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January 2019 - Monthly News

What would we not give to know the future? Well you’re in luck as you don’t need to give up anything to know what will be coming up in January. Here’s the latest rundown of the accounting events that you can expect to come across in the following months.

Income Tax Changes Following Scottish Budget

Wednesday 12th December saw Finance Secretary Derek Mackay delivering his 2019/2020 Scottish Draft Budget, after Chancellor of the Exchequer Philip Hammond’s UK Budget.

As you’ll know, the Scottish government enjoys devolved powers. This means they can set their own rates and bands of income tax for Scottish resident taxpayers. The new rates and bands will be considered by the Scottish Parliament before they come to an agreement about the Scottish Rate Resolution that will determine the rates and bands for 2019 and 2020. Here is how the figures are at the moment:

2018/19

2019/20

Band Name

Rate

Over £11,850 - £13,850

Over £12,500 - £14,549

Starter

19%

Over £13,850 - £24,000

Over £14,549 - £24,944

Scottish Basic

20%

Over £24,000 - £43,430

Over £24,944 - £43,430

Intermediate

21%

Over £43,430 - £150,000

Over £43,430 - £150,000

Higher

41%

Over £150,000

Over £150,000

Top

46%

Personal allowances are currently set to £11,850 for 2018/2019, but the personal allowance limit will be £12,500 for 2019/2020. The higher rate tax point for the UK in 2019/2020 is set at £50,000.

Changes to the Property Taxes Following Scottish Budget

Derek Mackay announced, in the Scottish Draft Budget of 2019/2020, that there would be changes coming to Scottish Land and Buildings Transaction Tax (LBTT). The primary LBTT concern remains to assist first-time buyers, and others, in navigating the property market. LBTT helps over 80% of taxpayers by making sure they pay less tax than in England. Here are the rates and bands as they are now:

Residential property

Rate

0 - £145,000

0%

£145,001 - £250,000

2%

£250,001 - £325,000

5%

£325,001 - £750,000

10%

£750,001 and over

12%

First-Time Buyers

For first-time buyers of properties up to £175,000 in value, there is relief that in the form of a zero tax threshold. This threshold applies for buyers purchasing a property between £145,000 and £175,000 in value. Benefits also exist for those buying a property over £175,000.

Additional Residential Properties

Certain residential properties are subject to higher rates of LBTT. These include buy to let properties and additional homes that are particularly subject to higher rates. If an individual owns two, or more than two, residential properties the Additional Dwelling Supplement (ADS) may apply. ADS is due to increase from 3% to 4% from January 25th, 2019.

Non-Residential Rate and Band Changes

The lower non-residential rate of LBTT is due to decrease from 3% to 1%, while the upper rate is due to go up from 4.5% to 5%. The starting threshold of the upper rate is due to decrease from £350,000 to £250,000. These changes are due to come into effect from 25th January. The rate and band changes are as follows:

Non-Residential Transactions

Purchase price

Rate

Up to £150,000

0%

£150,001 - £250,000

1%

Over £250,000

5%

Non-Residential Leases

Net present value of rent payable

Rate

Up to £150,000

0%

Over £150,000

1%

Reminder for Tax Deductible Expenses for Employees

HMRC is keen to remind employees to submit paperwork to claim tax rebates on any work related expenses. It is estimated that the employees eligible for such a rebate number in the millions. This is particularly relevant to those in the service industry. Nurses, those working in construction, as well as employees in the food and retail industries, could all claim tax rebates.

Many working in the above sectors have to pay for work-related mileage, uniforms, and tools. Individuals may be eligible to submit for a tax refund and claim extra cash, and they are advised to visit www.gov.uk to make the necessary checks.

Increases to the Pension Contribution

From 6th April, 2019, contributions to the workplace pension will increase to 8% and The Pensions Regulator (TPR) is kee to remind everyone.

Employers will be contributing 3% of the amount, at least. TPR is contacting employers to remind them and there is further information about the changes on their website.

It’s important for employers to check that the changes are reflected with their payroll software provider and pension provider. This will make certain that the changes are in place ahead of April 6th.

Deliberate Tax Defaulters

The list of deliberate tax defaulters has been updated by HMRC. Those deemed deliberate tax defaulters are those who have received penalties for:

● Deliberate tax return errors
● Deliberate failure to make good on their tax obligations

HMRC has the right to publish such information when an investigation has been conducted and led to the taxpayer being charged a penalty for deliberate defaults on tax of over £25,000.

Self Assessment Deadline

Don’t forget that the deadline for the 2017/2018 self assessment tax return is January 31st, 2019. This deadline does not only apply to tax returns, but also applies to payments due to HMRC and Classes 2 and 4 National Insurance Contributions (NIC), as well as capital gains tax and High Income Child Benefit Charge responsibilities.

