Archive for the ‘Uncategorised’ Category

Spring Statement 2018

Wednesday, March 14th, 2018

As you would expect, the Spring Statement delivered by the Chancellor Philip Hammond, to Parliament on 13 March 2018, was peppered with party political jibes no doubt intended to lift the spirits of his own party and dismay the opposition parties.

There was very little “promised” in terms of new tax or other strategic items that we are used to in a Budget speech; we will need to wait until autumn 2018 for news of changes to government spending and changes to the tax code.

The new-style spring statements are intended to deliver:

  • An update on the health of the UK economy and Office for Budgetary Responsibility (OBR) forecasts,
  • An update on progress made since Autumn Budget 2017, and
  • Invitations for interested parties to give their views on proposed policy changes.

A summary of the matters that were disclosed follow:

1. Economy and fiscal forecasts

  • Indicators for GDP growth, manufacturing output, and employment are forecast to rise.
  • The indicators for inflation and government borrowing are forecast to fall.

The Chancellor’s message in this part of his presentation was upbeat but cautious. He would consider relaxing his expenditure criteria, but only if the positive indicators continued. His consistent message was “there is a light at the end of the tunnel, but caution is still required”.

2. Progress since Autumn Budget 2017 items cited included:

  • Housing challenges: progress is being made to meet housing needs by working with local authorities and other parties. Mention was made of the 60,000 first time buyers who have benefitted from the stamp duty concessions announced last year.
  • Helping households: cited increases in basic tax allowances at the last budget and increases in the National Living Wage to £7.83 per hour.
  • The Chancellor also announced that the next business rates revaluation will take place a year earlier than planned, in 2021, with further reviews every three years starting 2024.
  • Improving transport in English cities; plans to allocate the £1.7bn of funding announced in the Autumn Budget 2017. Half the funding has been allocated to Combined Authorities with mayors, the balance to cities across the UK via an invitation to bid.
  • Improving the UK’s digital connectivity. The aim is to roll out full-fibre to local areas.

3. Inviting views on future changes to the tax system.

These will include:

  • Reducing single-use plastic waste through the tax system. This will look at ways to reduce the impact of plastic waste in our environment such as disposable plastic cups, cutlery and foam trays. Some of the tax revenue raised will be used to fund research into new ways to encourage a more responsible use of plastic.
  • Making sure multinational digital businesses pay a fair share of tax. This is an ongoing attempt to ensure that the larger digital players pay tax in the UK on sales they make in the UK.
  • Seeking views on the role of cash in the new economy. Will cash become less relevant as digital payment processes become more widely used? This and the prevention of the use of cash to avoid tax and to launder the proceeds of criminal activity will be opened to a wider debate.
  • Supporting people to get the skills they need. Improving skills to benefit growth in the economy by investing in upskilling and retraining, especially by the self-employed.

As mentioned in our introduction today, there was much “padding” to the Chancellor’s presentation, but the overall impression was a “steady as you go” approach. It will be interesting to see how wider political issues, such as the forthcoming Brexit negotiations, will play their part in the shaping of future fiscal policy. Only time will tell.

Time to raid piggy banks

Thursday, March 8th, 2018

From the 1 March 2018, the old-style £10 notes featuring Charles Darwin, ceased to be legal tender. A recent announcement by Companies House suggests the following actions:

Time is ticking for the old paper £10 banknote. We’re advising all businesses to take ‘note’, as there’s just a few days left to spend your old ‘tenners’.

Figures from the Bank of England suggest there’s still £2.2 billion of old paper £10 notes in circulation. But, from midnight on 1 March 2018, these old paper notes will stop being legal tender. This means that from this date, you’ll no longer be able to spend the old paper notes, featuring Charles Darwin.

Changing your old banknotes

From 1 March, most shops and other businesses will only accept the new polymer or ‘plastic’ £10 notes, featuring Jane Austen. But, you’ll still be able to exchange any old paper tenners for free at the Bank of England, either by post or in person.

