THE ROAD TO BREXIT
Those of us who are old enough to have been taught religious
education at school may recall that St Jude was often quoted as being
the Patron Saint of lost causes. It turns out that this is not quite
correct for two reasons;
Firstly St Jude was the Patron Saint of Impossible Causes and secondly there were 4 characters in the frame.
( Above L-R – St Rita, St Jude, St Philomena & St Gregory – all claimants to be the saint of Impossible Causes)
Whilst I am a religious non participant myself I wonder if perhaps
our Prime Minister may by now be seeking some Divine intervention on
behalf of UK businesses in order to bring some clarity to the future. My
fear perhaps would be that these 4 would individually advise for a “No
Deal”, “Short Extension”, “Longer Extension” or “Second Referendum”
Walker Thompson however will continue to listen to our clients, find solutions and be clear with our advice.
Sherod Williams. Director
REPORTING BENEFITS IN KIND – FORMS P11D
The forms P11D which report details of benefits and some expenses
provided to employees and directors for the year ended 5 April 2019, are
due for submission to HMRC by 6 July 2019. The process of gathering the
necessary information can take some time, so it is important that this
process is not left to the last minute.
Employees pay tax on benefits provided as shown on the P11D,
generally via a PAYE coding notice adjustment or through the self
assessment system. Some employers ‘payroll’ benefits and in this case
the benefits do not need to be reported on forms P11D but employers
should advise employees of the amount of benefits payrolled.
In addition, regardless of whether the benefits are being reported
via P11D or payrolled the employer has to pay Class 1A National
Insurance Contributions at 13.8% on the provision of most benefits. The
calculation of this liability is detailed on the P11D(b) form. The
deadline for payment of the Class 1A NIC is 19th July 2019 (or 22nd for
cleared electronic payment).
HMRC has produced an expenses and benefits toolkit. The toolkit
consists of a checklist which may be used by advisers or employers to
check they are completing the forms correctly.
If you would like any help with the completion of the forms or the
calculation of the associated Class 1A NIC please get in touch.
Internet links: HMRC guidance Toolkit
ADDITIONAL BREXIT ADVISORY DOCUMENTS FOR SMALL BUSINESSES
The government has published additional documents containing advice on Brexit for UK small businesses.
According to the government, the information will help business
owners to ‘understand how leaving the EU may affect their business’. The
advisory documents cover a range of issues, from changes to UK-EU trade
following Brexit, to alterations to how businesses send and receive
personal data.
Amidst ongoing Brexit uncertainty the government is urging businesses
to ‘prepare now’. Businesses that import or export goods to the EU are
urged to apply for a UK Economic Operator Registration and
Identification (EORI) number if they have not already done so, in order
to continue trading with the EU post-Brexit.
Businesses that provide services to or operate in the EU may need to
comply with new rules following Brexit. A business could be affected if
it has a branch or branches in the EU; it operates in a services sector
within the EU; it is planning a merger with an EU company; or if its
employees have to travel to EU or European Economic Area (EEA) countries
for business.
Meanwhile, businesses that hold intellectual property are warned that
they may face changes to their copyright, patents, designs and
trademarks following Brexit.
The government is urging small firms to utilise the Exit Tool.
Internet link: EU Exit tool
DELAY TO RISE IN PROBATE FEES
The government has delayed its planned increase in probate fees indefinitely.
The delay has been attributed to
‘pressure on Parliamentary time‘ caused by Brexit debates and votes.
The increase in fees had been set to take effect from 1 April 2019,
but HMRC recently made the decision to postpone the rise. Under
government plans, the proposed probate fees are as follows:
| Value of estate |
Proposed Fee |
| Up to £50,000 or exempt from requiring a grant of probate |
£0 |
| £50,000 – £300,000 |
£250 |
| £300,000 – £500,000 |
£750 |
| £500,000 – £1m |
£2,500 |
| £1m – £1.6m |
£4,000 |
| £1.6m – £2m |
£5,000 |
| Above £2m |
£6,000 |
|
|
While the changes are pending, a temporary process is in place for
applying for probate, and estates will not incur the higher fees if
applications are made before the fee changes take effect.
A spokesperson for HMRC said:
‘Probate registries will accept applications before processing by
us as long as they are assured the inheritance tax (IHT) forms from us
will be coming shortly.
‘Our processes aren’t changing, it’s just that probate registries
will be willing to accept applications before our processing is done
when normally it would need to be after.’
Internet link: Gov.uk news
UPDATE ON STRUCTURES AND BUILDINGS ALLOWANCE
Chancellor Philip Hammond delivered the Spring Statement on Wednesday 13 March 2019 amidst all the Brexit debates.
In his speech the Chancellor provided an update on the economy and
responded to the Office for Budget Responsibility forecasts. In addition
he launched consultations on various aspects of the tax system together
with updates on earlier consultations.
One area subject to consultation is the Structures and Buildings
Allowance (SBA). The SBA gives relief for expenditure on certain
structures and buildings. The allowance is available for new structures
and buildings intended for commercial use, and the improvement of
existing structures and buildings. The SBA will be also available on the
cost of converting or renovating existing premises to qualifying use.
Relief is limited to the original cost of construction or renovation and
given across a fixed 50-year period, at an annual flat rate of 2%
regardless of changes in ownership.
Only certain expenditure will qualify. The structures or buildings
must be brought into use for qualifying activities. These include
trades, professions or vocations and certain UK or overseas property
businesses – essentially commercial property lettings.
