A very brief summary of the some of the major points from the budget that we think will be of most interest to our clients. If you have any further questions about any of these changes please give us a call. We will put more details on some of these points on our site over the next couple of weeks.
The personal allowances will be increased to £12,500 from April 2019. However the increase to the basic rate band where individuals start paying 40% tax doesn’t apply to Scotland.
Despite the pre-budget speculation, entrepreneurs’ relief will continue. However, the qualifying ownership period has been extended from 12 months to two years. Transitional rules will apply where the claimant’s business ceased before 30 October 2018.
Annual investment allowance
Businesses will now enjoy a higher AIA of £1,000,000 for the two years beginning January 2019, this should encourage capital investment.
Research and development
Refunds arising from research and development claims will be restricted to the PAYE paid by the company. This will restrict the benefit of R&D claims by companies that do not have employees.
The new IR35 rules will not be introduced to the private sector until April 2020 and it will only affect large and medium sized businesses. This will bring the private sector into line with the current public sectors rules.
The main residence relief will be restricted. The final qualifying period of ownership will be reduced to nine months.
The VAT registration threshold will be maintained until 2022.
Automatic Protection Ltd in Biggar have been a client of ours since 2013. They were established in January 2001 by Father and Son team Neil and Stuart Harrison. Based in the border town of Biggar, South Lanarkshire, APL has over 45 years of experience in the fire and security industry with unparalleled expertise in Automatic Fire Extinguishing & Fire Suppression systems. See more details at: http://www.autoproltd.co.uk
Making Tax Digital – The Short Version
Making Tax Digital sounds complex but in the first phase all that it means is that all VAT registered businesses must be submitting VAT returns straight from Software starting in April next year.
Making Tax Digital – The Slightly Longer Version
HMRC’s Making Tax Digital initiative is edging ever closer. So with just six months to go until it comes in here is a review of where we are.
Here is HMRC’s take on it https://www.gov.uk/government/publications/making-tax-digital-how-vat-businesses-and-other-vat-entities-can-get-ready/making-tax-digital-how-vat-businesses-and-other-vat-entities-can-get-ready
Whilst the later phases are still clouded in confusion, the initial phase which covers VAT is now coming and clients will need to submit their VAT returns straight from software. No more totting up invoices on a calculator and then typing the VAT return numbers in to the HMRC VAT portal. It isn’t even clear if a spreadsheet will suffice.
So the bottom line is that in practice all VAT registered businesses should be converting to electronic book keeping by the end of 2018 to be ready for the change. Clients using old unsupported versions of Sage will either have to upgrade to the latest version or even better convert to a cloud accounting package.
Many of our clients wont notice the difference as the are already on Xero, Freeagent or Kashflow either supported by us or with us doing their book keeping. However the few that are still calculating VAT returns manually and then giving us a shoe box at the end of the year will need to convert as soon as possible.
If you are unsure about what you need to do give us a call and we will point you in the right direction.
There is more detail on Making Tax Digital here from the Tax Institute. https://www.tax.org.uk/policy-technical/technical-news/making-tax-digital-vat-main-issues-consideration