Some retailers, banks and building societies may choose to accept the old notes after this deadline. But, they don’t have to.

New polymer notes

Paper banknotes of £5, £10 and £20, are being gradually replaced by polymer ones, which are more secure and harder to counterfeit. These new banknotes also have raised bumps and dots, to help blind and partially-sighted users identify each banknote by touch.

They’re also more resistant to dirt and wear, so last longer. According to the Bank of England, this means they’re better for the environment, with a lower carbon footprint than the old paper notes.

Other banknotes

The old paper £5 note has already been replaced, and a new polymer £20 banknote will be issued in 2020. The Bank of England hasn’t confirmed if the £50 note will be replaced.

If you have petty cash boxes or a safe where old notes may be hoarded time to see if your bank will exchange them, if not, you will need to organise a trip to the Bank of England or check out their website at where you can pick up instructions on how to exchanges notes by post.

Massive fine for making VAT payment one day late

Tuesday, March 6th, 2018

In a recent case considered by the courts a company was fined £297,845 for being one day late in paying their VAT.

The case highlights the unpredictable, and seemingly harsh outcomes of HMRC’s VAT surcharging rules.

If you pay your VAT on time, whether quarterly or monthly, and you make sure that you file your VAT returns in good time, before the filing deadlines, you need have no fear of incurring VAT surcharge liabilities. They only arise if you are a late filer or late payer.

A key point to remember is that the VAT default surcharges increase each time a default occurs: from 2%, 5%, 10% and 15%. The only way to reset the penalty clock back to zero is to be free of default events for a complete calendar year.

In the case highlighted in this article, the company had various past default events and had reached the 10% penalty band. It’s VAT liability was £2,978,459, and therefore the penalty was £297,845.

Unfortunately, the company could produce no compelling excuse for the late payment and the court upheld the surcharge.

Whilst the outcome of this case was exceptional, £297,845 seems an extraordinary amount to pay for being one day late in settling a bill, it is a salutary reminder to file and pay VAT returns before the due dates so that you do not find yourself on the default surcharge treadmill. And if you do default, redouble efforts to file and pay on time for a full year to reset the default clock to zero.

New protection for company directors from identity fraud

Monday, March 5th, 2018

The Department of Business, Energy & Industrial Strategy issued the following announcement last week:

  • Company directors are twice as likely to be victims of identity fraud, research shows
  • New laws will allow directors to remove their personal address from the company register whilst still ensuring transparency at Companies House
  • Protection will help to ensure the UK continues to be one of the best places in the world to start a business – a key part of our Industrial Strategy

New laws to help protect company directors from identity fraud and personal harm will be introduced by the Government. The new laws will enable company directors to remove their personal addresses from the UK’s official company register on Companies House. Directors must still provide their business address as a legal requirement.

This comes in response to reports that fraudsters are using this publicly available information to pose as company directors to buy products online. There are also concerns the information is leaving company directors vulnerable to violence and intimidation.

They are twice as likely to be the victims of identity fraud, with company directors being victims in one in five recorded cases, according to research by fraud prevention organisation Cifas.

These new regulations will also help to ensure people feel safe when setting up a new business by protecting directors from identity fraud.

Currently, personal addresses can only be removed when Companies House and the relevant authorities judge there is a serious risk of violence or intimidation because of the company’s work.

The new laws will also ensure transparency in legal information as public authorities such as the police, the insolvency service and the pension regulator will still be able to access directors’ information, such as their personal address.

The laws will come into force by the end of summer 2018.

Tax and making loans to employees

Monday, March 5th, 2018

A reminder that making loans to your employees or their relatives can create tax problems for employees and employers. For example, the employer will have an obligation to report a beneficial loan to HMRC and the deemed benefit would be a taxable benefit in kind for the relevant employee. A beneficial loan is one that is interest free or the rate charged is below the “official rate” and the benefit is the difference between these interest rate charges. Further, the benefit would increase the employer’s Class 1A NIC bill at the end of the tax year.

