Making Tax Digital – The Countdown has started

From April 2019 – a year from now, all businesses, with turnover above the VAT threshold will be required to use the Making Tax Digital for Business system.  This initially will only be required for businesses to meet their VAT obligations, but all taxes will follow in time.

Background

Making Tax Digital is part of the government’s plans to make it easier for individuals and businesses to keep on top of their tax affairs and make sure they are always accurate.  (Personally I doubt this measure is to achieve these goals, I think it is more about removal of personal privacy and a move towards the Big Brother 1984 esk state!).

Every business and individual already has access to their own digital tax account.  If you want to find out how to access yours do a little Google, or give use a call  and let us help you.

Four pillars of Making Tax Digital

  1. Better use of information
    The idea here is that HMRC should have access to all your information in a single place, and therefore all departments will be able to talk to each other so requests of information by HMRC should reduce.
    Additionally, you should be able to see all the information which HMRC holds in a single place, and therefore you should be able to easily correct the information should there be an error.
  2. Tax in real time
    Customers should be able to see how much they owe at any point in time.  This will be a benefit for some, but for those in full time employment (the vast majority of UK Residents) this will be little use.  The aim of this is that it should prevent errors and stop tax which is owed building up.  (Personally, I feel this aim is the government moving to the ultimate position that every Tax account has a Direct Debit setup, with HMRC taking what they think is due at the end of each month)
  3. A single financial account
    HMRC say that taxpayers cannot see a single picture of their liabiulities and entitlements. i personally disagree with this as if I log into my HMRC account I can see exactly what I owe…..which is nothing.
  4. Interacting digitally with customers
    Customers will be able to interact with HMRC digitally at any time to suit them.  Accounting software will be linked directly with HMRC systems, allowing customers to send and receive information directly from their software.  (Personally I feel this is again a major invasion of privacy, all account records, banking information and tax informatuion will be linked together with HMRC (and any other government department) being able to see exactly when, what and where you spend money).

Next steps

As you might gather, I’m very sceptical about the true intentions of this legislative change.  To me it does simply seem to be a way to monitor UK citizens, and also they will impose the requirements on any foreign nationals who have investments and income in the UK.  But watch this space, this is going to be a major piece of legislation which is going to be introduced over the coming months, and will have a larger impact on individuals and businesses.

A Smith Accounting, Huddersfield Chartered Accountants provide a full range of Accounting and Taxation services and can help you comply with your Making Tax Digital requirements.

Further Reading & information

Best place will be HMRC’s own website

Self-assessment deadline looming

Self-assessment deadline looming – don’t miss the 31 January deadline

If you need to file a tax return online and you haven’t yet registered online to do so, act now to make sure you don’t miss the 31 January deadline.

You have until 11:59pm on 31 January to send a completed online self-assessment tax return for the 2016/17 tax year, which ended 5 April 2017, to HMRC.  If you miss the deadline you’ll be fined, this applies even if you don’t owe any tax or are due a refund.

You need to be registered to complete it online, if you haven’t previously registered to complete returns online, be aware that it can take HMRC up to seven working days to send you an activation code, so do this now to avoid missing the deadline.

Not registering in time is not a valid excuse for missing the deadline.

Do I need to file a return?

If your tax is deducted by your employer, you usually don’t need to submit a form unless you get additional income from a second job or freelance work.

If HMRC has asked you to complete a tax return but you don’t think you need to, tell it as soon as possible. You’ll have to pay a penalty if you simply don’t send one in.

If you haven’t received a notification, you should get in touch with HMRC if you fall into one of the following categories, as it’s likely you’ll need to file a return:

  • You’re self-employed
  • You’re a partner in a business partnership
  • You’re a company director
  • Your annual income is £100,000 or more
  • You have income from property
  • You have income from savings or investments that has been taxed and was £10,000 or more before you paid tax on it
  • You have income from savings or investments that hasn’t been taxed and is £2,500 or more (bank account interest is usually taxed automatically)
  • You need to claim expenses or reliefs
  • You or your partner receive child benefit and your income is more than £50,000
  • You get income from overseas
  • You have income from trusts, settlements or estates
  • You have capital gains tax to pay
  • You’ve lived or worked abroad or don’t live in the UK permanently
  • You’re a trustee

Can I file by paper?

The deadline for filing paper returns passed in October, so don’t do it that way or you’ll definitely be fined.

