Newsletter 130

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UK BUDGET DATE ANNOUNCED: MONDAY 29 OCTOBER

The Chancellor of the Exchequer, Philip Hammond, has announced that the Budget will take place on Monday 29 October.

Breaking with the tradition of a Wednesday in November, perhaps in a bid to avoid the ongoing Brexit negotiations, the government is expected to set out its plans ‘to build a stronger, more prosperous economy, building on the recent Spring Statement and last year’s Budget’.

The government announcements are expected to include updates on draft legislation and consultations, and proposed tax rates and reliefs.

Internet link: GOV.UK news

SELF-EMPLOYED CLASS 2 NATIONAL INSURANCE WILL NOT BE SCRAPPED

The government has decided not to proceed with plans to abolish Class 2 National Insurance Contributions (NICs) from April 2019.

Class 2 NICs are currently paid at a rate of £2.95 per week by self-employed individuals with profits of £6,205 or more per year. The government had planned to scrap the Class 2 contribution and had been investigating ways in which self-employed individuals with low profits, could maintain their State Pension entitlement if this inexpensive contribution had been abolished.

In a written statement to MPs, Robert Jenrick, Exchequer Secretary to the Treasury, stated that:

‘This change was originally intended to simplify the tax system for the self-employed. We delayed the implementation of this policy in November to consider concerns relating to the impact on self-employed individuals with low profits. We have since engaged with interested parties to explore the issue and further options for addressing any unintended consequences.’

‘A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the State Pension rise substantially. Having listened to those likely to be affected by this change we have concluded that it would not be right to proceed during this parliament, given the negative impacts it could have on some of the lowest earning in our society.’

Internet link: Parliament written statement

‘NO DEAL’ BREXIT GUIDANCE AND SMALL BUSINESS SURVEY

Following the issue of some ‘no deal’ Brexit technical notices, in August, the government has issued further notices with the aim of helping both businesses and individuals to prepare in the event of a UK-EU agreement not being realised.

The second and third batches of notices cover topics such as passports, driving licences together with data protection and mobile phone roaming charges amongst other topics. The full list and access to the collection of technical notices can be viewed by visiting the link at the end of this article. The government has confirmed they plan to issue further technical notices.

Although reaching a deal remains the ‘overriding priority’ unless a Withdrawal Agreement is ratified by the UK and European Parliaments, the possibility of the UK leaving the EU without a deal on 29 March 2019 remains.

Meanwhile, a survey by the Federation of Small Businesses (FSB) has revealed that:

• Only 14% of small businesses have started planning for a no deal Brexit.
• A further 41% believe that a no deal Brexit will have an impact on their business but have not yet started planning for the possibility.
• 10% believe that a no deal Brexit will have a positive impact on their ability to do business whilst 48% believe that a no deal Brexit will have a negative effect on their ability to do business. This figure rises sharply to 66% for those small firms that trade with the EU and to 61% for those that employ a staff member from the EU.

FSB National Chairman, Mike Cherry, said:

‘Looking at this research it is obvious that our small firms are not prepared or ready for a chaotic no deal Brexit and the impact that it will have on their businesses. If you sell your products to the EU, buy goods from the EU or if your business relies on staff from the EU, you now see this outcome as a clear and present threat to your business.’

We will keep you informed of developments.

Internet links: GOV.UK no deal brexit collection FSB press release

DEADLINE FOR ‘PAPER’ SELF ASSESSMENT TAX RETURNS

For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2017/18 return is 31 October 2018. Returns submitted after that date must be submitted electronically or they will incur a minimum penalty of £100. The penalty applies even when there is no tax to pay or the tax is paid on time.

If you would like any help with the completion of your return, please do get in touch.

Internet link: GOV.UK deadline

HMRC HAS PUBLISHED AN UPDATED LIST OF DELIBERATE TAX DEFAULTERS

HMRC has published an updated list of deliberate tax defaulters. The list includes details of taxpayers who have incurred a penalty because they have either:

• deliberately provided one or more inaccurate documents to HMRC
• deliberately failed to comply with an HMRC obligation
• committed a VAT or excise wrongdoing.

HMRC’s criteria for publishing this information also states that ‘These deliberate acts have resulted in HMRC establishing an additional amount of tax of more than £25,000. HMRC only publish the details where the taxpayer has not made a full and immediate disclosure when HMRC started to investigate or prior to any investigation.’