Fortunately, certain loans are exempt from this reporting obligation. These may include loans employers provide:

• in the normal course of a domestic or family relationship as an individual (not as a company you control, even if you are the sole owner and employee),

• with a combined outstanding balance due from an employee of less than £10,000 throughout the whole tax year,

• to an employee for a fixed and never changing period, and at a fixed and constant rate that was equal to or higher than HMRC’s official interest rate when the loan was taken out – the official rate for 2017-18 is 2.5%,

• under identical terms and conditions as those provided to the public (this mostly applies to commercial lenders),

• that are ‘qualifying loans’, meaning all the interest qualifies for tax relief.

Loans written off also create a National Insurance Class 1 charge for the employee. They must be reported on a P11D and the employer has an obligation to deduct and pay Class 1 NIC from the employee’s salary, on the amount written off for tax purposes.

Calculating the taxable benefits for chargeable loans can be somewhat complex and readers are advised to take advice if they are unsure of their tax and NIC responsibilities. Don’t forget “employees” includes directors and loans to family members may be caught.

Inheritance tax in for an overhaul

Monday, March 5th, 2018

The Office for Tax Simplification (OTS) has been tasked by government to review key aspects of the inheritance tax (IHT) legislation. According to information posted to the government’s website recently, the review would appear to be wide ranging. Issues to be examined include:

  • The process around submitting IHT returns and paying any tax, including cases where it is clear from the outset that there will be no tax to pay;
  • The various gifts rules including the annual threshold for gifts, small gifts and normal expenditure out of income as well as their interaction with each other and the wider IHT framework;
  • Other administrative and practical issues around routine estate planning, compliance and disclosure, including relevant aspects of probate procedure, in relation to situations which commonly arise;
  • Complexities arising from the reliefs and their interaction with the wider tax framework;
  • The scale and impact of any distortions to taxpayers’ decisions, investments, asset prices or the timing of transactions because of the IHT rules, relevant aspects of the taxation of trusts, or interactions with other taxes such as capital gains tax; and
  • The perception of the complexity of the IHT rules amongst taxpayers, practitioners and industry bodies.

We will be keeping a keen eye on the outcome of these deliberations as they could turn even the most basic IHT planning on its head. We will keep readers informed when the OTS publishes its report although it may be some time before any changes are enacted and have a direct impact on estate planning. The OTS doesn’t envisage publishing its initial report until the Autumn of this year.

Tax-free childcare support expanded

Monday, March 5th, 2018

From 14 February 2018, tax-free childcare is available to all remaining eligible families: parents whose youngest child is under 12. The new scheme aims to help working parents with the cost of childcare.

According to government, it is quick and easy to apply, and parents could save thousands of pounds each year. For every £8 parents pay into their childcare account, the government will add an extra £2, up to £2,000 per child per year. HMRC has been gradually rolling out tax-free childcare since April 2017.

Parents must each expect to earn (on average) at least £120 per week (equal to 16 hours at the National Minimum or Living Wage). If either parent is on maternity, paternity or adoption leave, or you're unable to work because you are disabled or have caring responsibilities, you could still be eligible.

However, if either you, or your partner, expect to earn £100,000 or more, you can’t get tax-free childcare. Also, you can’t use tax-free childcare at the same time as childcare vouchers, Universal Credit or tax credits. You can use it with the 15 hours and 30 hours schemes.

You can use tax-free childcare to help pay:

  • Registered childminders, nurseries and nannies
  • Registered after-school clubs and playschemes
  • Registered schools
  • Home careworkers working for a registered home care agency

Parents, including the self-employed, can apply online for tax-free childcare by visiting Childcare Choices at

Claiming expenses by the mile

Monday, March 5th, 2018

A reminder that employees can make a claim for the business use of their own cars, motorcycles or cycles by logging their business mileage and applying an approved mileage rate.

