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New Tax Rates Reminder

The new tax year has started. Here’s a brief summary of the new tax rates in the tax system you need to be aware of.

The National Living Wage is going up to £8.21 an hour
Anyone aged 25 and over, and not in their first year of an apprenticeship, is legally entitled to at least the National Living Wage. Those under 25 and apprentices also benefit from rises in the Minimum Wage. The National Living Wage and National Minimum Wage rates apply across the UK.

The Personal Allowance is going up to £12,500
You don’t have to pay income tax on the income you earn below this amount. As a result of the change, a typical basic-rate taxpayer will take home £130 more than in 2018-19.

Fuel duty will remain frozen for the ninth year in a row
It will remain at 57.95 pence per litre across the UK. Fuel duty has been frozen for the ninth successive year, saving the average car driver £1,000.

Small retailers will get business rates relief
Small retailers will get one third off their business rates bills, this is part of more than £13 billion of rates relief since 2016.

New Enterprise Allowance has been extended
The New Enterprise Allowance provides mentoring, support and
funding for benefit claimants to get their business ideas off the ground.
Over 120,000 businesses have been launched though the NEA since 2011
and from April funding will continue for another 2 years with
30,000 new mentoring places available.

Access to Work is increasing by an extra £2,000 per year
From 1 April 2019 people will be able to claim up to £59,200 annually
through the Access to Work scheme to help pay for additional support
that they may need in the workplace. This can include workplace adaptations, assistive technology, transport and interpreters

For more advice and information about the new tax rates, get in touch with us at info@oandk.co.uk or call 0208 686 7756 today

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The Making Tax Digital Initiative – Only A Few Days To Go

You’ll need to be ready for HMRCs Making Tax Digital initiative and to handle your tax records digitally from the 1st April.

Thousands of SMEs are signing up for Making Tax Digital each day, but at the beginning of March over million businesses only had one month to go to get signed up and use the software.

Most UK VAT registered businesses with more than £85k p.a. turnover must subscribe to the new Making Tax Digital initiative (MTD) regime for VAT return submissions falling due from 1 April 2019. This means they must have a computer system allowing them to:

· Keep records in a digital form;

· Create a VAT return from the digital records, and

· Submit this information digitally (no more manually typed
submissions will be possibl

The new MTD service will give you a more integrated approach to tax.

For SMEs over the VAT threshold, you will need to be to digitally submit your records and submit VAT returns using MTD-compatible software.

HMRCs scheme is designed to give you more control over your finances, so that you can spend more time on growing your business, well that’s the theory. It could also be a way on HMRC being able to collect taxes much earlier, we shall see.

With our help we think it’s fair to say that you should be spending less time on administration. We also know that MTD should make it easier and simpler to get your tax payments right every time. It’s all part of the government’s #Smartergov campaign, which was launched to drive innovation through the public sector.

There are many aspects to this new regime. So if you are not prepared, or not quite sure which online accounting software to use, or simply want to ask us questions, at no cost to you, then get in touch HERE

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The Chancellors Spring Statement – A Summary

The Chancellor Philip Hammonds Spring Statement has been delivered to the House of Commons

Mr Hammond opened his Statement by acknowledging that the most urgent task at present is to ‘lift the uncertainty’, but he also added a positive note, stating that the ‘economy itself is remarkably robust’.

The Chancellor indicated that if the UK does leave the EU with a deal, there will be an economic boost due to a pick-up in business confidence and investment. He said his role will be to decide how much of this ‘Deal Dividend’ the Government can prudently release, and how it would be shared between increased spending on public services, capital investment in Britain’s future prosperity and keeping taxes low, while continuing to keep debt falling.

In the Chancellor Philip Hammonds Spring Statement he focused on the latest forecasts for the economy and the public finances provided by the government’s independent forecaster, the Office for Budget Responsibility (OBR). Growth forecasts have been revised for the current year – the Chancellor now expects growth of 1.2%, compared to the October 2017 forecast of 1.6%. Next year’s forecast remains unchanged at 1.4%, followed with 1.6% in each of the following three years. The Chancellor reported ‘good news’ on borrowing figures – this year it will be 1.1% of GDP, £3bn lower than forecast at the Autumn 2017 Budget. He also expects that borrowing will fall from £29.3bn in 2019/20, then £21.2bn, £17.6bn, £14.4bn and finally £13.5bn in 2023/24. The expectation is that the Government remains on track to meet its fiscal target early.

