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2018 Autumn Budget Highlights

30 October 2018 • HMRC News

Here is a review of the headline announcements together with a reminder of the measures coming into force from October and November 2018, January and April 2019, and beyond.

Measures introduced immediately

Capital gains tax: tackling misuse of Entrepreneurs’ Relief

In addition to the current requirements on share capital and voting rights, from 29 October 2018 shareholders must also be entitled to at least 5% of the distributable profits and net assets of a company to claim the relief.

Stamp Duty Land Tax (SDLT) and first-time buyer’s relief

First-time buyers relief will be extended in England and Northern Ireland so that all qualifying shared ownership property purchasers can benefit, whether or not the purchaser elects to pay SDLT on the market value of the property.

This change will apply to relevant transactions with an effective date on or after 29 October 2018, and will also be backdated to 22 November 2017 so that those eligible who have not previously claimed first-time buyers relief will be able to amend their return to claim a refund.

Structures and buildings allowance (SBA)

New non-residential structures and buildings will be eligible for a 2% capital allowance where all the contracts for the physical construction works are entered into on or after 29 October 2018.

Intangible fixed assets regime

With effect from 7 November 2018, the de-grouping charge rules, which apply when a group sells a company that owns intangibles, will be reformed so that they align more closely with the equivalent rules elsewhere in the tax code.

Measures introduced from 1 January 2019

Annual Investment Allowance (AIA)

The Annual Investment Allowance will increase to £1 million for all qualifying investment in plant and machinery made between 1 January 2019 and 31 December 2020.

Measures introduced from April 2019

Personal Allowance and Higher Rate Threshold

From April 2019, the personal allowance will increase from £11,850 to £12,500 and the higher rate threshold will be extended from £46,350 to £50,000. These will remain at the same levels for 2020-2021 and then increase in line with the Consumer Price Index.

Entrepreneurs’ Relief: minimum qualifying period

From April 2019, the minimum period throughout which the qualifying conditions for relief must be met will be extended from 12 months to 24 months.

Capital allowances special rate reduction

From April 2019, the capital allowances special rate for qualifying plant and machinery assets will be reduced from 8% to 6% to more closely match average accounts depreciation

Pensions and Savings

The lifetime allowance for pension savings will increase in line with the Consumer Price Index, rising to £1,055,000.

The annual subscription limit will be uprated in line with Consumer Price Index to £4,368 for both Junior ISAs and Child Trust Funds.

Offshore receipts in respect of intangible property (previously Royalties Withholding Tax)

From April 2019, legislation will be introduced to tax income from intangible property held in low-tax jurisdictions to the extent that it is referable to UK sales.

In the future

Corporation tax

The government confirmed that corporation tax will be further reduced to 17% from April 2020.

VAT registration threshold

The VAT threshold will be maintained at £85,000 until April 2022.

Capital gains tax

From April 2020, lettings relief will be reformed so that it only applies where the owner of the property is in shared occupancy with the tenant.

The final period exemption will also be reduced from 18 months to 9 months.

Off-payroll working in the private sector

From April 2020, responsibility for operating the off-payroll working rules will move from individuals to the organisation engaging the worker. Small organisations will be exempt.

Preventing abuse of R&D tax relief for small and medium-sized enterprises (SMEs)

From April 2020, the amount of payable R&D tax credit that a qualifying loss-making company can receive in any tax year will be restricted to three times the company’s total PAYE and NICs liability for that year.

Employment Allowance

From April 2020, the employment allowance will be restricted to employers with National Insurance Contributions below £100,000 in their previous tax year. Only larger companies will be affected.

Consultation on SDLT charge for non-residents

The government will publish a consultation in January 2019 on a SDLT surcharge of 1% for non-residents buying residential property in England and Northern Ireland.

If you would like to explore what the Autumn Budget could mean for you and your business, please call 020 7731 6163 to talk to one of our tax team. 

A review of the changes introduced for the new tax year 2018/2019

17 April 2018 • HMRC News

If you cast your mind back to last March when Chancellor Philip Hammond delivered his Spring Budget, you may recall he made changes to various tax allowances which have now come into effect. Our tax team have highlighted the main changes that may affect you and your business.

Personal Allowance

This year, most tax payers will see an increase in their personal allowance; the basic rate of 20% has risen from £11,500 to £11,850, whilst the higher rate threshold has increased from £45,000 to £46,350.

