Topic: Uncategorized

Borderline benefits

Now that Scotland and Wales have their very own stamp duty taxes buying a house in the border areas between Wales and England, and Scotland and England, raise some interesting planning options.

Consider Llanymynech, a village that straddles the border between Powys (Wales) and Shropshire (England). The amount of stamp duty payable on an identically priced house, say £179,000, would cost the buyer £1,080 in Stamp Duty Land Tax if bought in the English side of the village, but no Land Transaction Tax would be payable for an equivalently priced house in the Welsh side of the village. A definite incentive to buy in this price bracket the Welsh side of the border.

If you live in the Scotland/England border areas and you are contemplating the purchase of an expensive property and your budget is £1m, you may want to consider the following numbers:

  • Buying in Scotland would cost you £78,350 in Land Transaction Tax, and
  • Buying in England would cost you a mere £43,750 in Stamp Duty Land Tax.

Scotland has also set its own Income Tax rates for 2018-19. So, depending on the amount of your income, you may pay more or less income tax depending which side of the border you choose to live.

These border considerations will need to be considered as our regions gain more autonomy over their local taxes. They unfortunately add another raft of regulation that will have to be considered when planning on the situation of your residence (in border areas) for stamp duty and income tax in the years to come.

Broadband fibre gets rates boost

The Telecommunications Infrastructure Act 2018 paves the way for full-fibre broadband and future 5G communications by enabling 100% business rates relief for operators who install new fibre on their networks. In other words, the Act incentivises operators to invest in the broadband network.

Apparently, the secondary legislation has been laid, firing the starting gun on the scheme which will see communications providers exempt from business rates on new fibre for 5 years, backdated to 1 April 2017.

Local Government Minister, Rishi Sunak, said:

From the country’s most rural locations, to our big cities, we want everyone to benefit from fast, affordable and reliable broadband.

With this new legislation now in place, people can expect the rapid installation of new fibre, paving the way for better connectivity across the country.

From making it easier to work from home to allowing digital businesses to flourish, our measures are creating the right conditions for more high-skilled, high-paid jobs of the future.

Hopefully this cash incentive will help to close the loop and provide the many “fibre vacant zones” with much needed high-speed broadband. According to government sources, by driving improvements in the speed, service quality, security and reliability of broadband services, the Act will help transform the way modern businesses work together, reach their consumers and target their export markets.

As well benefiting businesses, full fibre broadband will also increase internet speeds for households and enable users to access more services online with multiple devices. For example, simultaneously streaming high definition TV and films, playing online games, and working from home quicker and more reliably.

Of course, increased funding is one thing, it will be interesting to see if remote businesses still obliged to access the internet at pre-broadband speeds, will finally get a high-speed connection on which all our businesses benefit.

Common-sense prevails

Imagine that you have no interest in computers or computing. That Facebook and Twitter sound like racehorses running in the 2.30 at Haydock Park. Further, imagine that the thought of having to deal with computers pushed you into a severe anxiety state.

Ms Naylor, the Company Secretary of a flooring company, fitted this profile. For many years she had filed paper monthly contractor’s returns to HMRC and had never missed a deadline. When the returns were converted to an online filing version from April 2016, she was thrown into the computer age and with unfortunate consequences.

For months she tried to fathom out how to register for online filing and was constantly delayed by the non-arrival of an elusive activation code from HMRC; repeated tries at getting support from various help lines failed to prompt the code to appear in the mail, letterbox mail that is.

With each passing month late filing penalties were accruing, and Ms Naylor’s health started to fail. The anxiety she experienced resulted in visits to her local cardiology clinic for various tests, and still the access code failed to arrive even when the application process was repeated, this time with help from her daughter – newly returned from university.

Eventually, after many months of frustrating delays, she and her daughter managed to complete the login process and file all the outstanding returns.

With what remained of her over-stretched nervous system, Ms Naylor appealed against the multitude of financial fines on the basis she had a reasonable excuse – no knowledge of computers and poor health.

After considering the arguments from both sides, the court ruled to quash the fines, and allowed Ms Naylor’s appeal. Phew… A victory for common-sense.

Apparently, Ms Naylor did not seem to receive much help from her professional advisor. Can we just confirm that any clients reading this post can be assured that we are computer literate and very willing to help if you have problems dealing with the online world.

Offshore tax evasion

From 1 October 2018, HMRC will be gaining access to information from tax havens that will enable it to identify UK citizens with undisclosed offshore assets, and by inference, undisclosed UK income and taxable gains. Why does this matter?

