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Brief Summary Autumn Budget 2017

 

The budget message from the Chancellor was that ‘the economy that continues to grow, continues to create more jobs than ever before and continues to confound those who seek to talk it down’. You can read the individual measures and details of some of the numerous consultations below.

 

Marriage allowance

From 6 April 2018 the transfer of £1,185 of a personal allowance to a spouse or partner or deceased partners is available. The inclusion of deceased partners applies from 29 November 2017 and can be backdated 4 years, subject to conditions.

 

Dividend allowance

The tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018. The reduction of the dividend tax free allowance impact is £225, £975 or £1,143 a year depending on whether recipients pay tax at the basic rate, higher rate or the additional rate.

 

Stamp Duty Land Tax: relief for first time buyers

From 22 November 2017 first time buyers paying £300,000 or less for a residential property will pay no Stamp Duty Land Tax (SDLT). This measure does not apply in Scotland. SDLT was devolved to Scotland on 1st April 2015. This measure will apply in Wales until 1 April 2018, when SDLT will be devolved to Wales.

 

Corporation tax

The corporation tax rate will remain at 19% for the 2017/18 and 2018/19 tax years.  

 

Annual investment allowance

The annual investment allowance of £200,000 per annum remains available for companies and for unincorporated businesses.

 

Making tax digital

The chancellor announced that the enabling legislation in the Finance (No.2) Act 2017 has been passed. This allows, subject to secondary legislation for HMRC to require businesses to keep records digitally. VAT is the only area mandated to use MTDfB and this is from April 2019.

 

VAT

A review of VAT thresholds has been announced, with the Chancellor stating that the thresholds will remain unchanged for two years.

 

Relief from business rates increases

The Chancellor has announced that business rates will rise in line with CPI. This is lower than the inflation rate.

 

ATED

From 1 April 2018 the charges for the annual tax on enveloped dwellings (ATED) will be increased by 3%. Returns for 2018/19 are to be filed electronically.


IR35
Unsurprisingly, it was announced that HMRC will consult on reforms to IR35 for the private sector. It is unclear if this will look at a more modern approach to self-employment or will keep the assessment used for the public sector which was enacted this year. 

 

Increase in Individual Savings Accounts (ISA) limits
The annual ISA allowance remains unchanged at £20,000.


IHT

The Nil-rate band remains at £325,000. The residence nil-rate band for deaths in the following tax years will be:

 

£100,000 in 2017 to 2018

£125,000 in 2018 to 2019

£150,000 in 2019 to 2020

£175,000 in 2020 to 2021

 

Interest relief for landlords

Landlords will be able to obtain relief as follows:

 

                                                Finance cost allowed in full                Finance cost allowed at basic rate

Year to 5 April 2016                100%                                                               0%

Year to 5 April 2017                100%                                                               0%

Year to 5 April 2018                75%                                                                 25%

Year to 5 April 2019                50%                                                                 50%

Year to 5 April 2020                25%                                                                 75%

Year to 5 April 2021                0%                                                                   100%

 

Apprenticeships

The annual pay bill and levy rate remains unchanged. A non-levy paying employer will need to co-invest 10% and will benefit from government funding to cover the remaining 90% of the cost. http://www.accaglobal.com/uk/en/employer/recruit-acca-accounting-technician-apprentices.html

 

Cash accounting

The trading cash basis thresholds for unincorporated businesses will remain at £150,000. The exit threshold is also unchanged at £300,000.

 

Disincorporation relief

The current relief will not be extended beyond 31 March 2018.

 

Taxation of trusts

The taxation of trusts will be subject to a consultation and review in 2018.

 

Corporation Tax: removal of capital gains indexation allowance

When a company makes a capital gain on or after 1 January 2018, the indexation allowance that is applied in order to determine the amount of the chargeable gain will be calculated up to December 2017.

 

R&D

The Research and Development Expenditure Credit rate will increase by 1% to 12% for expenditure incurred on or after 1 January 2018.

 

Class 2 and Class 4 NIC

The government has chosen to delay the abolition of Class 2 NICs by a year until 6 April 2019.

Class 4 will remain at 9% and will not be subject to the increases previously announced.

 

Landlords

Landlords, now have a choice on deductions in relation to travel expenses as they are now able to use mileage allowances for their property rental businesses

 

Diesel cars

The benefit in kind will increase from 3% to 4% with the maximum percentage being 37%. 

 

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Making Tax Digital

 

HMRC have released the new timetable for Making Tax Digital and we are pleased to confirm they have delayed it even further and have withdrawn it for small business.

 

Only business with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes, which they will need to do from April 2019. This means that small businesses and landlord with turnover below the VAT threshold will be able to choose when to move to the new digital system.