Internet link: GOV.UK/deliberate tax defaulters

GENUINE HMRC CONTACT AND RECOGNISING PHISHING EMAILS AND TEXTS

HMRC has updated their guidance on how to recognise when contact from HMRC is genuine and how to recognise phishing or bogus emails and text messages.

Internet link: GOV.UK recognising phishing emails

HMRC IDENTIFY RECORD £15.6 MILLION MINIMUM WAGE UNDERPAYMENTS

HMRC has announced that they achieved record enforcement results this year, identifying £15.6million of minimum wage underpayments.

The number of workers identified as underpaid was double that in 2016/17 and the highest number since the National Minimum Wage came into force.

The figures reveal:

• a record £15.6 million of underpayment identified for more than 200,000 workers
• employers fined £14 million for not meeting legal obligations
• more than 600 employers named in 2017/18 as part of ‘naming’ rounds.

Business Minister Kelly Tolhurst, said:

‘We are dedicated to stopping underpayment of the minimum wage. Employers must recognise their responsibilities and pay their workers the money they are entitled to.’

‘The UK’s lowest paid workers have had the fastest wage growth in 20 years thanks to the National Living Wage and today’s figures serve as a reminder to all employers to check they are getting their workers’ pay right.’

HMRC has prioritised the social care, retail, commercial warehousing and gig economy sectors for enforcement of the minimum wage. This is alongside employment agencies, apprentices and migrant workers. These are the sectors where HMRC believes non-compliance with National Minimum Wage is more widespread.

For advice on payroll please contact us.


Internet links: GOV.UK news GOV.UK naming

Newsletter 129

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WELCOME TO A NEW MEMBER OF STAFF

This month we are pleased to announce the addition of a new member of our team.
Hollie Cox has joined Walker Thompson as a trainee accountant, having concluded her A level education at King Edward VI Sixth Form College. She will shortly commence studies for her AAT qualification, which will hopefully be followed by ACCA examinations.
Outside of work Hollie enjoys swimming, jogging and walking. She also expresses an aptitude for Sudoku and card games, so should excel at solving client problems.

MAKING TAX DIGITAL FOR VAT

HMRC has published further information on Making Tax Digital for VAT (MTDfV). The VAT notice sets out some further details of the MTDfV regime, which will ultimately require taxpayers to move to a fully digital tax system.
Under the rules, businesses with a taxable turnover above the VAT threshold (currently £85,000) will be required to keep digital records for VAT purposes using ‘functional compatible software’ and provide their VAT return information to HMRC via an application programming interface.
This notice explains:

• the digital records businesses must keep and the ways to record transactions digitally in certain special circumstances
• what counts as ‘functional compatible software’, and when software programs do and do not need to be digitally linked where a combination of programs is used.

The new rules have effect from 1 April 2019, where a taxpayer has a ‘prescribed accounting period’ which begins on that date, and otherwise from the first day of a taxpayer’s first prescribed accounting period beginning after 1 April 2019.
Please contact us for advice and support on the introduction of MTDfV.

Internet link: GOV.UK MTD

SCOTLAND INTRODUCES RELIEF FOR FIRST TIME BUYERS

First-time buyers in Scotland will be helped to purchase their first home through a new tax relief which applies to Scottish Land and Buildings Transaction Tax (LBTT).
According to the Scottish Parliament approximately 80% of first-time buyers will pay no LBTT once the LBTT First Time Buyer relief takes effect. The change sees the zero-rated LBTT threshold raised to £175,000 for first-time buyers. Those purchasing property at a higher value will have their tax reduced by a maximum of £600. The Scottish Parliament expect that around 12,000 first-time buyers will benefit each year.
Minister designate for Public Finance and Digital Economy Kate Forbes said:
‘From today, around 80% of first-time buyers will pay no LBTT, helping thousands of people across the country buy their first home.’

Internet link: GOV.SCOT news

ONE MILLION COUPLES STILL ELIGIBLE FOR £900 TAX BOOST

HMRC has highlighted that three million UK couples have already taken advantage of Marriage Allowance but a million more are still eligible for the tax break.
The Marriage Allowance allows certain couples, where neither pay tax at more than the basic rate, to transfer 10% of their unused personal allowance to their spouse or civil partner, reducing their tax bill by up to £238 a year in 2018/19.  The allowance was introduced in 2015 and it is possible to backdate the claim to earlier tax years.
Please contact us if you would like to know more about this allowance and whether you are eligible.

