In this edition….’Will Making Tax Digital ever happen?’
‘We announce a wider range of tax help’
‘Landlords beware of more tax changes’
‘The VAT Flat Rate Scheme – An update’
Will it ever happen?
As soon as the Prime Minister announced the General Election, it was obvious to most observers that large chunks of Finance Bill 2017 (FB17) would be removed, at least for the time being. This has proved to be the case. 80% of the original bill has been removed. HMRC’s Making Tax Digital is one of those measures that has been put on ice.
Is Making Tax Digital now dead in the water?
We now know the Election result, so we think the full introduction of Making Tax Digital will still happen. It is just a question of when?.
The silver lining re this delay, is that we hope HMRC will use this additional time to learn from a period of controlled go-live public beta testing.
Here a small number of UK businesses and tax-agents will have more time to enroll on the HMRC Making Tax Digital pilot since it started in April 2017.
Software developers will also benefit from a period of extra time to familiarise themselves with HMRC’s application program interfaces (APIs).
So in summary, Making Tax Digital has not gone away, it will no doubt be back, before we know it!
At present, landlords can deduct mortgage interest and other allowable costs from their rental income, before calculating their tax liability. Relief will be given as a reduction in tax liability instead of a reduction to taxable rental income.The key changes that have been phased in from from April 2017 in summary are:
• The changes are effective from the 2017/18 financial year and will be phased in over four years
• Mortgage interest tax relief will be limited to the basic rate of tax, currently 20%, and given as a reduction in tax liability instead of a reduction to taxable rental income
• The changes mean that the basic rate tax payers could find themselves pushed into a higher rate band as a result
• There’s no impact on tax liability for landlords who remain as zero or basic rate payers, after calculating taxable income under the new rules
• Other allowable costs, on an actual cost basis, can still be deducted from gross rental income for the purposes of determining taxable income.
From 6 April 2020, tax relief for finance costs has been restricted to the basic rate of income tax, currently 20%, but changes are being phased in, so the time to act is now.
VAT Flat Rate Scheme – Make a Note of These Changes
As from 1st April there have been changes to the VAT Flat Rate Scheme.But first quick explanation……..
If you are not using the Flat Rate Scheme, the amount you pay to HMRC each quarter will be the difference between the VAT you have charged to your customers and the VAT you can reclaim on your supplier bills.
When you are using the Flat Rate Scheme, you still charge VAT to your customers in the normal way, but you pay a percentage of your total sales to HMRC as VAT.
The percentage depends on what your business’s trade is, unless you are a limited cost trader. You can’t reclaim VAT when you’re using the Flat Rate Scheme, unless you buy a capital asset that cost over £2,000 including VAT – you can reclaim the VAT on that, but must pay standard VAT on that asset when you sell it on.
The VAT Flat Rate Scheme is designed to save a small business time, rather than cash. That’s why the percentages vary with trades, because some businesses would be able to reclaim more VAT than others, since they have to buy more.
As from 1st April 2017, there have been changes to the VAT Flat Rate Scheme and these are outlined in more detailed HERE
Superb Tax Advice More Services – Greater Expertise
Not only we will support you with the standard compliance type accountancy services, we are pleased to announce that we are offering an even more extensive range of added value tax services as follows:
– Capital Allowances
– Corporate Tax Planning
– Financial Planning
– HMRC Tax Investigations
– Inheritance Tax Planning
– IR35 Contractor Solutions
– Management Buy Outs
– Mergers and Acquisitions
– Overseas Business
– Personal Tax Planning
– Raising Capital and Crowd Funding
– R&D Tax Advice
In partnership with our superb business colleagues at Abbey Tax, we will ensure that whatever your specific tax needs we have the widest possible range of expertise and services to help you.
We will ensure that you are kept right up-to-date with the latest legislation to quickly identify new tax-saving opportunities.
Our philosophy will always be to ‘Remove your worries and legitimately reduce your tax burden’.
Contact us via e-mail at firstname.lastname@example.org or call 0208 686 7756 for more information or to arrange your complimentary tax consultation.