The penalty stands at £100 for a late tax return, even if there is no tax due, or if a refund is due.

Balances on outstanding income tax, NIC, capital gains tax and High Income Child Benefit Charge for year ending 5th April, 2018, is also due by 31st January, 2019. Interest will be charged on any late payments.

First payments for income tax, class 4 NIC, or High Income Child Benefit Charge, on the are also due by 31st January, 2019.

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Tax Return Tips for January

tax tips able accountantsUse these super handy tips to process your tax returns efficiently and make sure that you file your tax return, and pay any outstanding tax owed. If you submit self-assessment tax returns you should be aware that the deadline is looming and that preparations are underway to check submissions. With the deadline almost upon us it is a good idea to put together some key points that you should keep in mind when preparing your self-assessment tax return.

1. Is a Tax Return Necessary?

It may not be absolutely necessary for you to submit a self-assessment tax return, depending on your circumstances. Perhaps your situation has changed since the last tax filing and you need to let HMRC know that they need to cancel their request for your submission. Why not check HMRC’s criteria?

2. Provisional Tax Returns

Don’t forget about this handy facility that you, or your accountant, can take up if you don’t have all the necessary information at hand. Remember that this is a provisional return to avoid incurring a penalty. You will need to update it later with all the relevant missing information.

3. Deadline For Amendments

As well as being the deadline for current returns, 31 January is also the deadline for amending your tax return from the previous year, if necessary. Until 31 January you have the ability to amend your return and make significant changes, but HMRC might stop you from making changes after 31 January that would be to your benefit. It’s always best to make sure your return is accurate before submitting it and risking questions from HMRC.

4. Contractor Tax Payments

If you’re a contractor tax payments are due by 31 January which is ten months into the tax year. By now you should have an accurate estimate of your earnings for the year and how much you will owe. The previous year’s earnings would have been used to calculate a contractor’s payment on account. If these calculations are too high, you can choose to change them.

There are three ways that contractors can to reduce payments on account:

* The SA303 form
* Filing a tax return with an adjustment
* Submitting a change via the HMRC website

5. Tax Reliefs

Tax reliefs may be used by contractors to cut down on their tax liabilities. The main method is through gift aid, so make sure any charitable donations are specifically mentioned on your return, as well as your personal pension contributions.

6. Don’t Be Shy, Mention Your Losses

Don’t forget that including any information about losses can mean a reduction in your tax liability. Different losses can involve different deadlines, so be sure to check the regulations on this.

7. Taxation of Other Income

If you’re a contractor you should be aware that rules surrounding other sources of income are always changing. Read up on the latest news so you comply with HMRC regulations and have your income recognised by them.

8. 31 January

Don’t forget that 31 January is not only about filing your tax return, it is also the deadline for actually paying your tax liability if you don’t want to be charged interest by HMRC. If there is an issue and you cannot pay up by 31 January, you should contact HMRC to talk about an arrangement for paying, perhaps a payment plan for a longer period.

9. Tick Tock!

January is a busy time of year for HMRC as their helplines are jammed with calls from people, just like you, looking for advice. That’s why it is best not to leave it too late. Submit a provisional return if you need to, but do so well in advance of 31 January so you can complete the submission in good time.

10. Submit!

It may sound like nonsense, but it is common for taxpayers to fill out their tax returns in good time, only to completely forget to actually submit it. Don’t be one of these people who receive a fine for forgetting to hit the “submit” button!

We hope this had provided you with some food for thought, but don’t just read about submitting your tax return. Do it! The last thing you need is to be paying a fine, or extra interest to HMRC. If you know you’re going to have trouble paying your tax bill, it is better to contact HMRC and work something out, rather than bury your head in the sand and hope the problem will just disappear. Good luck!

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Accounting Resolutions For The New Year

new years resolution able accountantThe turn of a new year is the perfect moment to take a look back on the last year and set yourself up for success in this one. These tips will shine a light on to how you can get your business in shape for the new year.

We all make resolutions to change the way we live, but how about the way we work? How about the way our businesses work? Yes, we make decisions about that too, but we often overlook the accounting processes and procedures that form the backbone of our businesses. Why? Our businesses cannot operate without money, so the way we account for it should always improve. The best way to do that is to look over your achievements from last year so you can make good moves in this one.

1. Look Over Your Figures

Take a look through all your sales invoices and make sure all the figures add up correctly. If you run a business that has complex revenue streams this might be a difficult task, but there is an increasing number of high quality software packages that can help you with your accounting. They often include many elements that can aid automation.

2. See Your Accountant

Don’t waste a moment, get your accounts in order now and share the books with your accountant so they can get busy and check them.

If your accountant is any good they’ll be happy to look over your books before the financial year so they can give you a good estimate of how much you will owe in taxes. Having this kind of information as early as possible will help you to be ready with the necessary funds.

