Blog Archives

Budget 2018 - key points for business

11/11/2018

As the dust settles after Chancellors October Budget 2018. We felt nearly all of the news coverage by journalists had presented little or no perspective specifically for the self employed and small and medium sized businesses. So to help below is another one of our famous main points lists, because lifes to short to waffle :

Corporation tax will fall to 17% in 2020.
Personal tax free allowance will be £12,500 and the Higher rate tax band will rise to £50,000 from April 2019, one year earlier than planned. The threshold will remain at the same level in 2020-21 and then increase by CPI
New structures and buildings allowance and a temporary increase in the Annual Investment Allowance now up to £1 million.
New tax on plastic packaging which does not contain enough recycled content.
Introduced over 100 measures to crack down further on avoidance, evasion, aggressive tax planning and unfair outcomes
Off-payroll working in the private sector IR35 to be extended this change will not be introduced until April 2020. Small organisations will be exempt, minimising administrative burdens.
The government will not abolish Class 2 NICs as previous said.
Trusts consultation, the government will publish a consultation on taxation of trusts, to make the taxation of trusts simpler and more transparent.
Charity taxes - increasing upper limit for trading that charities can carry out without incurring a tax liability from £5,000 to £8,000 where turnover is under £20,000, and from £50,000 to £80,000 where turnover exceeds £200,000
Lifetime allowance for pensions – increase for 2019-20, rising to £1,055,000.
Adult ISA annual subscription limit for 2019-20 will remain unchanged at £20,000. The annual subscription limit for Junior ISAs for 2019-20 will be uprated in line with CPI to £4,368.
The annual subscription limit for Child Trust Funds for 2019-20 will be £4,368.
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.
The capital allowances special rate for qualifying plant and machinery assets will be reduced from 8% to 6%.
Entrepreneurs’ Relief: minimum qualifying period from 6 April 2019 the minimum period throughout which the qualifying conditions for relief must be met extended from 12 months to 24 months.
Directly taxing offshore entities that realise intangible property income in low-tax jurisdictions, rather than through applying a withholding tax
Royalties and income from the indirect exploitation of intangible property in the UK market through unrelated parties to be a target for investigation
Cutting bills for retail properties with a rateable value below £51,000
Business rates public lavatories 100% business rates relief for all public lavatories to help keep these important local amenities open
Business rates local newspaper discount – £1,500 business rates discount for office space occupied by local newspapers in 2019-20.
Stamp Duty Land Tax (SDLT) and first-time buyers relief – The government will extend first-time buyers relief 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.
Consultation on SDLT charge for non-residents - 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.
Capital gains tax - from April 2020 lettings relief only applies in circumstances 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. The government will consult on these changes. There will be no changes to the 36 months final period exemption available to disabled people or those in a care home.
Vehicle Excise Duty (VED): Uprating – From 1 April 2019 VED rates for cars, vans and motorcycles will increase in line with RPI.
Company vehicles – From 6 April 2019 fuel benefit charges will increase in line with RPI and the van benefit charge will increase in line with CPI.
Air Passenger Duty (APD) – Short-haul APD rates for 2020-21 will not rise, Long-haul rates will increase in line with RPI. The rates for long-haul economy will increase by £2, and the rates for those travelling in premium economy, business and first class will increase by £4. Those travelling long-haul by private jets will see the rate increase by £13.
Tax on the production and import of plastic packaging from April 2022 and is subject to consultation.
Alcohol duty rates and bands – Duty rates on beer, most cider and spirits will be frozen. Duty on most wine and higher strength sparkling cider will rise by RPI inflation from 1 February 2019. The government will review the current Small Brewers Relief to ensure it is supporting growth in the sector. (12)
Vaping ie Tobacco for heating - government will legislate in Finance Bill 2018-19 for a new duty rate for tobacco for heating. In these products processed tobacco is heated (but not burned like conventional tobacco) to produce, or flavour, vapour. This will be set at the same level as hand rolling tobacco and take effect on 1 July 2019.
VAT threshold will be maintained at the current level of £85,000 for a further 2 years until April 2022. The government will look again at the possibility of introducing a smoothing mechanism once the terms of EU exit are clear.
VAT fraud in labour provision in the construction sector – government will introduce a VAT domestic reverse charge to prevent VAT losses through so-called ‘Missing Trader’ fraud. This occurs when traders collect VAT on their sales but go missing before passing that VAT on to HMRC. The new rules will have effect on and after 1 October 2019 and the government is publishing secondary legislation alongside the Budget to implement this change.
Alternative method of VAT collection: ‘split payment’ – To reduce online VAT fraud by third country sellers and improve how VAT is collected on cross-border e-commerce, the government is looking at a split payment model.
EU exit - Consequential minor amendments to tax legislation to reflect EU exit – The government is responsible for preparing for all possible outcomes to EU negotiations. This power will allow the government to make small, essential changes to UK tax law to maintain the effect of tax legislation if the UK leaves the EU without a deal. Changes made under this power will maintain current operation of the tax law in essential areas, including changes in line with no deal legislation in other parts of the law.
Tax avoidance and evasion, aggressive tax planning and non-compliance to continue.
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. This is to address an identified abuse of the current rules.
Profit fragmentation – As announced at Autumn Budget 2017, the government will legislate in Finance Bill 2018-19 to introduce targeted legislation that aims to prevent UK businesses from avoiding UK tax by arranging for their UK-taxable business profits to accrue to entities resident in territories where significantly lower tax is paid than in the UK. The taxable UK profits will be increased to the actual, commercial level.
Reforming Stamp taxes on shares consideration rules – From 29 October 2018, a targeted market value rule will be introduced for listed shares transferred to connected companies to prevent forestalling.
Preventing abuse of R&D tax relief for small and medium-sized enterprises (SMEs) – From 1 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. This will ensure the relief is robust against identified abuse, including fraud, following the prevention by HMRC of fraudulent claims worth £300 million.
Protecting your taxes in insolvency – From 6 April 2020, 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, will 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 NICs, and Construction Industry Scheme deductions). The rules will remain unchanged for taxes owed by businesses themselves, such as Corporation Tax and employer NICs.
Tax abuse and insolvency – Following Royal Assent of Finance Bill 2019-20, directors and other persons involved in tax avoidance, evasion or phoenixism will be jointly and severally liable for company tax liabilities, where there is a risk that the company may deliberately enter insolvency.
National insurance threshold will rise - not mentioned in the Chancellor's speech but in the budget papers - where we got our info from. This rises from £8160 in 17/18 to £8424 in 18/19 and £8632 in 19/20.
Premuim bond minimum savings amount will drop - from £100 to £25.
National living wage rise from April 19 - for over-25s will rise to £8.21 per hour from £7.83 per hour.
Annual ISA allowance will remain at £20,000 in 2019/20 for adults – the annual allowance for Junior ISAs will rise in 2019/20 to £4,368