Mileage allowance payments (MAPs) are the HMRC approved rates used by most employers to reimburse employees when they use their own transport for business purposes. The current rates have remained unchanged for some time. They are:

  • Cars and vans – 45p per mile for the first 10,000 miles in a tax year and 25p thereafter.
  • Motorcycles – 24p per mile
  • Bikes – 20p per mile

If employers pay at these rates, and no more, any expenses paid are tax free in the hands of the employee.

If the employer is registered for VAT, they can also claim back as input tax the deemed VAT included in the mileage rate. To do this, employers should use the advisory fuel rates. These are published on the website at

If employers pay at rates higher than MAPs, any excess will be treated as remuneration, added to employees’ salary, and taxed accordingly.

If employers pay their employees at less than the MAP rates, employees can make a claim to HMRC to compensate them for any shortfall. In effect, the difference in the MAP rate paid times the business mileage for the tax year can be claimed as an allowable expense.

Tax Diary March/April 2018

Monday, March 5th, 2018

1 March 2018 – Due date for corporation tax due for the year ended 31 May 2017.

2 March 2018 – Self assessment tax for 2016/17 paid after this date will incur a 5% surcharge.

19 March 2018 – PAYE and NIC deductions due for month ended 5 March 2018. (If you pay your tax electronically the due date is 22 March 2018)

19 March 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2018.

19 March 2018 – CIS tax deducted for the month ended 5 March 2018 is payable by today.

1 April 2018 – Due date for corporation tax due for the year ended 30 June 2017.

19 April 2018 – PAYE and NIC deductions due for month ended 5 April 2018. (If you pay your tax electronically the due date is 22 April 2018)

19 April 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2018.

19 April 2018 – CIS tax deducted for the month ended 5 April 2018 is payable by today.

30 April 2018 – 2016-17 tax returns filed after this date will be subject to an additional £10 per day late filing penalty.

Just a few weeks to the end of the tax year

Wednesday, February 28th, 2018

The 5 April 2018, is the next key marker for tax advisors, the end of the current tax year. Why is this date especially important?

Each tax year, taxpayers are granted a number of tax-free allowances, exemptions and reliefs, and in most circumstances, if you don’t take advantage of these reliefs they are lost; they cannot be carried forwards. Basic allowances for 2017-18 include:

Income Tax:

  • Personal tax allowance – £11,500
  • Personal savings allowance – £1,000 for basic rate taxpayers and £500 for higher rate taxpayers.
  • Dividend allowance – £5,000. This is the last year that this generous tax-free allowance is available, from 6 April 2018 it is reducing to £2,000.

National Insurance:

  • The employment allowance of £3,000 is available to set-off against employer’s Class 1 secondary contributions subject to certain restrictions.

Capital Gains Tax:

  • Annual exempt amount, individuals can accrue chargeable gains of £11,300 (trusts £5,650) in the tax year without paying this tax.

Annual Investment Allowance:

  • Sole traders, partnerships and companies can invest up to £200,000 in qualifying capital expenditure and set this off against their taxable profits.

Inheritance tax:

  • Annual gifts out of capital £3,000 (this gift allowance can be carried forward for one year).
  • Small gifts allowance, £250 per recipient.
  • Parental gift on marriage, £5,000.
  • Grandparent or party to marriage, £2,500.
  • Other gifts on marriage, £1,000 per donor.


  • Annual ISAs – you can invest up to £20,000 in a tax-sheltered ISA. The limit for Junior ISAs is £4,128.

This is by no means a complete list, what it does help to illustrate is the need to work through a basic check list of reliefs to ensure that you have organised your tax affairs for 2017-18 in such a way that you can make the most of reliefs available.

We can help. If you have not considered your tax planning options for 2017-18, call now to organise a planning meeting.