3. Review Review Review

Take time to review the last year and answer some questions. Has your business grown? Do your revenues and profits compare favourably with the last year? Are sales up? Are your business expenditures rising? Did you meet all the goals you had in mind for last year?

In answering these questions you are trying to understand your business. If things are looking up, give yourself a round of applause. If not, let’s dig deeper and find out what you can do to improve things. Don’t hesitate to have a chat with your accountant as they may be able to help you to put together a financial plan to realign your aims.

4. Stay Current

Always keep up with the latest tax laws and make sure you meet all deadlines. If you’re not sure about them get in touch with your accountant so you can understand how any changes to regulations can affect the way you do things.

5. Payroll

You should also pay some attention to your internal systems dealing with payroll etc. Again, the right software will make it easier to deal with issues such as bonuses and electronic payments.

6. Accounting Software

Having the right software will make your daily tasks so much easier for you, and you will be able to genuinely revolutionise the way your business works.

7. Goals

What are your goals for the year ahead? It’s easy to just say “make more money”, but what are the things that will help that to become a reality? Do you need to reassess your sales targets? How about revenue streams? Do you need to consider more staff, or doubling down on customer service? Set yourself goals, but make them achievable. There is no point setting yourself goals that will be impossible to achieve as this will only result in frustration.

8. Think: Accounts!

Only with well-managed accounts will you have a business that runs well. Give yourself the right tools and you’ll always be aware of how well your business is doing, meaning you will have the information to make both long-term and daily decisions that will impact performance.

These are just some of the resolutions you should make if you want to run your business more efficiently this year. If you’re still struggling with basic changes you may want to consider at least switching to digital documents, such as receipts. If the scanner is a step too far, using the camera on your phone is a simple way to get a digital copy of your sales receipts and invoices.

Keep to these resolutions and you are sure to see your business grow from strength to strength over the next 12 months.

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December 2018 Monthly News

Wondering what the significant accountancy dates you have to look forward to? You’ve come to the right place. In this regular blog post we guide you through all that is coming up on the accounting horizon, so you need never miss out on the big dates on your calendar.

New Advisory Fuel Rates for Company Car Users

Each December HMRC reviews the recommended rates for fuel used in company cars and this December has been no different. The latest advisory fuel rates (AFR) are published as they pertain to company car users.

The new rates are effective from 1st December, 2018, but the previous rates can continue to be used for another month, at the most, from the date that the new rate comes into force.

Cleared Payment Deadline for VAT Return

This is the deadline on the 7th December by which HMRC should be in receipt of your cleared funds for your VAT Return filing for the period ending with the 31st October, 2018. Don’t be late with this as penalties can apply.

Deductions for PAYE, student loans and CIS

Wednesday 19th December is one is for employers who make deduct PAYE contributions from salaries of their employees. It also applies to contractors who have engaged and paid subcontractors under CIS.

This is the update due for the month running up to the 5th December that necessitate the payment of contributions for HMRC of income tax, national insurance and student loans. Under the CIS contractors are obliged to make the relevant contributions of tax deductions from the pay of subcontractors to the HMRC.

If you normally make your payment electronically, the deadline for payment to have cleared is Friday 21st of December, 2018. You can also arrange a “Faster Payment” for funds to clear by Saturday 22nd December. Don’t forget that you are liable for interest if the payment is overdue and penalties may also apply.

Electronic Payment Deadline for PAYE, NICs and CIS

If you’re using the “Faster Payment” facility to submit your remittance to HMRC for PAYE, NICs and CIS to HMRC, the date the funds need to have cleared is 22nd December.

Deadline for Employees Completing 2017/2018 Self Assessment Tax Return

This deadline of Sunday 30th December specifically applies to employees who complete an online self assessment tax return. If an underpayment has occurred, the employee can ask HMRC to collect the outstanding balance with an adjustment to their tax code for 2019/2020.

That’s everything for December! Have a spectacular festive season and check in with again soon for updates and news for the new year.

Scottish Budget - Key Points

Many of you will be interested in learning the latest from the Scottish Budget, the draft of which Finance Secretary Derek Mackay delivered on 12th December. Amongst the announcements were those about new bands for income tax and Land and Buildings Transaction Tax changes.

Income Tax

With its devolved powers the Scottish government can set the rates and bands of income tax for Scottish resident taxpayers. Here are the income tax rates and bands for 2019/2020 that will be under consideration by Parliament.

2018/19

2019/20

Name of Band

Rate

Over £11,850 - £13,850

Over £12,500 - £14,549

Starter Rate

19%

Over £13,850 - £24,000

Over £14,549 - £24,944

Scottish Basic Rate

20%

Over £24,000 - £43,430

Over £24,944 - £43,430

Intermediate Rate

21%

Over £43,430 - £150,000

Over £43,430 - £150,000

Higher Rate

41%

Over £150,000

Over £150,000

Top Rate

46%


Changes to Land and Buildings Transaction Tax (LBTT)

Higher rates of LBTT are in force on additional residential properties. These include buy-to-let properties and second homes.

