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19th Jul 2017

Things to note

Making Tax Digital and other recent changes

Catherine Chapman :: Wednesday 19th July 2017 :: Latest Blog Posts


Things to note

By the time you will be reading this article over a nice cuppa, the school summer holidays will have come and gone, new uniform purchased and everyone excited about going back to school; perhaps you are starting to think about gathering your tax return information to pass to your accountant, or gathering the momentum to complete it yourself!

A few things just to note:

1. Making Tax Digital (MTD)

You may recall in my previous articles, I mentioned MTD was to commence from April 2018. However, I am glad to report that it was announced during July 2017 that this is now being pushed back a year to April 2019.

The new timetable for MTD is:

  • Businesses with a turnover above the VAT threshold (currently £85,000) from April 2019 will need to report VAT through MTD
  • Businesses/individuals with rental income will be asked to complete quarterly income/corporation tax statements from April 2020

From an administration point if you are VAT registered and your VAT quarters do not fall in line with your accounting year end, it is recommended that you amend your VAT quarter.

2. Are you self employed?

I would recommend that you log on to your personal tax account with HMRC (go to https://www.gov.uk/government/publications/your-personal-tax-account/your-personal-tax-account ) and check that you have made sufficient Class 2 national insurance contributions whilst being self-employed.

As announced at the Budget 2016, Class 2 NICs will be abolished from 6 April 2018, so any outstanding NIC contributions from this date any outstanding contributions will need to be settled as Class 3 contributions.

3. Are you, or do you know someone who is, a sole director of a company and work for the public sector which includes:

  • Government departments
  • Non-departmental public bodies
  • Local government
  • NHS
  • Schools, colleges and universities
  • Police and fire authorities

Then please continue to reading...

From 6 April 2017 it will be the public sector authority that will be responsible for deciding whether or not IR35 applies to the particular engagement.

What is IR35 I hear you cry. IR35 was introduced a number of years ago. It is where the company is the "worker's" own personal service company and usually consists of one or two Directors who are usually spouses/partners. There are normally no other employees and usually only one worker who is providing their services to the client.

The intermediary earns all, or the majority, of its income from supplying the services in circumstances that would be employment had the worker been contracted by the client. Confused... here is an example:

  • Bob Computer has set up a company called Bob Computer Limited. Bob the Computer Limited has a contract with the local hospital providing IT consultancy.
  • The hospital will from 6 April 2017, need to decide whether Bob Computer Limited is caught under the IR35 legislation and if so, will deduct from the invoice both income tax and national insurance contributions, as if Bob himself was an employee of the local hospital.
  • Bob will need to provide the local hospital with his name and NI number.
  • Prior to the start of the engagement, Bob will have to provide not only his NIC number but, his date of birth, personal address and if applicable the form P45 from the previous employment.

Under these new changes the employment rights will not be available to Bob Computer Limited from the NHS i.e. no employment obligations, no sick or holiday pay, no statutory maternity pay and no pension obligations!

So as I said at the beginning, please pass this information on if you know of someone in this position. There is also speculation that these rules will be being introduced in the private sector.

If you need any assistance with anything mentioned above, please do not hesitate to give me, Catherine, a call on 01258 840306.

Until next time...

If you need assistance with any accountancy or tax related matters, please contact Catherine at CBA Services Limited on 01258 840306/07895 913546/ . We offer evening and weekend appointments and there is no charge for the first meeting.

Whilst care has been taken in preparing this publication it is for information only. It is not, and should not be construed, as advice and accordingly no reliance should be placed on the information contained herein.