The point at which higher earners lose their personal allowance entirely has also increased in line with the higher personal allowance.

Class 4 NIC Increase

For anyone self-employed, there is now have a higher threshold for Class 4 NIC’s which sees the income level at which you must pay this class of national insurance increase from £8,164 to £8,424.

Dividend Allowance

From this April, the dividend allowance is dropping from £5,000 to £2,000, allowing shareholders to receive only £2,000 per year as a dividend before paying tax.

Auto Enrolment

For those with employees, several of the new changes introduced include the rise in the living wage to £7.83 and auto enrolment may mean higher costs for your business.

The Government has raised the statutory contribution you as an employer must make to each employees’ pension fund from 1% to 2%. You may also want to factor in that this will increase again to 3% in 2019.

If you want to discuss how these of any of the above might affect you or your business, please do not hesitate to contact one of our tax specialists on 020 7731 6163.

Highlights from the Spring Statement

14 March 2018 • HMRC News

Philip Hammond’s new style of Spring Statement was aimed at making a statement on the health of the economy and not as a forum to announce tax changes or spending announcements. Mr Hammond was keen to stress that the economy had performed better than expected, with a predicted growth of 1.5%, plus the expected reduction in inflation during the coming year should produce real wage growth in 2018/19.

Following his speech yesterday, our tax team here at Warrener Stewart has analysed the information to share any points of interest that might affect SME business owners. Most notably, he used the Spring Statement to announce bringing forward the introduction of the next business rates valuation to 2021, plus assistance to increase production in small businesses. He also spoke about measures designed to eliminate late payment, certainly a welcome intervention for many business owners in light of recent failings like Carillion.

Rather than announcing tax changes the Chancellor did announce the start of several consultation documents to help shape future taxes. Amongst these is the consultation on reducing tax on the least polluting vans, and ways to tackle single use plastic waste. There is also going to be a consultation on the role of cash within our ever-growing digital economy, including looking at continuing with 1p and 2p coins, and £50 notes.

The Chancellor has asked business owners to share their views on whether the £85,000 VAT registration threshold is helping them or creating a burden. Likewise, the government is keen to know what business owners think about their revisions to their proposals on corporate tax for the digital economy. They will also be holding a series of collaborative workshops to review alternative methods of VAT collection.

Commenting on the Spring Statement, Warrener Stewart’s tax director Ryan Lane said; “The main purpose of the Statement seems to have been a reassurance to the country that we are on track and to engage with businesses on their future via the many consultations they announced.”

HMRC introduce new rules on providing pay and tax information over the phone

27 July 2017 • HMRC News

It may be summer and whilst you might not want to cloud your days with thoughts of the frantic rush in January to complete your tax return, as Ryan Lane, head of personal client services at tax specialists Warrener Stewart, cautions new rules mean it might be a good time for some tax housekeeping.

“HMRC has just tightened up on their regulations relating to request from agents like us, for information on taxpayers details of employment income and tax deductions over the phone,” notes Ryan. “This means that we can no longer phone up and request instant information on behalf of clients to assist in the preparation of last minute tax returns.”

Due to a growing number of security issues, HMRC has recently introduced a policy whereby taxpayers may continue to request the information over the phone, however, the data will now be sent directly to the taxpayer by post which could take several days or even weeks.

“January is normally a busy month as people rush to collate all the information needed to submit their personal tax return,” Ryan continues. “With the introduction of these new measures we need to build in additional time, up to at least three weeks, to factor in information requests to HMRC to be able to submit an individual’s tax return if their P60 or P45 documentation has gone astray. Whilst summer is not the most traditional time to think of tax returns, a few moments spent now submitting a request for your 2016/2017 information or sending on the P60 to us now could mean filing on time in January!” 

Stamp Duty Land Tax – Individuals

04 July 2016 • HMRC News, Tax Videos

 

As of 1 April 2016, those acquiring an additional property will need to be aware of higher rates of Stamp Duty Land Tax. Buyers are required to pay 3% on top of the normal bands which can be as high as 15%.

Conditions - There are four conditions for the higher rate to apply for individuals. These include the value of the interest, the number of interests owned including non-UK dwellings and whether the property is going to be a main residence, as the higher rate does not usually apply to replacing your home.