If an individual owns two or more residential properties the Additional Dwelling Supplement (ADS) may come into force. An increase for ADS has also been announced meaning that it will go up from 3% to 4%.

Non-Residential Rates and Bands

The lower rate of non-residential LBTT is scheduled to be reduced from 3% to 1%, while the upper rate will go up from 4.5% to 5%. Meanwhile the upper rate starting threshold will come down from £350,000 to £250,000.

The rates and bands for non-residential LBTT transactions that are under consideration are as follows:

Non-Residential Transactions

Purchase price

Rate

Up to £150,000

0%

£150,001 - £250,000

1%

Over £250,000

5%

Non-Residential Leases

Net present value of rent payable

 Rate

Up to £150,000

0%

Over £150,000

1%

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Brexit, How Will it Affect Business Accounting and Finances?

brexit tips able accountantsThe past weeks have seen some truly frantic action on both sides of the Brexit lines with both the UK and EU contingents trying to steer a course through the choppy seas, and bracing themselves for impact. The time for negotiations is all but up for Theresa May, with a deal yet to be confirmed with the EU at the time of writing.

You can read the entire proposal agreed with the EU, but save yourself some time and read our summary of how Brexit may impact business accounting and finances. May’s proposal will see the UK face many difficulties, but the outcome of the Brexit negotiations depends on whether the deal is approved, or not.

You will already know that there are two possible outcomes. Either the proposal is approved, or Theresa May is denied her deal. The former may lead to longer-term confusion and difficulties. However, the latter would mean significant short term uncertainty which would be alleviated in time, after the transition period.

What this article aims to tackle is the question of how Brexit will impact professional accountants, tax advisors, and the kind of effect our clients can expect to feel. Since the Brexit result was announced uncertainty has slowly crept into the lives of every person in the UK. In the last few weeks we have seen the pound fluctuate, hitting all-time lows before achieving a degree of stability again. What many from the business community are asking their accountants is what will definitely change, and what will not change.

What we have determined is that there are 4 ways that things may change for your business’ accounting and taxes:

1. Guidance will need to be offered in a timely fashion by all relevant advisory service providers.
2. The UK government will need to develop a greater presence when it comes to Corporation Tax.
3. Changes, such as the Flat Rate Scheme (FRS), will have an impact upon VAT.
4. Issues, such as FRS, will also have an impact on accounting and the law.

Let’s take a look at these four elements in a little more detail and spell out what we have been able to deduce so far.

1. The Advisory Services

Sooner rather than later, businesses will need dependable advisors who will have an in-depth knowledge of the forthcoming changes. These changes will spread and have far-reaching consequences throughout the taxation and accountancy processes and systems that are currently in place.

So many of the regulations and laws governing the accounting and taxation advisory profession are either linked to EU principles, or directly overseen by directives from the EU. This means that it will be necessary for the UK government to roll out a raft of changes to meet the needs of different users as the economy reacts to the various changes.

2. Corporation Tax

It is very likely that Corporation Tax will undergo some severe changes. These will include the need for it to have heavier regulation from the UK government as we transition in the months and years ahead.

Some of the biggest issues to cast a shadow over larger businesses that operate and trade outside of the UK will be:

● Double taxation
● High rates of tax

For companies that keep their operations within the UK there will also be changes ahead. These will most likely appear in the way of tax hikes.

3. VAT

Despite VAT being an EU concept that the UK government of the time readily put into practice, it is highly unlikely that the UK government will now look to get rid of VAT. Such is the massive revenue stream from VAT to the national economy that the government will sooner change VAT rates, rather than declare it obsolete and remove it altogether.

Any changes in VAT will necessitate a reaction, and development of new accountancy practices. It will be imperative for all types of businesses to readily adhere to any changes to the way VAT is handled. You can count on us to guide you through all the changes relevant to your business.

4. Legal Aspects of Your Accounting

The Flat Rate Scheme has had the additional result of major changes for the way that your financial reports are compiled. Brexit will lead to further changes as the ties that bind UK regulation to EU directives are removed. The UK government will be keen to remove the impact of EU directives that do little to improve things for UK businesses.

In their place new policies will be created to more directly benefit UK businesses and the UK government. How these new regulations will come into force, and impact the economy, remains unclear, but this will result in a raft of changes.

Some Words of Advice

There is a lot of speculation across all sorts of media, and it is tempting to get caught up in it all. However, until things become clearer about the long-term effects of Brexit, it is advisable to keep an open mind so we can weigh up the firm facts when they do finally arrive. You’ll know by now that we always keep ourselves up to date with the latest developments, so you can count on us to give you the right advice whatever occurs.

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