Relief will be given on eligible construction costs incurred on or
after 29 October 2018. Where a contract for the physical construction
work is entered into before this date, relief is not available. The
consultation on draft legislation is open until 24 April 2019.
Internet links: WMS and
Consultation
MTD FOR VAT
HMRC is phasing in its landmark Making Tax Digital (MTD) regime,
which will ultimately require taxpayers to move to a fully digital tax
system. Under the new rules, businesses with a taxable turnover above
the VAT threshold
(currently £85,000)
must
keep digital records for VAT purposes and provide their VAT return
information to HMRC using MTD functional compatible software.
The new rules have effect from 1 April 2019 where a taxpayer has a
‘prescribed accounting period’ which begins on that date, or otherwise
from the first day of a taxpayer’s first prescribed accounting period
beginning after 1 April 2019. For some VAT-registered businesses with
more complex requirements the rules will not have effect until 1 October
2019. Included in the deferred start date category are VAT divisions,
VAT groups and businesses using the annual accounting scheme.
The government has confirmed that a light touch approach to penalties
will be taken in the first year of implementation. Advising that where
businesses are doing their best to comply, no filing or record keeping
penalties will be issued as the focus will be on supporting businesses
to transition to MTD. The government has confirmed that it will not be
mandating MTD for any new taxes in 2020.
Figures published by HMRC show that almost 1.2 million businesses are affected by MTD for VAT.
Financial Secretary to the Treasury, Mel Stride MP, said:
‘In a world where businesses are already banking, paying bills
and shopping online, it is important that the tax system moves into the
21st century.’
Internet link: GOV.UK
CALL FOR TAX ON SOCIAL MEDIA BUSINESSES
A group of MPs has called on the government to tax the profits of social media businesses.
The All Party Parliamentary Group (APPG) on Social Media and Young
People’s Mental Health and Wellbeing recently published a report which
outlined the impact of social media on the health of young people.
The APPG has suggested creating a Social Media Health Alliance, which
would be funded by a 0.5% tax on the profits of social media companies.
MPs hope that the money would be used to fund research and help ‘draw
up clearer guidance’ on the impact of social media on health and
wellbeing.
Internet link: Royal Society for Public Health
CHANGES TO INCOME TAX FOR 2019/20
The new tax year brings changes to income tax bands and allowances.
The personal allowance is £11,850 for 2018/19 and increases to
£12,500 for 2019/20. There is a reduction in the personal allowance for
those with ‘adjusted net income’ over £100,000. The reduction is £1 for
every £2 of income above £100,000. So for 2018/19 there is no personal
allowance where adjusted net income exceeds £123,700. For 2019/20 there
is no personal allowance available where adjusted net income exceeds
£125,000.
The marriage allowance permits certain couples, where neither pays
tax at more than the basic rate, to transfer 10% of their personal
allowance to their spouse or civil partner.
The basic rate of tax is 20%. In 2018/19 the band of income taxable
at this rate is £34,500 so that the threshold at which the 40% band
applies is £46,350 for those who are entitled to the full personal
allowance. In 2019/20 the basic rate band increases to £37,500 so that
the threshold at which the 40% band applies is £50,000 for those who are
entitled to the full personal allowance.
Individuals pay tax at 45% on their income over £150,000.
Scottish residents
The tax on income (other than savings and dividend income) is
different for taxpayers who are resident in Scotland to taxpayers
resident elsewhere in the UK. The Scottish income tax rates and bands
apply to income such as employment income, self-employed trade profits
and property income.
In 2018/19 and 2019/20 there are five income tax rates which range
between 19% and 46%. Scottish taxpayers are entitled to the same
personal allowance as individuals in the rest of the UK. The two higher
rates are 41% and 46% rather than the 40% and 45% rates that apply to
such income for other UK residents. For both 2018/19 and 2019/20, the
threshold at which the 41% band applies is £43,430 for those who are
entitled to the full personal allowance.
Welsh residents
From April 2019, the Welsh Government has the right to vary the rates
of income tax payable by Welsh taxpayers. The UK government has reduced
each of the three rates of income tax paid by Welsh taxpayers by 10
pence. The Welsh Government has set the Welsh rate of income tax at 10
pence which will be added to the reduced rates. This means the tax
payable by Welsh taxpayers continues to be the same as that payable by
English and Northern Irish taxpayers.
Internet links: GOV.UK GOV.SCOT income tax GOV.WALES income tax
HMRC WINS DISGUISED REMUNERATION AVOIDANCE CASE
HMRC has won a legal case over a contractor loan scheme endorsed by
Hyrax Resourcing Ltd. As a result, HMRC will now be able to collect more
than £40 million in unpaid taxes.
The scheme in question was a disguised remuneration avoidance scheme,
which paid users in loans, rather than salaries, to avoid paying income
tax and national insurance contributions on earnings.
Hyrax Resourcing Ltd will now be required to disclose details of the
tax avoidance scheme, including the names and addresses of 1,180
individuals who used it. Failure to provide the relevant information
could result in Hyrax Resourcing Ltd becoming liable for substantial
penalties.
Financial Secretary to the Treasury, Mel Stride MP, said:
‘HMRC is cracking down on the unscrupulous promoters who sell these highly contrived tax avoidance loan schemes.
‘Promoters need to take note of this decision and make sure they
contact HMRC urgently about schemes they haven’t yet disclosed.’
Internet link: HMRC news
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