Pitfalls – There are certain pitfalls to try and avoid including:

  • Where a property is bought jointly, if one purchaser is subject to the higher rate tax, the entire transaction will be too. 
  • If the property is purchased by an individual, their spouse or civil partner are treated as a joint purchaser, and each of their interests in dwellings are combined, increasing the potential of the transaction being higher rate.

Multiple transactions - If two or more dwellings are purchased in a single or linked transaction, the buyer could be entitled to Multiple Dwellings Relief. This works out the mean consideration of each dwelling in the transaction and is subject to a minimum rate of tax of 1%. Where six or more dwellings are purchased in a single transaction, the purchaser can choose whether to apply the non-residential rates of SDLT.

Stamp Duty Land Tax - Companies

For Companies, Stamp Duty Land Tax is charged at 15% on residential properties costing more than £500,000.

Where a transaction would not trigger the 15% rate, it will still be subject to the additional 3% even if it is the only residential property that the company owns. There are no special exemptions from the higher rate for companies. This said, the higher rate does not apply to non-residential or mixed use properties, transactions with a consideration of less than £40,000 and caravans, houseboats and mobile homes.

Reliefs - There are SDLT reliefs available from the 15% rate for certain types of properties including rental properties or properties acquired for development, redevelopment or trading. There is no similar relief from the higher rate tax. Tax relief, however, can be clawed back if, for example, within 3 years the use of the property changes from the relief initially claimed or a connected person occupies the property.

Annual Tax on Enveloped Dwellings

This is a daily tax, paid annually, by Companies, at the beginning of the financial year for companies owning residential properties valued at over £500,000. The current valuation date is 1 April 2012 however this will move to 1 April 2017 for the next chargeable year. The charge is dependent on the value of the property, and a return needs to be filed and the tax paid annually by 30 April.

Reliefs - Like with Stamp Duty Land Tax, similar reliefs are available from the ATED charge, however the ATED reliefs are fully changeable. Some properties including hotels, care homes and prisons are not considered dwellings and are exempt.

Charity accounts - know your obligations

25 April 2016 • HMRC News

Recent research conducted by the Charity Commission into the quality of annual reports completed by smaller charities concluded that many smaller charities were not aware of their reporting obligations.

This observation and the commission’s recent research outlined on Gov.uk comes as no surprise to Warrener Stewart’s Gary Chapman, the Fulham based Chartered Accountants includes several charities as clients; “We work with a number of charities completing both audits and independent examinations, together with assisting with financial reporting. For the charity sector it is imperative to maintain clear and transparent financial records. We would be happy to hear from any charities who would like our assistance with their financial reporting obligations.”

The Charity Commission’s research revealed the following findings:

Small charities not up to scratch

The research showed that just under half of the annual report and accounts that were provided to the commission by small charities met a minimum, basic standard. Many small charities do not appear to be aware of their reporting obligations - 1 in 5 sent some other form of report, 1 in 6 did not send the commission any form of report at all, and several small charities only sent their annual report and accounts after the commission had provided further explanation of the requirements to them.

However those charities that use both the commission’s annual report and accounts templates showed a significant improvement on the others, with 71% producing reports and accounts of acceptable quality.

Larger charities are improving

The larger charities report shows their accounts are improving. It tells a more positive story, with over three quarters of charities producing sets of accounts that met a minimum basic standard in 2013-14, up from just over half in 2011-12. Looking at the 3 documents that make up a set of accounts:

90% of annual reports covered either the charity’s purposes and its activities to carry them out or its reserves policy: most included both

90% of independent scrutiny reports were of the correct type, either audit or independent examination, for the charity’s size

93% of accounts met a basic integrity standard and all of the charities that were required to prepare accruals accounts had done so

But some larger charities continue to produce accounts with major flaws

Charities continue to file sets of accounts with the commission with major flaws, such as a chairperson’s statement instead of an annual report, an accountant’s report instead of an independent examiner’s report, or accounts that don’t balance. They also file annual reports that look well-presented but are not transparent about what the charity does, or about how the trustees are dealing with financial risks shown in the accounts.

More charities are talking about the public benefit that their activities provide - but not nearly enough

The public benefit report showed that whilst the number of charities meeting the public benefit requirement has improved, just over 40% of charities in their 2013/14 annual reports compared to just over a quarter in 2011/12, the numbers still need to improve significantly. Meeting this requirement is more than just discussing a charity’s activities. It also requires an assessment of how a charity’s activities have led to benefit for its beneficiaries and a statement that the trustees have had regard to our guidance on public benefit.

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