By AC Accounts Business News • Insights • Tax Advice 0 Comments

Working in the “gig” economy

The House of Commons Work and Pensions Committee has recently published a report calling on the Government to close the loopholes that allow “bogus” self-employment practices, which burden the welfare state but reduce the tax contributions needed to sustain it.

This follows the “Matthew Taylor” inquiry which took evidence during February and March 2017 from witnesses including representatives of companies such as Uber, Amazon, Hermes and Deliveroo. Most of the people working for such organisations were not on the payroll and have limited workers rights and are paid for each delivery or “gig”. The Committee recommended a default assumption of “worker” status, rather than “self-employed”, and said that the incoming Government should set out a roadmap for equalising the NICs paid by employees and the self-employed.

Mr Taylor was also asked to produce a report on the status of such workers and suggested that a new category of “dependent contractor” should be established, but the report did not conclude on how such a worker should be taxed.

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New government childcare schemes

Working parents can start applying for two new Government childcare schemes launching this year – Tax-Free Childcare which begins immediately and 30 hours free childcare which starts in September.

This means that working parents of children, aged under 4 on 31 August 2017, can now apply through the new digital childcare service for Tax-Free Childcare and receive a Government top-up of £2 for every £8 that they pay into their Tax-Free Childcare account.  This will apply to children under 12 years old but parents of disabled children under 17 will also be able to apply for Tax-Free Childcare.

This new scheme is designed for working families, including the self-employed, in the UK. For every £8 you pay in, the government will add an extra £2, up to £2,000 per child, or £4,000 per year for disabled children under 17 years old. The special account is then used to pay for childcare with an OFSTED registered nursery or childminder.

In addition, parents of 2-3 year olds, who will be eligible for a 30 hours free childcare place in September 2017, can apply through the childcare service and start arranging a place with their childcare provider.

 

By AC Accounts Business News • Insights • Tax Advice 0 Comments

Second finance bill this autumn

It has also been announced that the second Finance Bill will legislate for all policies that were included in the pre-election Finance Bill but had to be dropped in order to rush through the Finance Act 2017 before the snap general election in June.

The Government has re-confirmed that all policies originally announced to start from April 2017 will be effective from that date.

This means that the planned changes to corporation tax such as the new losses rules, will take effect from 1 April 2017 after all, as will the changes to deemed domicile which will take effect from  6 April 2017.

 

By AC Accounts Business News • Insights • Making Tax Digital • Tax Advice 0 Comments

Making tax digital for business delayed

The Government has responded to pressure from accountants and other interested parties and announced the delay of Making Tax Digital for Business to 2020 at the earliest.

 Quarterly VAT reporting using the new system will be mandatory from 2019.

In a further U-turn, three million small businesses and buy to let landlords below the VAT threshold will now not be required to keep digital accounting records but will be able to move to the new system for keeping tax records at a pace that is right for them.  For such businesses, Making Tax Digital will be voluntary.

Mel Stride, the new Financial Secretary to the Treasury and Paymaster General, announced that the roll out for Making Tax Digital has been amended to ensure businesses have plenty of time to adapt to the changes.  Under the revised timetable:

  • only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records, and initially only for VAT purposes from 2019
  • businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020

As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.

All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes. This deferral will give much more time for businesses, supported by their advisers, to identify for themselves, at their own pace, the benefits of digital record keeping. It will also ensure that many more software products can be developed and tested before the system is mandatory.

 

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Stamp duty on second homes

Since 1 April 2016 there has been a 3% supplementary Stamp Duty Land Tax (SDLT) charge payable on the purchase of second and subsequent residential properties costing more than £40,000. This was clearly aimed at buy-to-let investors as well as those buying second homes. Note that this additional 3% charge does not apply where the main residence is replaced.

Where the new main residence is bought before the old home is sold the 3% still has to be paid but is refunded if the old home is sold within 36 months.

 

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HMRC computer isn’t always correct

HM Revenue and Customs have acknowledged that their software and some commercial software used by accountants doesn’t always come up with the right amount of tax payable! You may have seen this reported in some newspapers such as the Daily Telegraph. This arises because the tax system of different income tax personal allowances, dividend allowances, savings rates has become more complicated rather than getting simpler!

These anomalies only arise in certain limited circumstances depending on the combination of dividends, interest and other income and we can assure you that we will check that our software calculates the correct amount of your tax. We will ensure that where the HMRC computer system comes up with a different figure any anomalies are resolved.

 

 

By AC Accounts Insights • Making Tax Digital 0 Comments

Snap election means shorter finance act passed

The original Finance Bill published after the Spring Budget ran to nearly 700 pages. As a result of the announcement of the General Election on 8th June a significantly shorter Finance Bill was passed with many of the more detailed and more controversial measures being deferred to a later Bill. Whether those measures will reappear after the election will depend upon who wins on 8th June.

Among the tax changes that didn’t make the cut was the legislation to introduce Making Tax Digital, all of the corporation tax changes such as those affecting company losses and the changes affecting non-domiciled Individuals.

However the changes affecting workers supplying their services to the public sector via their own personal service company were enacted with effect from 6 April 2017.

Many hope that the deferral of the Making Tax Digital legislation to the next Finance Bill may mean that the planned start date in April 2018 will also be deferred. There will certainly be more time for proper debate of the proposed changes and the Treasury Select committee still has a number of reservations about the speedy implementation of such a significant change to the UK tax system. Watch this space.

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Diary of main tax events July/ August 2017

Date              What’s Due

1/07                Corporation tax for year to 30/9/16 (unless pay quarterly)

5/07                Last date for agreeing PAYE settlement agreements for 2016/17 employee benefits

5/07                Deadline for agents and tenants to submit returns of rent paid  to non-resident landlords and tax deducted for 2016/17

6/07                Deadline for forms P11D and P11D(b) for 2016/17 tax year

19/07             PAYE & NIC deductions, and CIS return and tax, for month to 5/7/17 (due 22/07 if you pay electronically

31/07              50% payment on account of 2017/18 tax liability due

1/08               Corporation tax for year to 31/10/16 (unless pay quarterly)

19/08            PAYE & NIC deductions, and CIS return and tax, for month to 5/8/17 (due 22/08 if you pay electronically)

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ADVISORY FUEL RATE FOR COMPANY CARS

These are the suggested reimbursement rates for employees’ private mileage using their company car from 1 June 2017.

Where there has been a change the previous rate is shown in brackets. You can continue to use the previous rates for up to 1 month from the date the new rates apply.

 

 

Engine Size                           Petrol                     Diesel                     LPG  

1400cc or less                     11p                                                             7p

1600cc or less                                                             9p

1401cc to 2000cc               14p                                                              9p

1601 to 2000cc                                                         11p

Over 2000cc                       21p  (22p)                    13p                        14p