 

This is great news as the administration burden and costs for small businesses were outweighing the benefits.

 

For more information please visit the government’s website at:-

https://www.gov.uk/government/news/next-steps-on-the-finance-bill-and-making-tax-digital

 

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On 4 November 2016, we held a tax surgery at our Windermere offices on High Street. Mathew Ellwood, Chartered Certified Accountant and Roger Jackson, Certified Financial Planner of Financial Management Bureau, answered any tax related questions individuals had.

 

Clients left noticeably happy after we answered numerous complicated questions surrounding Inheritance Tax, Capital Gains Tax and Trust Planning.

 

After such a success, we will be holding another surgery in due course. However, should you have any questions relating to tax, please don't hesitate to contact us on 015394 88561.

 

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On 15 August 2016 HMRC released their consultation documents about Making Tax Digital. Every self employed business owener and landlord will need to use software or apps to keep their business records and to update HMRC on a quarterly basis.

 

This means that if you have a business and you do not use software such as Xero, Sage, VT or Quickbooks and are still keeping your business records on a cash book or spreadsheet, then you will need to change.

 

MBE Accountancy are here to help you with the change over and guide you through the transition. All our staff are trained in the top packages such as Xero, Sage, VT, Quickbooks and much more. We have recently become involved in a Partner Programme with Xero and have become a certified Xero practice where all our staff are trained and have been given certification.

 

If you have any queries or questions relating to Making Tax Digital or would like training in any of the accountancy softwares stated above, please don't hesitate to give us a call on 015394 88561

 

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We will be having a free surgery called 'All things tax Planning' where Mathew Ellwood from MBE Accountancy Ltd and Roger Jackson from FMB Financial Planning will be open to ask any question relating to tax. The surgery will be held at our Windermere offices at 10 High Street in Windermere on

4 November 2016. Mathew Ellwood speciailise in Capital Gains and Income tax whereas Roger Jackson specialises in Pensions and Inheritence tax planning.

 

Both experts in one room answering any questions you have. Please call 015394 88561 to book a half hour appointment.

 

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HMRC have a property let campaign which is designed to give people a chance to disclose any undeclared rental income.

 

All rental income must be declared even if you are not making any profit. As only mortgage interest is an allowable tax deduction, if you have a capital repayment mortgage it may appear that you are not making any profits. However, if you only take into consideration the mortgage interest element, you may find that you are making taxable profits and therefore ...underpaying your taxes.

 

We can help disclose this information to HMRC from the date you start renting the property without them taking any further action which can saving considerable amounts of penalties and interest if they found out before you disclosed.

 

HMRC have powers which enables them to liaise with third parties such as letting agents to find out landlords details to check that they are declaring their rental income.

 

If you have a rental property and you have not declared the rental income, contact us on 015394 88561 so we can help you.

 

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The 2016 Budget brought some interesting changes. The main ones which will affect the majority of people are:-

 

Personal tax allowance will increase to £11,500 with the higher rate tax threshold increasing to £45,000.

 

Corporation tax will reduce to 17% by 2020. Currently the tax rate is 20% and with the taxation of dividends coming into play in April 2016, the tax advantage of becoming a limited company was significantly reduced. With the increased accountancy fees of preparing a company set of accounts compared to a sole trader, the net costs benefit is marginal. However, with the company tax rate now reducing to 17% the tax advantage becomes greater again.

 

Capital gains tax reduced from 28% for higher rate tax payers to 20% and 18% for basic rate tax payers to 10%. This is great news, although we would like to point out that this is not in relation to residential  properties such as buy to lets, which is where people would like to see the reduction.

 

Small business rates relief will increase from £6,000 to £15,000 which will mean many will find that their business rates are reduced to nil.

 

 New lifetime ISA offering £1 from the government each year for every £4 saved. This is great return on your savings.

 

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2016 was kicked off by a presentation at Carus Green relating to the taxation of properties. This included both income tax and capital gains tax with tips and advice to minimise future tax liabilities.

 

The presentation was aimed at unfurnished lets, furnished lets, furnished holiday lets, bed and breakfasts, guest houses and hotel owners.

The presentation was appreciated by local property owners with many wanting additional consultancy services.

 

If you are a property owner please contact MBE Accountancy Ltd for advice and support on 015394 88561

Get in Touch

We're always happy to have a chat ... give us a call or pop in!

015394 88561

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10 High Street

Windermere

Cumbria

LA23 1AF

 

Company registered in England and Wales

Registration number 09665360

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We are a member of ‘ingroup’ an independent networking group where we have great relationships with all the top professionals of the area.

ACCA The Global Body for Professional Accountants

Get in Touch

We're always happy to have a chat ... give us a call or pop in!

015394 88561