Internet link: GOV.UK news

HMRC WARNING: TIME TO DECLARE OFFSHORE ASSETS

HMRC is warning that taxpayers could face penalties if they fail to declare their income on foreign assets before new ‘Requirement to Correct’ legislation comes into force.
HMRC is urging UK taxpayers to come forward and declare any foreign income or profits on offshore assets before 30 September to avoid higher tax penalties.
New legislation called ‘Requirement to Correct’ requires UK taxpayers to notify HMRC about any offshore tax liabilities relating to UK income tax, capital gains tax, or inheritance tax. The most common reasons for declaring offshore tax are in relation to foreign property, investment income and moving money into the UK from abroad. HMRC has stated that over 17,000 people have already been in contact to notify they have tax due from sources of foreign income, such as their holiday homes and overseas properties.
The Financial Secretary to the Treasury, Mel Stride MP, said:
‘Since 2010 we have secured over £2.8bn for our vital public services by tackling offshore tax evaders, and we will continue to relentlessly crack down on those not playing by the rules.’
‘This new measure will place higher penalties on those who do not contact HMRC and ensure their offshore tax liabilities are correct. I urge anyone affected to get in touch with HMRC now.’
Common Reporting Standard (CRS)
From 1 October more than 100 countries, including the UK, will be able to exchange data on financial accounts under the CRS. It is expected that the CRS data will significantly enhance HMRC’s ability to detect offshore non-compliance and it is in taxpayers’ interests to correct any non-compliance before that data is received.
Taxpayers can correct their tax liabilities by:

• Using HMRC’s digital disclosure service as part of the Worldwide Disclosure Facility or any other service provided by HMRC as a means of correcting tax non-compliance.
• Telling an officer of HMRC in the course of an enquiry into your affairs.
• Or any other method agreed with HMRC.

Once a taxpayer has notified HMRC of their intention to make a declaration, by the deadline of 30 September, they will then have 90 days to make the full disclosure and pay any tax owed. To ensure there is an incentive for taxpayers to correct any offshore tax non-compliance on or before 30 September 2018 there are increased penalties for any failures to correct by that date.
If taxpayers are confident that their tax affairs are in order, then they do not need to worry. However if you are unsure, please contact us.

Internet link: GOV.UK news

NON-RESIDENTS CAPITAL GAINS TAX ON RESIDENTIAL PROPERTY

Non-residents are reminded that they have to inform HMRC within 30 days of completion of the conveyance of a UK residential property. You must report the disposal online using the non-resident Capital Gains Tax return even if:

• you’ve no tax to pay
• you’ve made a loss
• you’re registered for Self Assessment
• you’re registered with HMRC for Corporation Tax
• you send HMRC Annual Tax on Enveloped Dwellings (ATED) or ATED-related Capital Gains Tax returns

If a property was jointly owned, each owner must tell HMRC about their own gain or loss. Special rules apply if you give a UK residential property to your spouse, your civil partner, or to charity.
You might also have to pay any non-resident Capital Gains Tax due within the same 30 day period, although there are exceptions to the pay now rule if you already have an existing relationship with HMRC – for example, through Self Assessment. If you do, you can either:

• pay when you submit your return
• defer payment until your normal due payment date

Penalties

You have 30 days from the date of conveyance to report your disposal on the non-resident Capital Gains Tax return, and pay any tax due. You’ll get a late filing penalty and be charged interest if you do not do this by the 30 day deadline.
If you miss the deadline by:

• up to 6 months, you will get a penalty of £100
• more than 6 months, a further penalty of £300 or 5% of any tax due, whichever is greater
• more than 12 months, a further penalty of £300 or 5% of any tax due, whichever is greater

If you have to pay any non-resident Capital Gains Tax within the same 30 day period, late payment penalties and interest may also be due if you miss the deadline.
If any non-resident Capital Gains Tax remains unpaid after 31 January after the end of the tax year of the disposal, a late payment penalty of 5% of the tax outstanding will be charged.