It matters because HMRC has introduced new legislation called the Requirement to Correct which will dramatically increase the penalties for people who have not declared tax or declared the wrong amount of tax on their offshore income and gains.

If you have declared your taxable income and gains, then you have nothing to worry about, but if you haven’t, and HMRC finds out, you could face an investigation and be required to pay the undeclared tax, plus a penalty of up to double the tax you owe – with a minimum penalty of 5% of the tax owed.

You can avoid being charged the higher penalties by making a full disclosure of all undeclared tax liabilities under existing disclosure facilities.

Offshore income sources that should be declared include:

  • interest from overseas bank or building society accounts,
  • dividends and interest from overseas companies,
  • rent from overseas properties, and
  • wages, benefits or royalties earned outside the UK.

If you are concerned, now is the time to come forward. You have until 30 September 2018 to correct matters before the tougher new penalties are introduced.

Tax payers who are uncertain if they are affected are advised to call and seek guidance.

Black cabs urged to go green

Britain’s black cabs now qualify for an incentive to go green as the new tax exemption for electric taxis comes into force this month. The exemption, worth £1,550, will apply to new cabs purchased from April 2018 onwards, and follows the Autumn Budget announcement that zero emission taxis worth over £40,000 will no longer have to pay a Vehicle Excise Duty charge.

Currently, all cars over £40,000 are required to pay this charge. By exempting zero emission taxis, it is hoped that cabbies will be incentivised to replace their old diesel taxi for a cleaner, greener electric version.

If just one switches to a zero-emission vehicle, it would rid the country of seven tonnes of carbon dioxide a year. With over 75,000 black cabs operating in England alone, the impact this would have on the environment would be significant.

According to government sources, black cab owners have had limited choice in the type of vehicle they can buy. This has meant that they have been forced to pay charges which their competitors – who can choose more affordable vehicles – can avoid.

Not only will today’s exemption save drivers from paying the VED charge, but by transferring to a zero-emission electric cab they will also benefit from average fuel savings of over £400 a month.

This initiative is part of a wider government plan to transform air quality and it builds on the £7,500 Plug in Taxi Grant, which helps cab drivers buy a zero-emission vehicle.

How long should you keep your records?

If you are self-employed, and obliged to submit a self-assessment tax return, you must keep your tax records for at least five years after the 31 January submission deadline of the relevant tax year. For example, if you sent your 2017-18 tax return online by 31 January 2019, you must keep your records until at least the end of January 2024. Records for this purpose includes those relating to personal income etc.

If you send your tax return more than four years after the deadline, you will need to keep your records for fifteen months after you submit your tax return.

If you keep your tax records on a computer, make sure you have sufficient backups of your data to meet these requirements. If you change software during the record retention period, you may need to print relevant reports if you are unable to maintain access to data backups.

If you run your business as a limited company you must keep records for six years from the end of the last company financial year they relate to, or longer if:

  • they show a transaction that covers more than one of the company’s accounting periods,
  • the company has bought something that it expects to last more than six years, like equipment or machinery,
  • you sent your Company Tax Return late, or
  • HMRC has started a compliance check into your Company Tax Return.

If you are not in business, the minimum period is 22 months after the 31 January filing deadline and at least 15 months after filing if later.

Tax Diary April/May 2018

1 April 2018 – Due date for corporation tax due for the year ended 30 June 2017.

19 April 2018 – PAYE and NIC deductions due for month ended 5 April 2018. (If you pay your tax electronically the due date is 22 April 2018)

19 April 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2018.

19 April 2018 – CIS tax deducted for the month ended 5 April 2018 is payable by today.

30 April 2018 – 2016-17 tax returns filed after this date will be subject to an additional £10 per day late filing penalty.

1 May 2018 – Due date for corporation tax due for the year ended 30 July 2017.

19 May 2018 – PAYE and NIC deductions due for month ended 5 May 2018. (If you pay your tax electronically the due date is 22 May 2018)

19 May 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2018.

19 May 2018 – CIS tax deducted for the month ended 5 May 2018 is payable by today.

31 May 2018 – Ensure all employees have been given their P60s for the 2017-18 tax year.

 

Spring Statement

The Chancellor, Philip Hammond, was keen to promote the positive aspects of the UK’s economic performance when he stood to present his Spring Statement on 13 March.

  • Employment and manufacturing growth rising,
  • Inflation and debt falling.