What must I pay in my return?

As well as any 2016/17 tax owing, most self-assessment payers must also pay the first half of what’s called a ‘payment on account’ for the 2017/18 tax year.  This is half the total expected tax due for 2014/15, which is estimated based on what you earnt and paid in tax the previous year.  If you don’t think you will earn as much money, you can ask for your payments on account to be reduced, but you will have to give a valid reason, such as an expected drop in profits or a change in circumstances.

Smarter Business Network

Here at A Smith Accounting, in our pursuit of continuing to provide out clients with the best advice and services available, we have joined the ICAEW’s Smarter Business Network.

Providing initial free consultations with clients and having access to fact sheets and tools tailored to every stage of your business lifecycle, adds even more ammo to our professional services arsenal.

For more information and to book your FREE consultation, please use the contact form or alternatively call us.

2017 Autumn Budget Summary

Last week the Chancellor, Philip Hammond delivered his autumn budget.  Here is a summary of the main talking points.

Stamp duty and housing

  • Stamp duty to be abolished immediately for first-time buyers purchasing properties worth up to £300,000
  • To help those in London and other expensive areas, the first £300,000 of the cost of a £500,000 purchase by all first-time buyers will be exempt from stamp duty, with the remaining £200,000 incurring 5%.
  • 95% of all first-time buyers will benefit, with 80% not paying stamp duty
  • Reduction will apply immediately in England, Wales and Northern Ireland although the Welsh government will have to decide whether to continue it when stamp duty is devolved in April 2018
  • It will not apply in Scotland unless Scottish government decides to follow suit
  • £44bn in overall government support for housing to meet target of building 300,000 new homes a year by the middle of the next decade
  • Councils given powers to charge 100% council tax premium on empty properties
  • Compulsory purchase of land banked by developers for financial reasons
  • £400m to regenerate housing estates and £1.1bn to unlock strategic sites for development
  • Review into delays in developments given planning permission being taken forward
  • £28m for Kensington and Chelsea council to provide counselling services and mental health support for victims of the Grenfell fire and for regeneration of surrounding area
  • New homelessness task force

Personal taxation and wages

  • Tax-free personal allowance on income tax to rise to £11,850 in line with inflation in April 2018
  • Higher-rate tax threshold to increase to £46,350
  • Short-haul air passenger duty rates and long-haul economy rates to be frozen, paid for by an increase on premium-class tickets and on private jets
  • National Living Wage to rise in April 2018 by 4.4%, from £7.50 an hour to £7.83.

Welfare and pensions

  • £1.5bn package to “address concerns” about the delivery of universal credit
  • Seven-day initial waiting period for processing of claims to be scrapped
  • Claimants to get 100% advance payments within five days of applying from January
  • Typical first payment will take five weeks rather than current six
  • Repayment period for advances to increase from six to 12 months.
  • New universal credit claimants in receipt of housing benefit to continue to receive it for two weeks

Business and digital

  • VAT threshold for small business to remain at £85,000 for two years
  • £500m support for 5G mobile networks, full fibre broadband and artificial intelligence
  • £540m to support the growth of electric cars, including more charging points
  • A further £2.3bn allocated for investment in research and development
  • Rises in business rates to be pegged to CPI measure of inflation, not higher RPI, a cut of £2.3bn
  • Digital economy royalties relating to UK sales which are paid to a low-tax jurisdiction to be subject to income tax as part of tax avoidance clampdown. Expected to raise about £200m a year
  • Capital gains tax relief for overseas buyers of UK commercial property to be phased out, with exemptions for foreign pension funds
  • Charges on single-use plastic items to be looked at
  • £30m to develop digital skills distance learning courses

Full article can be read at the BBC, http://www.bbc.co.uk/news/uk-politics-42056452

 

Autumn Budget, Wednesday 22 November 2017

The Autumn Budget on Wednesday will set out the government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility.  Here’s what to look out for:-

(Based on this article: https://www.newstatesman.com/politics/economy/2017/11/what-will-be-autumn-budget-2017-rumours-and-predictions)

Lots of new homes & incentives to achieve this
The Chancellor is under pressure from most young voters and their parents, and many parts of his party to encourage the building of a lot of new houses.  He has 300,000 new homes will be built a year, but hasn’t given any finer details regarding what proportion will be affordable, or where they will be built.  The budget will hopefully shed light on his plans.  Expect an increase in Help to Buy schemes and tax breaks for small/medium house builders.

