The tax year is coming to an end, and now is the time to ensure your tax affairs are in order. I've included a number of topics below to get you thinking about how you and your business are preparing for the future.
The government will publish its Spring Statement on 13th March - however as this is no longer The Budget there are no major tax changes expected.
I won't mention the 'B' word, but we await that deadline next month with interest!
Thanks once again for your business,
Ian Vogan FCA CTA Director
Excuses for filing Self-assessment returns late
According to H M Revenue & Customs there were 700,000 returns that were not filed by the deadline of 31 January.
They also published details of some of the more unusual excuses offered by individuals who did miss the deadline, these included one taxpayer who said they missed the post because they were not tall enough to reach the postbox. By coincidence this story came out on the same day that MP’s were debating whether to introduce a minimum height off the floor for domestic letter boxes.
If one spouse (or civil partner) is a basic rate taxpayer and the other’s income is below the personal allowance (£11,850 in 2018/19) then they can elect to transfer £1,190 of the allowance from the non-taxpayer to the other spouse (or civil partner). This is worth £238 in the current tax year, but it is an allowance that has a very low take up rate.
Perhaps people aren’t aware of it, especially individuals who do not have a professional advisor looking after their tax affairs. If you think you may be eligible to claim the allowance or know someone who might be (friend, relative or employee) and want more information please contact me. The claim is easy to make and it can be backdated to 2015/16 tax year, it could be worth over £800 to the claimant.
HMRC made an announcement to try to improve the uptake of this relief on Valentine’s Day.
Year end planning
The tax year end (5 April) is fast approaching and now is a good time to review your situation to see if there is anything that you can do to minimise your tax liabilities. Matters that you might want to consider include:
Have you maximised your pension contributions (you should consult an independent financial advisor who can review your position and advise what you can contribute to use up previous years’ allowances etc. without breaching the maximum contribution and savings totals)
Have you invested the maximum amount in tax free savings such as ISA’s. The annual allowance is £20,000 for 2018/19.
If you are wanting to start reducing your estate for inheritance tax planning have you used this year’s annual allowance of £3,000 (and if you haven’t used your allowance for 2017/18 you need to use that now or lose it)
Do you have fuel provided for private use with your company car? If your private mileage is low you may be paying more in tax than you would if you were purchasing the fuel for your private mileage personally. You are allowed to change your mind once in a tax year, so you may want to review your private mileage and work out whether it is beneficial to re-imburse your employer and get your tax reduced. As a rule of thumb if you are a basic rate tax payer with a petrol car the tipping point is around 7,000 private miles per year, with a diesel car the figure is about 10,000 miles and if you are a higher rate taxpayer the figures are approximately double.
If you have made a capital gain in the year do you have any assets that would make a loss which you could sell before 5 April to offset against the gain.
Tax coding notice
HMRC have started to issue PAYE codes for 2019/20. If you have received yours have you checked it? Many codes are wrong because they include adjustments for previous years which are no longer relevant. If you complete a tax return the figure is adjusted when the return goes in, but you could be out of pocket for up to 10 months if the return is filed in January.
Making VAT digital (MVD)
MVD comes in for the first VAT return period commencing on or after 1 April 2019, so it is almost upon us. If you want to apply for exemption then you can now do so, but the grounds for exemption are restricted (member of a religious cult whose beliefs are incompatible with the use of electronic communications, insolvency or inability to use compatible software due to disability, age or remoteness of location) and I am not aware of any of our clients where an application for exemption is likely to be successful. If you are not exempt and your turnover is greater than the VAT threshold MVD will apply to you and you will have to opt in to the scheme. We will guide clients through the process as there is a short time window to make the opt-in claim.
If you currently use software to maintain your accounting records and submit your VAT returns there will be little change in your processes. For clients who maintain their records on spreadsheets we are looking at different options which will bridge the gap between the spreadsheet and the HMRC VAT filing portal. If you maintain your accounting records manually we will review the options with you.
We have become aware that scam phishing emails are being sent out from verio.net domain names stating that the recipient of the email is due a refund from HMRC and asking for bank account details etc. They are undoubtedly being sent out now to coincide with the filing of tax returns at the end of January, many of which did include refund claims. But, as before we remind you to ignore the email and let HMRC know. HMRC will never ask for this information in an email. Even if you are expecting a refund you should still ignore the email, let us know and we will check whether it has been released by HMRC