The speech was also peppered with the usual political gambits to boost his party at the expense of the opposition.

The one practical change that was disclosed was a change to the next business rates revaluation that will now take place a year earlier than planned, in 2021, with further reviews every three years starting 2024.

The Chancellor also revealed new consultations that may eventually shape future legislation. These will include:

  • Reducing single-use plastic waste through the tax system. This will look at ways to reduce the impact of plastic waste in our environment such as disposable plastic cups, cutlery and foam trays. Some of the tax revenue raised will be used to fund research into new ways to encourage a more responsible use of plastic.
  • Making sure multinational digital businesses pay a fair share of tax. This is an ongoing attempt to ensure that the larger digital players pay tax in the UK on sales they make in the UK.
  • Seeking views on the role of cash in the new economy. Will cash become less relevant as digital payment processes become more widely used? This and the prevention of the use of cash to avoid tax and to launder the proceeds of criminal activity will be opened to a wider debate.
  • Supporting people to get the skills they need. Improving skills to benefit growth in the economy by investing in upskilling and retraining, especially by the self-employed.

It will be interesting to see if these initiatives subsequently drive government policy and new legislation.

2m workers to receive a pay rise from 1 April 2018

And no, this is no April fool…

Over 2 million people will get a pay rise from 1 April 2018 thanks to an above-inflation rise in the National Living Wage (NLW).

The National Living Wage will go up by 4.4%, from £7.50 to £7.83, meaning a full-time minimum wage worker will be over £2,000 better off since the introduction of the National

Living Wage in April 2016. From April 2018, the tax-free personal allowance will also increase from £11,500 to £11,850.

Almost 400,000 young workers are expected to benefit from the increases in the National Minimum Wage.

From 1 April 2018 the rates for:

  • workers aged 25 and over will be £7.83 per hour
  • workers aged 21 to 24 will be £7.38 per hour
  • workers aged 18 to 20 will be £5.90 per hour
  • workers aged under 18 will be £4.20 per hour
  • apprentices under 19 or in the first year of their apprenticeship will be £3.70 per hour

Employers who underpay minimum wage rates can face fines of up to 200% of the back pay they owe to workers and can be publicly named by the Department for Business, Energy and Industrial Strategy.

Since 2013 the naming scheme has identified more than £9 million in back pay for around 67,000 workers, with more than 1,700 employers fined a total of £6.3 million. Since 2015, the government has doubled investment in minimum wage enforcement, spending £25.3 million in 2017 to 2018.

The uplift comes after the government published its Good Work plan in February, which announced the right to a payslip for all workers. The new law is likely to benefit around 300,000 people who do not currently get a payslip.

For those paid by the hour, payslips will also have to include how many hours the worker is paid for, making pay easier to understand and challenge if it is wrong. The move is part of the government’s Industrial Strategy.

HMRC deals with online VAT abuse

Fulfilment houses are being drawn into government endeavours to deal with the loss of revenue by the activities of traders based outside the EU. From 1 April 2019, approved fulfilment businesses will be required to complete due diligence checks on their overseas customers and maintain records about the goods they store.

HMRC have announced that if you run a business in the UK, such as a warehouse, that stores goods imported from outside the EU that are owned by, or on behalf of, someone established outside the EU, you will need to apply to register for the Fulfilment House Due Diligence Scheme (FHDDS).

The deadline for applications from existing fulfilment businesses is 30 June 2018, and businesses that start trading on or after today to 30 June 2018 will need to apply on or before 30 September 2018. There are penalties for late applications.

Businesses that meet the FHDDS criteria will not be allowed to trade as a fulfilment business from 1 April 2019 unless they are approved by HMRC and they will risk a £10,000 penalty and a criminal conviction unless they register.

The FHDDS will help HMRC identify and combat non-compliant overseas suppliers more easily and make it more difficult for them to trade in the UK.

This will make the market fairer for the many legitimate and compliant businesses trading in the UK that pay the VAT and customs duty that they owe.

The scheme was announced by the government at Budget 2016 as part of a package of measures that will disrupt and deter abuse by some overseas businesses selling goods to UK customers through online marketplaces – HMRC estimated that this was costing the Exchequer £1 billion to £1.5 billion of unpaid VAT a year.

Businesses that only store or fulfil goods that they own, or only store or fulfil goods that are not imported from outside the EU, are not required to register. Transport businesses that need to store goods temporarily as part of their service, such as during an overnight break, are also not required to register.