Rough seas ahead
The UK is the slowest-growing G7 economy, Britain has endured the lowest growth and the highest inflation of the ten major EU economies, and the deficit isn’t getting any smaller.  We expenxt the Chancellor to announce the latest forecast from the Office for Budget Responsibility.  Following a report from the Institute for Fiscal Studies, due to the weak performance of the economy, the deficit in 2021-22 could be £36bn – £20bn higher than the £17bn forecast back in March.

Driverless cars
We should expect driverless cars in the UK by 2021, with it expected the government will announce £400m will be spent on electric car charge points, £75m on artificial intelligence, and £100m to boost purchases of clean fuel cars.

More for the younger generation
There are already leaked plans about the extension of the 16-25 young person’s railcard to under-30s, and rumours  stamp duty for first-time buyers will be scrapped.

Brexit budgeting
It is likely the chancellor will make some provision for the big Brexit breakup. Government departments and agencies will need to recruit extra staff in the case of no deal, with £250m already been allocated to prepare for the scenario of no deal.

Hidden Tax Rises?
It’s likely there will be some hidden tax rises – possibly by freezing income tax thresholds, but the the tax-free personal allowance needs to go up to £12,500 by 2020 in order to meet a Tory pledge.

Universal Credit backtrack
We know that the government plans to cut the payment delay of the new benefits system from six to four weeks, so it could be announced in this Autumn Budget.


Here are further details about the Governments new Autumn Budget timetable.
(Source: https://www.gov.uk/government/news/7-things-you-need-to-know-about-the-new-budget-timetable)

  1. The UK is the only major advanced economy to make major changes to the tax system twice a year
    Businesses, economy and tax experts like the International Monetary Fund, Institute for Government, the CBI, Chartered Institute of Taxation and the IFS have all been calling for this change. It will mean businesses and people face less frequent changes to the tax system, helping to promote certainty and stability.
  2. Spring Budget 2017 will be the final Budget held during springtime
    The move to a single fiscal event will be made after the spring Budget in 2017. There will be a second Budget before the end of 2017 to switch to the new timetable, which will then be followed in future years.The Office for Budget Responsibility (OBR) is required by law to produce two forecasts a year. One of these will remain at Budget. The other will fall in the spring and the government will respond to it with a Spring Statement.
  3. Finance Bill will follow the Budget, as it does now
    We expect a Finance Bill in spring/summer 2017 following the spring Budget.From winter 2017, Finance Bills will be introduced following the Budget. The aim will be to reach Royal Assent in the spring, before the start of the following tax year. This change in timetable will help Parliament to scrutinise tax changes before the tax year where most take effect.
  4. Tax policy consultation will continue and be strengthened
    The government remains committed to consulting on policy as set out in ‘The new approach to tax policy making’ in 2010. Most measures proposed at a Budget will be subject to policy consultation in the spring and publication of draft legislation in the summer, before being legislated in the Finance Bill after the following Budget. To build on this and allow for an earlier stage of involvement on key strategic challenges, the Chancellor has said that he may launch consultations on how to address these longer-term issues at the Spring Statement.
  5. From 2018 ‘Legislation day’ will move to the summer
    Since 2011, most tax policy consultation summaries and draft Finance Bill legislation have been published on ‘Legislation day’, following the Autumn Statement. In 2016 this will be on 5 December. From 2018, under the new timetable, this will move to the summer. As now, the date will continue to be announced by written ministerial statement.
  6. An Autumn Budget means tax changes will be announced well in advance of the start of the tax year
    The single fiscal event and new timetable to bring forward tax changes so they are legislated for before the start of the tax year will be beneficial to tax stakeholders. Making the transition to the new timetable will require adjustments to the normal tax policy making process due to the shorter interval between the two Budgets. Arrangements will be decided individually for different policies and set out to stakeholders by HMRC. In the normal way, these will where possible provide for consultation on policy proposals and on draft legislation.
  7. 2018 will see the first Spring Statement
    The Spring Statement will respond to the updated OBR forecast for the economy and the public finances. The Chancellor has said that the government will consider longer-term fiscal challenges and start consultations on how they can be addressed. The government will retain the option to make changes to fiscal policy at the Spring Statement if the economic circumstances require it.