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Surbiton , Worcester Park , Kingston upon Thames , Cheam and Epsom they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice and support.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

0 Comments

Brexit and how it can effect small and medium (sme) businesses

11/2/2018

0 Comments

To understand its importance, it is necessary to look at the scale of the matter with regards to small and medium sized businesses (SME’s).

In the UK, there are some 5.7m SME’s, which account for almost the whole of the private sector firms and 60% of total UK private sector employment. SME’s also account for 73% of all net private sector job creation in the UK. Therefore, SME’s have significant implications for the economy and anything that can effect SME’s is very important.

SME’s need to be proactive and prudent as they prepare for BREXIT – deal or no deal. While some business know how they will be affected, and what will be the consequences. Many do not have the time to spare to look at this and seriously lack any plan of action of how to deal with and overcome weaknesses that may affect their business.

This short article will focus on the most important aspects of leaving the EU without a deal for small businesses.

With a no deal Brexit, it will affect how businesses buy and sell in EU. There will be increased port clearance time for goods both in bound and out bound of the UK. This can serious effect supply chains and delivery times, large corporations such have expressed extreme alarm at the possibility of delays and stoppages to their supply chains and as such SME’s need to make serious contingency plans also.
Businesses will not be able to hire workers that easily or not at all. In the short term it is plausible that all new EU nationals will no longer be allowed to work here in UK. And therefore finding skilled reasonable cost employee may be more difficult. Which means businesses will have to employ locally, that may consequently increase their costs and in wages and or expect more work from fewer staff to cover the costs of higher wages so leading to less job satisfaction in the workplace.
There may also be non-tariff barriers and we may no longer be allowed to buy or sell goods from EU the same as we have done in the past. Especially when it comes to food business. Old licenses and certificates will not be accepted on both sides. Current VAT regime will no longer be applicable. And these in the interim may cause a lot of financial problems with VAT bills and accounting
Even if small businesses buy products from local wholesalers, their supply chain and procurement will be severely affected. This will indirectly affect your businesses as well.
Over all, delays mean increased costs and inefficiency’s which could result in bad customer satisfaction and higher time expended in providing customer satisfaction.
There may be new tariffs and increase admin costs and it is important for businesses to realise, either they are ready to pass these on customers or will they be sustainable to keep doing business with shrunken profit margin.

There are more questions than answers regarding impact of Brexit available yet. Ever lingering uncertainty and heightened anxiety in the business world in awash in the news at the moment. In any case, costs and delays relating to customs and trade are expected to increase in general. And these will affect all businesses and consumers.

Some businesses may see their business grow and will look for new opportunities, but many are likely to lose out, if they do not plan ahead and manage their competitive position.

By Awais at Tax Affinity Accountants in Epsom, Surrey

Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Surbiton , Worcester Park , Kingston upon Thames , Cheam and Epsom they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice and support.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

0 Comments

Budget 2018 - key points for business

Brexit and how it can effect small and medium (sme) businesses

Various Authors

Archives

Categories