Tax goes digital – what does it mean for you?

Making Tax Digital is a Government initiative that sets out a bold vision for a digital tax system “to make it easier for individuals and businesses to get tax right and to keep on top of their affairs. “Not sure what that means for you? Here’s what you need to know:

Making Tax Digital (MTD) is all about making tax administration more efficient and easier for taxpayers, through the implementation of a fully digital, online system.

Digital Filing for all VAT Returns

The rollout is well underway. From April 1st, 2019 all UK VAT-registered businesses with turnover above the VAT threshold will have to file VAT returns using MTD-compatible software and must store all records relating to VAT digitally.

We have researched the available software and found a good product which means that we can provide a VAT service for just £25 + VAT per return or £10 per month. The larger service providers are charging up to £42 per month.

The first VAT return for which VAT-registered businesses must use MTD-compatible software is the period commencing on or after April 1st 2019.

Therefore, if your VAT quarters end in June, September, December and March your first period to file with MTD-compatible software will be the period ending 30th June 2019. You must register for MTD after the last return under the old system has been filed. For the example above after April 1st 2019.

HMRC will impose penalties for late registration.

Your recording of invoices and receipts for purchases must be kept digitally, on software or spreadsheets, from April 2019. This will have to show the information attached.

Avoid the hassle and find out more about JDA’s Digital Filing Service. Give us a call on 01273 474885 or email us at info@jdaaccounts.co.uk.

From April 2020 – Digital Filing for Self Employed and those with Income from Property over £10,000 pa

With effect from April 6th 2020 self-employed taxpayers and those with income from property over £10,000 per annum must file corporation and income tax returns quarterly via a Government Gateway account. A Gateway account will give taxpayers a direct link to the government for all interactions. In the future this will include passport renewal, driving licences etc. It will also give you access to your tax and National Insurance records.

Do you have a Government Gateway account?

If not you may wish to take advantage of our setup service. This costs just £75 plus VAT.

We would recommend getting your account set up as soon as possible because up to 9 million businesses will be trying to register before April 2020!

We would also advise paying your bills monthly by direct debit, rather than quarterly. In this way you can claim expenses against your income and reduce your profits at the earliest opportunity. At JDA we are introducing a monthly Direct Debit Scheme and freezing our fees at 2018 rates!

We hope this makes ‘Making Tax Digital’ a little clearer. Any questions do get in touch on 01273 474885 or email us at info@jdaaccounts.co.uk. Happy to help!

Recent Tax Changes for Small Businesses

All the changes below are effective from April 6th 2019 unless otherwise stated:

Employment

• Pay slips required for all staff

All workers are now required to be provided with a payslip, including those who work only a few hours. These workers may be on variable hours or zero hours contracts. You may want to check that your payroll system is able to provide payslips for these workers.

• New rates for the National Minimum Wage and Living Wage

Hourly rates:

Apprentices £3.90 Under 18 £4.35 18-20 year olds £6.15 21-24 year olds £7.70 Over 25’s £8.21

Apprentices who have completed their first year of apprenticeship are entitled to the agerelated minimum wage.

Need help or advice with employee-related issues contact us on 01273 474885

Company Car and Van Taxation

• CO2 Emissions – for the purposes of Company Car Tax the relevant CO2 emissions figure will in future be based on the new Worldwide Harmonized Light Vehicles Test Procedure (WLTP). For cars registered before April 6th 2020 however, the existing New European Driving Cycle (NEDC) test will be used.

• Electric Vehicle Charging

The current 100% first year allowance for expenditure on electric charge point equipment is extended to 2023. There is no benefit in kind incurred by employees who charge their own vehicles using an employer provided charging point.

• Van and Fuel Benefit Increases

Van benefit charge and fuel benefit charge for unrestricted use of an employer provided van are increased for 2019/20. The flat rate for private use of a van increases to £3,430 and the flat rate charge for van fuel benefit increase to £655.

• Benefit in Kind Increases

Car benefit is increased by 3%. The multiplier for calculating the fuel benefit charge is increased to £4,100 for the 2019/20 tax year.

Need help or advice with car or van taxation contact us on 01273 474885

Pensions Auto Enrolment

Minimum contributions are increased to a total of 8%. Typically, this is made up of an employer contribution of 5% and an employee contribution of 3%. Visit the Pensions Regulator website for guidance.

Personal Service Companies – Employer Responsibilities to Increase

From April 2020 private companies will be responsible for deciding if employees are “off-payroll,” often known as IR35. This legislation will only apply to medium and large companies. Small businesses, based on the 2006 Companies Act definition, are not affected.

If you are not sure if this will affect your business contact us on 01273 474885

Capital Gains Tax and Buying Property Off-Plan

There is no capital gains tax to be paid on the sale of your home – your main private residence. However, when a property is purchased before it is built, or “off-plan,” the position is more contentious. It can be seen by HMRC as a capital asset.

If this is a situation which may be relevant to you, do get in touch. Getting the right advice upfront could be very beneficial.

Class 2 National Insurance Contributions Retained

The proposed plan to abolish Class 2 National Insurance contributions has been dropped.

Class 2 contributions are paid on profits if you are self-employed, and count towards your state pension and other contributory benefits. Where profits are less than the ‘small profits
threshold’ (SPT) you can make voluntary Class 2 payments to maintain entitlement to these benefits. This is therefore welcome news for those using Class 2 contributions in this way. The SPT is £6,205 for 2018/19 and £6,365 for 2019/20.

You can obtain a state pension forecast and a statement of your National Insurance Contributions by setting up a Personal Tax Account via the Government Gateway.

We hope you’ve found our blog interesting and useful. Do get in touch if you need any advice on accounting or taxation for you or your business. We are always happy to help!

Call us on 01273 474885 Or call or text us on 07973 410780