Tax Newsletter December 2018

Our newsletter this month includes: information on director disqualification, tax-free perks at Christmas, Authorised Economic Operator status and the Marriage Allowance.

 

 Our next newsletter will be published on Thursday, 10 January 2019.

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Newsletter December 2018


Just when you thought 2016/17 was history.....

We have it on good authority that HMRC are in the process of sending out approximately 30,000 revised 2016-17 personal tax calculations. Some taxpayers will get unexpected refunds while others will have additional tax to pay. 

Why is this happening? Well in 2016-17 there were a number of errors in HMRC software that in some cases would result in an incorrect tax calculation. 

To make matters worse HMRC are not sending copies of these letters to tax agents.

Here at CCB we independently checked all tax returns before they were submitted so we are not expecting to see many, if any, letters.  If you do receive something,however, please make sure you let us know.

You may be interested to know that HMRC have similar problems with the 2017-18 returns. Our clients can rest assured that once again we will be independently checking them.

Come on HMRC - 'Tax doesn't need to be taxing'

 


 

Making Tax Digital (MTD)

It is planned that from 1 April 2019 all businesses with a turnover in excess of £85,000 will be required to comply with MTD for VAT.  It is the first step in a program of reform of the British tax system. 

A recent report by The House of Lords Economic Committee, however, has recommended this is postponed by 12 months saying they are unconvinced of the government's argument that this will reduce errors in reporting. Furthermore, in a report designed to look at making the tax system fair for smaller businesses, the committee have said they felt that forcing these businesses to use software will put them under additional strain.

Of course, there are many benefits to using software to maintain your business records and we continue to encourage our clients to do so.  The information that can be obtained will allow you to manage your business more effectively giving you up to date information on things like profitability, who owes you money and many other features. 

When it comes to the implementation of MTD you could say watch this space, but it is only a question of when, not if.  So far we are not aware of any plans to move the proposed date for implementation back.

 


 

Tax-free perks at Christmas time

This article is our usual reminder of the tax breaks available if you are organising a Christmas party for your staff.

Many businesses take time out to provide their employees with a work based party or similar event. If you are concerned about the tax consequences of Christmas celebrations, read on. We have included in this article ways to organise these events without falling foul of HMRC.

December gives us an excuse to let our hair down and enjoy a well-earned celebration with our work colleagues and partners. The cost of an annual staff party or similar function is allowed as a deduction for tax purposes. However, the cost is only deductible if it relates to employees and their guests, which would include directors in the case of a company, but not sole traders and business partners in the case of an unincorporated organisations. Also, it does not include ex-employees.

If the criteria below are followed there will be no taxable benefit charged to employees:

  1. The event must be open to all employees at a specific location.
  2. An annual Christmas party or other annual event offered to staff generally is not taxable on those attending provided that the average cost per head of the functions does not exceed £150 p.a. (inc VAT). The guests of staff attending are included in the head count when computing the cost per head attending.
  3. All costs must be considered, including the costs of transport to and from the event, accommodation provided, and VAT. The total cost of the event is divided by the number attending to find the average cost. If the limit is exceeded then individual members of staff will be taxable on their average cost, plus the cost for any guests they were permitted to bring.
  4. VAT input tax can be recovered on staff entertaining expenditure. If the guests of staff are also invited to the event the input tax should be apportioned, as the VAT applicable to non-staff is not recoverable. However, if non-staff attendees pay a reasonable contribution to the event, all the VAT can be reclaimed and of course output tax should be accounted for on the amount of the contribution.

Merry Christmas.


 Are you eligible to claim the Marriage Allowance?

Marriage Allowance lets you transfer £1,190 of your Personal Allowance to your husband, wife or civil partner - if it would be financially beneficial to do so.This can reduce the joint tax liabilities for 2018/19 by up to £238 in the tax year.

You can backdate claims to include any tax year since 5 April 2015.

If your partner has died since 5 April 2015 you can still claim - phone the Income Tax helpline. If it is your partner that would transfer their allowance then the person responsible for managing their tax affairs needs to phone.

Who can apply?

You can benefit as a couple from you transferring your Marriage Allowance to your partner  if all the following apply:

  • You’re married or in a civil partnership.
  • You are not using all of your personal allowance, or a reduction in your personal allowance increases your tax liability by less that it would reduce the liability of your partner.
  • Your partner pays Income Tax at the basic rate, which usually means their income is between £11,851 and £46,350.

If you’re in Scotland, your partner must pay the starter, basic or intermediate rate, which usually means their income is between £11,850 and £43,430.

It will not affect your application for Marriage Allowance if you or your partner:

  • are currently receiving a pension;
  • live abroad - as long as you get a Personal Allowance.

If you or your partner were born before 6 April 1935, you might benefit more as a couple by applying for Married Couple’s Allowance instead.

 


 

Tax Diary December 2018 /January 2019

1 December 2018 - Due date for Corporation Tax due for the year ended 29 February 2018.

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

19 December 2018 - Filing deadline for the CIS300 monthly return for the month ended 5 December 2018.

19 December 2018 - CIS tax deducted for the month ended 5 December 2018 is payable by today.

30 December 2018 - Deadline for filing 2017-18 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2019-20.

1 January 2019 - Due date for Corporation Tax due for the year ended 31 March 2018.

19 January 2019 - PAYE and NIC deductions due for month ended 5 January 2019. (If you pay your tax electronically the due date is 22 January 2019)

19 January 2019 - Filing deadline for the CIS300 monthly return for the month ended 5 January 2019.

19 January 2019 - CIS tax deducted for the month ended 5 January 2019 is payable by today.

31 January 2019 – Last day to file 2017-18 self-assessment tax returns online.


DISCLAIMER - PLEASE NOTE: The ideas shared with you in this email are intended to inform rather than advise. Taxpayers circumstances do vary and if you feel that tax strategies we have outlined may be beneficial it is important that you contact us before implementation. If you do or do not take action as a result of reading this newsletter, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.