Internet link: Capital Gains Tax

STAMP DUTY CUT: 121,500 HOUSEHOLDS SAVE £284 MILLION

According to the latest statistics 121,500 first-time buyers have saved a total of £284,000,000 following the introduction of a relief for first-time buyers under the Stamp Duty Land Tax rules which apply in England and Northern Ireland.
Over the next five years, it is estimated that this relief, part of the UK government’s housing policy will help over 1 million people getting onto the housing ladder.
First-time buyers purchasing homes of £300,000 and under pay no stamp duty at all, and those who bought properties of up to £500,000 will also have benefitted from a stamp duty cut.
Financial Secretary to the Treasury, Mel Stride, said:
‘Once again, we can see that our cut to stamp duty for first-time buyers is helping to make the dream of home ownership a reality for a new generation – exactly as we intended.’
‘In addition, we’re building more homes in the right areas, and have introduced generous schemes such as the Lifetime ISA and Help to Buy.’
Those purchasing properties in Wales (since 1 April 2018) pay Land Transaction Tax and those in Scotland pay Land and Buildings Transaction Tax.  First-time buyers in Scotland also benefit from a relief for first-time buyers.

Internet link: GOV.UK news

SOFTWARE SUPPLIERS – MAKING TAX DIGITAL FOR VAT

HMRC is working with more than 150 software suppliers who have said they will provide software for Making Tax Digital for VAT (MTDfV) in time for April 2019.
From 1 April 2019, businesses will be mandated to use the MTDfB system to meet their VAT obligations under MTDfV. Only businesses with a taxable turnover above the VAT threshold (currently £85,000) will be required to use MTDfV, however HMRC is piloting the new system, on a small scale, from April 2018.
HMRC has advised that more than 40 suppliers have said they will have software ready during the first phase of the pilot and other software suppliers are expected to follow. HMRC will open up the pilot to allow more businesses and agents to join later in 2018.
HMRC has advised that the list will be updated as more software meets the criteria. HMRC are advising businesses to check with their existing software supplier to find out if they will be supplying suitable software.
Contact us for help with Making Tax Digital for VAT.

Internet link: GOV.UK software suppliers

ADVISORY FUEL RATES FOR COMPANY CARS

New company car advisory fuel rates have been published which take effect from 1 September 2018. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after
1 September 2018 are:

Engine size	Petrol
1400cc or less	12p
1401cc – 2000cc	15p
Over 2000cc	22p
Engine size	LPG
1400cc or less	7p
1401cc – 2000cc	9p
Over 2000cc	13p
Engine size	Diesel
1600cc or less	10p
1601cc – 2000cc	12p
Over 2000cc	13p

The guidance states that the rates only apply when you either:

• reimburse employees for business travel in their company cars
• require employees to repay the cost of fuel used for private travel

You must not use these rates in any other circumstances.
If you would like to discuss your car policy, please contact us.

Internet link: GOV.UK AFR

HMRC LATEST GUIDANCE FOR EMPLOYERS

HMRC has published the latest edition of the Employer Bulletin. This guidance for employers, and their agents, includes articles on:

• Reporting your payroll information accurately and on time
• Irregular payments and completion of Full Payment Submissions
• Starter Declaration on a Full Payment Submission (FPS)
• PAYE Settlement Agreements and Scottish Income Tax
• National Living Wage and National Minimum Wage – are you paying the correct rate?
• Advisory Electricity Rate for fully electric company cars
• Welsh Rates of Income Tax
• Construction Industry Scheme (CIS) webinars
• Postgraduate Loans
• Benefits and Expenses: Company cars
• Tax avoidance loan schemes – settle now
• Completing an EYU in respect of Employee’s National Insurance Contributions
• Employment Income: Draft Legislation
• Deadline for post 16 Child Benefit looms.

For help with payroll matters, please contact us.

Internet link: Employer Bulletin

‘NO DEAL’ BREXIT GUIDANCE

The government has issued some ‘no deal’ Brexit technical notices, with the aim of helping both businesses and individuals to prepare in the event of a UK-EU agreement not being realised.
The government has published the first 25 notices. Brexit Secretary Dominic Raab was keen to emphasise that reaching a deal remains the ‘overriding priority’. However, until a Withdrawal Agreement is ratified by the UK and European Parliaments, the possibility of the UK leaving the EU without a deal on 29 March 2019 remains.
The 25 documents cover a range of different areas, including VAT and trading, financial services, farming and workplace rights.
Josh Hardie, Deputy Director General at the CBI, said:
‘It’s right and responsible that the government has supplied information to businesses on issues from financial services passporting to food labelling, all of which will help lower the risks of the harshest outcomes from a ‘no deal’ Brexit.’
The government has confirmed further technical notices will be issued in September.

Internet link: GOV.UK no deal brexit collection