New HMRC Penalties

Making Tax Digital (MTD) New points based penalty model HMRC have been exploring changes to the penalty system for late submission failures under Making Tax Digital (MTD). They have now decided to adopt a points based model with the draft legislation expected in summer 2018. This will see the introduction of a system where late submission of a return or of the filing obligations under MTD attract points. A penalty will be charged for every failure to provide a submission on time once points have been accumulated up to a certain threshold. Penalty thresholds The penalty thresholds will be: Submission frequency penalty threshold Annual 2 points Quarterly 4 points Monthly 5 points Good compliance points reset After a period of good compliance, the government is ‘minded’ to use the following periods of good compliance before resetting penalty points back to zero. Submission frequency good compliance period Annual 2 submissions Quarterly 4 submissions Monthly 5 submissions Both the accumulation of points and any subsequent penalties will be fully appealable. When will this start? April 2019 sees the start of mandatory reporting of VAT obligations for all VAT registered businesses with a turnover in excess of £85,000. A 12 month soft landing period will follow, before the new points system commences in 2020. This will then be rolled out across the other taxes. What will the penalties be? The actual penalty amount has yet to be announced. Watch this space, once we know more details we’ll be sure to share...

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Tax Guide 2017/2018

Great news, our tax guide for 2017/2018 is online and can be downloaded here: Courtley West tax guide 2017 2018 If you have any questions or we can help you in anyway way, please don’t hesitate to get in touch.

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Changes to Making Tax Digital

We’re very pleased with HMRC’s announced changes to the roll-out of its Making Tax Digital scheme, which was due to go live from April 2018. The proposed scheme was far reaching and due to be implemented in a short timescale, however due to concerns from business owners, accounting professionals and software developers, HMRC have made a number of changes to the Making Tax Digital Scheme. Businesses that trade above the VAT threshold will now only have to keep records digitally for VAT purposes and only from 2019. Businesses will now no longer be asked to keep digital records or update HMRC quarterly for taxes other than VAT until at least 2020, instead of 2018 as originally proposed. Smaller business will be able to file digitally for other taxes on a voluntary basis. While we are skeptical of HMRC’s agenda we do believe that the taxpayer and the accounting industry should be given time to adapt to new methods of compliance regarding record-keeping. At Courtley West, we are comfortable with all the popular cloud platforms for record keeping and so you can be assured that when the MTD (Making Tax Digital) scheme goes live, we will be best placed to support...

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Axe the Tenant Tax – Buy-to-let mortgage tax relief setback

In October 2016, the group legally challenging the government’s decision to cut tax relief on buy-to-let loans, suffered a setback when their challenge was rejected by a judge advising that it was “bound to fail” and therefore should not proceed to court. The group is called “Axe the Tenant Tax” and was represented by Cherie Booth QC who owns buy-to-let properties and therefore has an interest in the case. If the challenge had been successful then the plan would have been put on hold until the courts had time to consider the case in full. What are the changes to buy-to-let mortgage tax relief? Starting in April 2017 and over a period of 4 years, tax relief at higher rates will be phased out for interest on loans to buy or improve buy-to-let residential properties. Therefore from April 2021, the maximum tax relief will only be available at the basic rate. If you are a basic rate tax payer only, then you won’t be affected. If you think you may be affected please don’t hesitate to get in touch to see how we can help you. Courtley West Chartered Certified Accountants Wakefield    ...

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HMRC – Making Tax Digital

  Below is a brief summary about the ‘Making Tax Digital’ consultations and proposals from HMRC.   HMRC’s vision is for businesses to be able to easier understand and manage their tax affairs. It wants to make greater use of the information that it already holds such as bank and building society interest to make things easier on the tax payer without them having to compile this information again. Digital record-keeping will be required from 2018 for most businesses, sole traders and landlords in order to report quarterly to HMRC. HMRC aren’t looking to become software providers, they will expect the tax payer to use third party software although they are trying to ensure free options are available. Those with income below £10,000 will not be required to use the new ‘making tax digital’ system. Further thresholds haven’t been decided yet. This is being looked at while HMRC are reviewing how they can simplify the tax system. Other areas they are looking at are the thresholds for cash vs revenue accounting and similar areas. One thing we can say for certain is that tax administration in the UK will look very different in 5 years time. At Courtley West we keep up to date on all the current developments at HMRC and we proactively engage with many of our clients using the cloud based book-keeping systems which ultimately will be very instrumental in the delivery of the quarterly reports. As always, if you have any queries about how this may affect you or you’d just like to know how we may help your business, please get in...

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2016 Budget Summary

On 16 March 2016 George Osbourne presented his budget, the budget was followed by the publication of the finance bill on the 24 March. Here are the top key points affecting small business. Personal Allowance For 2017/18 the personal allowance will increase to £11,500 (2016/17: £11,000). The basic rate band will increase to £33,500 (2016/17: £32,000), resulting in a higher rate threshold of £45,000 for 2016/17. We have been told that the higher rate threshold will increase to £50,000 by the end of this parliament. New Lifetime ISA From April 2017 those under the age of 40 will be able to subscribe to a ‘Lifetime ISA’. Subscribers can pay in up to £4,000 a year until the age of 50 and receive a government bonus of 25%. Contributions to a Lifetime ISA will count towards the ISA contribution limit which will be set at £20,000 for 2017/18. Funds can be withdrawn without charge when the subscriber reaches 60 or purchases their first residential property worth £450,000 or less. The ISA will be ‘flexible’ and funds can be withdrawn at any time before the age of 60, subject to the subscriber losing their bonus (including any interest or growth thereon) and paying a 5% charge. More details should be released in Autumn 2016. Class 2 National Class 2 NICs will be abolished from April 2018. 4 NICs will be reformed so that the self-employed will continue to build entitlement to contributory benefits following the abolition of Class 2. We would expect an increase in the Class4 NIC rate, although this has not been announced yet. Micro-businesses allowances Two new allowances of £1,000 each were announced by the Chancellor, to be introduced from April 2017. The allowances are available for property and trading income and are aimed particularly at micro-entrepreneurs carrying out activities such as selling goods or letting their homes through online marketplaces. Individuals with trading or property income below £1,000 will no longer be required to declare or pay tax on that income. Whilst detailed information on these two new allowances is not available at the time of writing, we do know that they will work in a similar way to rent a room relief: if income from property or trading exceeds £1,000 the taxpayer will have a choice between deducting actual expenses from income or deducting the £1,000 allowance from income. Corporation Tax Rates The planned reduction in the rate of corporation tax to 19% on 1 April 2017 will go ahead as planned. 1 April 2020 the rate will drop to 17%. Loans to participators This will affect any client with an over-drawn director’s loan account. The rate of s455 tax will increase from 25% to 32.5% from April 2016. The new rate will apply to loans made or benefits conferred by close companies on or after 6 April 2016. Planned reduction in CGT rates One of the headlines from the 2016 Budget was the reduction of Capital Gains Tax rates from April 2016. The basic rate will reduce to 10% (from 18%) and the higher rate will reduce to 20% (from 28%). An 8% surcharge rate will apply to gains on residential property and carried interest, effectively keeping the rates exactly as they were. ATED related gains will also be chargeable at 28%. Trustees and personal representatives will...

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