Assuming a Brexit deal is agreed, the Chancellor went on to say that he will launch a ‘full three-year spending review’ before the summer break and that this in turn will ‘set departmental budgets beyond the NHS’. He said the review will ‘reflect the public’s priorities between areas like social care, local government, schools, police, defence and the environment’.

As expected, no changes to tax were announced in the Spring Statement speech itself. However, the supporting Spring Statement 2019: Written Ministerial Statement outlines thirteen consultations, draft regulations and call for evidence documents, which are due to be published immediately or over the coming months

THE TAXATION SYSTEM IN GENERAL

Making Tax Digital (MTD)

Mandatory digital record keeping for VAT for businesses over the VAT threshold (with turnover over £85,000) comes into force from 1 April 2019. This is an important first step in this modernisation of the tax system to which the government remains committed. In the WMS, the Chancellor confirmed the government’s ‘light touch approach to penalties in the first year of implementation’. Where businesses are doing their best to comply,
no filing or record keeping penalties will be issued. The focus will be on supporting businesses to transition and the government will therefore not be mandating MTD for any new taxes or businesses in 2020.

Capital allowances for new non-residential structures and buildings

The Chancellor announced the introduction of a new capital allowance for new non-residential structures and buildings (SBA) at the 2018 Autumn Budget, designed to support business investment in the UK, improve the case for developing new structural assets and enhance tax relief for such assets. A technical note published at that time, outlined the key features of the policy and included consultation questions on residential use exclusion,
leasing provisions, overseas property treatment and disuse provisions.

For the second part of the consultation process, the Government is now inviting views on the legislative detail, before it is laid before and approved by the House of Commons. An overall response to consultation responses will be published in May 2019 and the final published version of this legislation will be in the form of a Statutory Instrument.

Broadly, the structure of the relief is summarised as follows:

  • relief will be given at a flat rate of 2% over a 50-year period
  • relief will be available for new commercial structures and buildings, including costs for new conversions or renovations
  • relief is available for UK and overseas structures and buildings, where the business is within the charge to UK tax
  • relief will be limited to the costs of physically constructing the structure or building, including costs of demolition or land alterations necessary for construction, and direct costs required to bring the asset into existence
  • relief is available for eligible expenditure incurred where all the contracts for the physical construction works were entered into on or after 29 October 2018
  • claims can only be made from when a structure or building first comes into use
  • land costs or rights over land will not be eligible for relief, nor will the costs of obtaining planning permission
  • the claimant must have an interest in the land on which the structure or building is constructed
  • dwelling houses will not qualify, nor any part of a building used as a dwelling where the remainder of the building is commercial
  • sale of the asset will not result in a balancing adjustment – instead, the purchaser takes over the remainder of the allowances written down over the remaining part of the 50-year period
  • expenditure on integral features and fittings of a structure or building that are currently allowable as expenditure on plant and machinery, will continue to qualify for writing down allowances for plant and machinery including the Annual Investment Allowance (AIA) up to its annual limit
  • SBA expenditure will not qualify for the AIA
  • where a structure or building is renovated or converted so that it becomes a qualifying asset, the expenditure will qualify for a separate two percent relief over the next 50 years

For Personal Tax Advice CLICK HERE

Aggregates Levy review
The government is to publish a discussion paper launching a review of the Aggregates Levy, including the Terms of Reference, information on timing and scope of the review as well as membership of an expert working group.

Under the same heading of Maintaining the tax system, in the coming months the Government will publish the following:

Offshore receipts in respect of intangible property
Draft regulations to ensure the provisions apply as intended, and draft guidance relating to the practical application of the measure.

Hybrid and other mismatches
Draft regulations to update the definition of regulatory capital instruments that are entitled to an exemption within the hybrid mismatch rules.

General Anti-Abuse Rule (GAAR) Amendments
A technical note alongside draft legislation on minor procedural and technical changes to the GAAR legislation to ensure that it works as intended.

(NICs) Employment Allowance draft regulations
A document inviting technical comments on the draft regulations implementing the reform, as announced at Budget 2018, of the NICs Employment Allowance to restrict it to businesses with an employer NICs bill below £100,000.

