Financial advice

TAX & ACCOUNTANCY TIPS

A happy new year to all readers.

Brexit is dominating the political and perhaps economic landscape, but behind all that noise, the day to day compliance requirements for business remain. I have placed a couple of useful reminders in my comments.

Dean Flood www.rowlandhall.co.uk

Making Tax Digital (MTD) This project has crept up very quickly from when it was first discussed some years ago and is now very much ‘around the corner’. VAT registered businesses that are not voluntarily registered for VAT will need to ensure that VAT returns are submitted via appropriate software for any VAT return that commences for the period after 31st March 2019. If you are within that group of businesses and are not already submitting VAT returns directly from appropriate accounting software you should take immediate action and advice from your accountant or advisor as to how to become compliant.

Tax return deadlines Just before Christmas, approximately just under half of the personal tax returns for the year to 5th April 2018, expected by HMR&C (about 5.5 million), were still outstanding. By the time this column is published the 31st January deadline will most likely have passed. If you have not submitted a tax return and you were aware that one had been expected or requested by HMR&C, automatic penalties will be levied and interest and surcharges could be levied for late settlement of any tax due. It is strongly advised that outstanding returns are attended to as soon as possible.

Tax free gifts to employees Employers have often historically been reluctant to give small gifts to staff and claim them as business costs for fear of HMR&C seeing these as taxable gifts that may prompt P11d benefit calculations. HMR&C now have a more relaxed view of such matters and it is now permissible for employers to make small gifts to employees and claim them as a deductible expense and not worry about PAYE compliance issues. The gift cannot be in the form of cash or cash redeemable vouchers and cannot be in excess of £50 in value or as a reward for contractual work undertaken. Gifts to directors or close family members who are employees is permissible but the total value of gifts in a given year cannot exceed £300 in total for each director. Budget Highlights

The October 2018 budget seemed to go past without a great deal of fuss, probably due to the dominance of Brexit. There were however a couple of highlights to consider.

• The Annual Investment Allowance (the amount businesses can claim 100% tax deductions on qualifying capital expenditure) has been increased from £200,000 to £1m with effect from 1st January 2019.

• The changes to IR35 legislation that came into effect in April 2017 for the public sector are to be extended to medium and large businesses in the private sector from April 2020. This places responsibility with the contractor (rather than subcontractor) where employment status and personal service companies are being considered. This is an area for serious consideration for contractors are engaging the services of smaller owner managed companies.