that accompany the changes: “If any arrangements which were in place before April 2017 relate to cars with co2 emissions over 75g/km, accommodation or school fees: these arrangements will be protected until April 2021. Also, other arrangements agreed prior to April 2017 that do not fall into the aforementioned categories will be protected until the end of the current tax year in April 2018.”

It is estimated that millions of workers from across the UK will pay more tax due to these changes, with the Treasury believing that these schemes are costing too much in lost tax receipts and national insurance contributions. It is estimated that the reform will cost employers in the UK around £85M this tax year, whilst increasing another £260M by April 2021 when the full changes will come into effect.

If you are worried about any of these forthcoming changes, please contact us at Green & Co for further help and guidance.

Green & Co Accountants and Tax Advisors specialise in business growth and tax minimisation for businesses across Wales and the South West of England.

For proactive advice, contact Green & Co Accountants and Tax Advisors on 01633 871 122, follow @Green_and_Co on Twitter or email barrie@greenandco.com.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Class 2 Voluntary Contributions

Class 2 NI.jpg

Although the self-employed heaved a sigh of relief when the Chancellor reversed his decision to raise the rate of Class 4 NIC recently, other changes in the structure of National Insurance will give cause for concern, particularly for those with low earnings.

The abolition of the self-employed stamp (Class 2 NIC) from April 2018 means those who are currently below the Small Earnings Exemption and have been paying voluntary Class 2 contributions in order to secure contributory benefits will no longer be able to do so.  From that date they will have to pay Class 3 voluntary contributions which is currently £14.10 per week, compared to the Class 2 amount of £2.80 they are currently contributing.  In addition, the special rates for share fishermen (currently £3.45) and volunteer development workers (£5.60) will also be abolished, so they too will have to pay the higher Class 3 amount to maintain their contributions.

The situation is further complicated as in the past those with income below the Class 2 limit had to opt out of paying the stamp by applying for exemption, whereas now low earners have to opt in if they wish to make contributions – a fact many may not have been aware of, and may give rise to gaps in their records.

You can check your Class 2 record by logging onto your personal tax account at HMRC on-line, by post or by phone – details can be found here. If you have gaps in your contributions you can now backdate your Class 2 contributions for up to 6 years but you will need to do so before Class 2 is fully abolished.  You need 35 years of contributions paid or credited to be entitled to the full state pension.

If you would like to discuss your situation with one of the team at Green & Co, please contact us on 01633 871122.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Mates Rates – Letting your property at below Market Value

Letting your property.jpg

When you let a property to a third party for a market rent it should be relatively straightforward to calculate your taxable rental income, or loss if applicable. A market rent is that which a landlord can expect to receive in accordance with rents charged for similar properties in the same area. If your rental income exceeds the allowable expenditure incurred the profit will form part of your income and if the allowable expenditure exceeds the income then, assuming you meet all criteria, you will have a loss which you can carry forward and offset against future rental income.

There are some circumstances where a market rent is not charged. For example, a parent may let a property to their child for a lower amount, as parental duty dictates.  In this instance the expenses incurred, such as mortgage interest, landlord insurance, etc., may be greater than the rent received. If this is the case, then the expenses are not sustained wholly and exclusively for business purposes and in strict terms should not be claimed. However the good people at HMRC do allow expenditure to be claimed up to the value of the rent received, therefore resulting in no profit no loss. As a result, however, any actual ‘loss’ will be lost.

Should you have any Landlord tax queries please contact Green & Co on 01633 871122.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.