Child Trust Funds (CTF): consultation on maturing CTFs
Draft regulations to ensure that CTF accounts can retain their tax-free status after maturity.

VAT Simplification and the Public Sector
A policy paper exploring a potential reform to VAT refund rules for central government, with the aim of reducing administrative burdens and improving public sector productivity.

VAT Partial Exemption and Capital Goods Scheme: Simplification
A call for evidence on potential simplification and improvement of the VAT Partial Exemption regime and the Capital Goods Scheme – ensuring they are as simple and efficient for taxpayers as possible. This follows on from the recommendations of the Office of Tax Simplification, who have looked in detail at the UK VAT system and possible areas for improvement.

Worldwide harmonised Light vehicles Test Procedure (WLTP) and vehicle taxes
Further to the 2018 Autumn Budget announcement, the government will publish its response to the review into the impact of the WLTP on Vehicle Excise Duty and company car tax.

Consultation on the use of diesel by private pleasure craft
The government is to launch a consultation seeking evidence on the likely impact of government proposal to require diesel-powered private pleasure craft to only use full duty paid heavy oil (white diesel) for propulsion.
This would replace the existing system where private pleasure craft use marked gas oil (red diesel) but pay the white diesel rate of fuel duty.

Review of Time Limits
The Government will publish a report, as required by Finance Act 2019, s 95, of comparing the time limits for the recovery of lost tax involving an offshore matter, with other time limits, including those provided for by Finance (No. 2) Act 2017, Schedules 11 and 12.

In the report the government will set out the rationale for the charge on disguised remuneration (DR) loans legislated in Finance (No. 2) Act 2017 and its impacts. The report will be laid by 30 March 2019.

Social Investment Tax Relief (SITR)
There will be a call for evidence on the use of the SITR scheme to date,
including why it has been used less than anticipated and what impact it has
had on access to finance for social enterprises.

Enterprise Investment Scheme (EIS) approved funds guidelines
Draft guidelines will be published for comment alongside draft legislation.
The document will contain guidelines stating HMRC’s proposed policy and practice for approving funds. The legislation will include powers for HMRC to set appropriate conditions and approve funds.

CGT private residence relief
A consultation is to be launched on the changes, announced at 2018 Autumn Budget, to lettings relief and the final period exemption, which extend private residence relief in capital gains tax.

Finally, the Government is to publish summaries of responses to the following documents:

Structures and buildings allowance
A technical note on the introduction of this allowance.

For Business Tax Advice CLICK HERE

Protecting your taxes in insolvency
A consultation launched in February 2019, following the announcement at the 2018 Autumn Budget, to make HMRC a secondary preferential creditor for certain tax debts paid by employees and customers on the insolvency of a business.

Broadly, the government is proposing to change the rules from 6 April 2020,
so that when a business enters insolvency, more of the taxes paid in good faith by its employees and customers and temporarily held in trust by the business go to fund public services, rather than being distributed to other creditors. This reform will only apply to taxes collected and held by businesses on behalf of other taxpayers (VAT, PAYE income tax, employee National Insurance contributions and Construction Industry Scheme deductions). The rules will remain unchanged for taxes owed by businesses themselves, such as corporation tax and employer National Insurance contributions. This will be legislated for in Finance Bill 2019/20.

Corporate Capital Loss Restriction
A consultation is to be launched on a change announced at the 2018 Autumn Budget to restrict, from 1 April 2020, the amount of carried-forward capital losses a company can offset to no more than 50% of the chargeable gains arising in a later accounting period.

Broadly, the government will legislate in Finance Bill 2019/20 to restrict companies’ use of carried-forward capital losses to 50% of capital gains from 1 April 2020. The provisions will include an allowance that permits companies unrestricted use of up to £5m capital or income losses each year,
meaning that 99% of companies will be financially unaffected. A consultation paper was published on 29 October 2018 and draft legislation will be published in Summer 2019. An anti- forestalling measure to support this change took effect on 29 October 2018.

Stamp Taxes on shares consideration rules
A consultation on aligning the consideration rules of Stamp Duty and Stamp Duty Reserve Tax and introducing a general market value rule for transfers between connected persons.

Digital Services Tax
A consultation will be launched on the detailed design and implementation of the Digital Services Tax that will take effect from 1 April 2020

Broadly, from April 2020, the government will introduce a new 2% tax on the revenues of certain digital businesses which derive value from their UK users.

The tax will:

  • apply to revenues generated from the provision of the following business activities: search engines, social media platforms and online marketplaces;
  • apply to revenues from those activities that are linked to the participation of UK users, subject to a £25m per annum allowance;
  • only apply to groups that generate global revenues from inscope business activities in excess of £500m per annum; and
  • include a safe harbour provision that exempts loss-makers and reduces the effective rate of tax on businesses with very low profit margins.

Amendments to tax returns
There is to be a call for evidence on simplifying the process of amending a tax return.

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The Spring Statement – Coming Next Week

The Spring Statement 2019 will be delivered by the Chancellor next week, and we are going to be keeping you fully up-to-date.

This includes expert predictions, live key announcements plus a detailed summary and reactions to the Statement.

Our FREE Mobile App will contain the latest news. Download HERE for important updates from The Chancellor

Within the App you will notice an icon named ‘Budget Pack’.

In this part of the App you will already find historic data on the Budget including expectations, a detailed overview and specific business and personal announcements.

This is where we will be posting new content for the upcoming Spring Statement, immediately updated following the announcement.

Reaction

As well as the facts, we will also post a round-up of immediate reactions from some of the UK’s leading industry groups, including key quotes from experts as soon as they come in.

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The Most Under-claimed Business Tax Credit

Tax Credits – Is Your Business Losing Out ?    
SMEs still losing millions in unclaimed R&D tax credits

UK SMEs are missing out on millions of pounds of
tax credits by not claiming for new product research and development costs.
SMEs are failing to maximise their tax efficiency which, in turn,
impacts on their ability to finance new product development
programmes.

There has been a steady increase in R&D tax relief claims since its
introduction, but there is still a chronic lack of awareness amongst the UK’s SME base. The result is that hundreds of millions of
pounds of R&D tax credits are going unclaimed which could make a
significant impact to the ability of an SME to fund new product
development.

Any company or organisation can claim R&D relief whether it is
making profits or losses, with no upper limit on the amount of the
claim. SMEs are capable of deducting up to 230% of R&D costs,
which could include specific costs such as staff costs, consumable materials, subcontracted costs, power, water, fuel and computer
software that is used directly in carrying out R&D. 

Many SMEs are involved in R&D and the HMRC definition by no
means restricts the ability to claim to just high tech or
pharmaceutical industries. Many SMEs do not realise that they
have eligible projects or worry that the process is too onerous and
costly. R&D tax credit advice forms part of our specialist business
support service, which covers all aspects of this taxation advice including securing funding.

The primary barrier to claims is that many SMEs and advisers
wrongly believe that R&D relief can only be claimed on new
products. R&D tax credits are not only confined to light bulb eureka moments; product improvements, new ranges and new
production processes can also be eligible.

Furthermore, identifying costs associated with
R&D activity is often seen as a laborious and
minimally beneficial process compared to the
possible tax benefit.

This is not the case.

Plus retrospective claims can be made for the past two years
accounting periods. This can often result in a significant repayment of corporation tax, or if a company is
loss making, a claim for R&D tax credits.
Is your business in one of these market sectors?:

Aerospace
Alarms and CCTV
Automotive Industry
Banking and Finance
Chemicals, paints and adhesives
Clothing, textiles and fabrics
Construction and building materials
Electronic and electricals
Engineering and machinery
Food and drink producers
Foundries
Games software industry
Health
Household goods and textiles
IT hardware
Insurance brokers (software development)
Land remediation
Lighting
Marine
Manufacturing
Media and entertainment
Personal care, cosmetics and household
Pharmaceuticals and biotechnology
Printing and packaging
Property and construction
Software and development
Telecommunications
Travel Industry
Transport
Waste Recycling
Water treatment

It is important that SMEs examine their suitability for
reclaiming tax and work with an adviser who
understands how HMRC works. It should take HMRC
around four weeks to process a well-structured claim
and this could radically alter a company’s year-end
financial position and help finance further research and
development work or other investment.

Contact us today on 0208 686 7756 or info@oandk.co.uk  to take advantage of a free health check to
identify potential opportunities