Archives for 2019

Follow the outline below to ensure that the cost of your annual staff party will not create tax issues for you or your staff.
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. (including 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.

Although the Brexit process continues to throw a spanner into the normal workings of government, there are a few certainties from a tax point of view that will be effective from April 2020. A few property related changes are noted in this article:
• Presently, the last 18 months of ownership of a residential property are ignored if a home has been let at any time. From April 2020, this will be reduced to 9 months.
• If your home has been let at any time, or is let when you sell it, there is a letting relief you can claim that can make a significant impact on any Capital Gains Tax payable. From April 2020, you can only take advantage of this lettings relief if you are in shared occupancy with your tenant.
• From April 2020, all finance costs, incurred by UK residents that let residential property, will be disallowed as an expense of their property business. Instead, tax relief on the disallowed finance charges will be restricted to a basic rate (20%) tax credit. This process started on a phased basis on 6 April 2017 and will complete on 5 April 2020.
• UK residents that sell land or property in the UK, after 5 April 2020, will need to prepare a formal CGT computation and return this to HMRC within 30 days of the relevant sale. They will also need to pay any tax due in the same period.

1 September 2019 – Due date for Corporation Tax due for the year ended 30 November 2018.
19 September 2019 – PAYE and NIC deductions due for month ended 5 September 2019. (If you pay your tax electronically the due date is 22 September 2019)
19 September 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2019.
19 September 2019 – CIS tax deducted for the month ended 5 September 2019 is payable by today.
1 October 2019 – Due date for Corporation Tax due for the year ended 31 December 2018.
19 October 2019 – PAYE and NIC deductions due for month ended 5 October 2019. (If you pay your tax electronically the due date is 22 October 2019.)
19 October 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2019.
19 October 2019 – CIS tax deducted for the month ended 5 October 2019 is payable by today.
31 October 2019 – Latest date you can file a paper version of your 2019 self-assessment tax return.

We have alerted building contractors and sub-contractors in previous newsletters of changes to the VAT rules from 1 October 2019 – this has now been delayed until 1st October 2020.
In a nut-shell, if you are subject to the Construction Industry Scheme and if you are registered for VAT, from the 1 October 2020 you may need to change the way you account for VAT on supplies between sub-contractors and their contractor customers.
At present, sub-contractors registered for VAT are required to charge VAT on their supplies of building services to contractors. From 1 October this approach is changing.
From this date sub-contractors will not add VAT to their supplies to most building customers, instead, contractors will be obliged to pay the deemed output VAT on behalf of their registered sub-contractor suppliers.
This does not mean that contractors, in most cases, are paying their sub-contractors’ VAT as an additional cost.
When contractors pay their sub-contractors’ VAT to HMRC they can claim back an equivalent amount as VAT input tax; subject to the usual VAT rules. Accordingly, the two amounts off-set each other.
The change is described as the Domestic Reverse Charge (DRC) for the construction industry. It has been introduced as an increasing number of sub-contractors have been registering for VAT, collecting the VAT from their customers, and then disappearing without paying the VAT collected to HMRC.
Beware cash flow concerns
However, the change to DRC may create cash flow issues especially if you use the VAT Cash Accounting Scheme or the Flat Rate Scheme.
We recommend that all affected CIS readers contact us so we can help you make the necessary changes to your invoicing and accounting software and reconsider the use of VAT special schemes if your continued use would adversely affect your cash flow.

The end of next month, 31 October 2019, is the latest deadline for our exit from the EU and the recent hiatus seems to be pushing the UK ever closer to a no-deal outcome.
Accordingly, if you are involved in buying or selling goods to EU countries, you should apply now for an Economic Operator Registration and Identification (EORI) number. Without an agreed withdrawal with the EU, you will need an EORI number that starts with GB to move goods in or out of the UK. Additionally, if you want to trade with an EU country you will also need an EU EORI number. It will start with the country code of the EU country you got it from. You should apply for one from the customs authorities in the EU country you will trade with. Apparently, you do not need an EORI number if you are only moving goods between Northern Ireland and Ireland.
If you do not apply, you may be faced with increased costs and delays. For example, if HMRC cannot clear your goods you may have to pay storage fees. Clearly, these delays could have serious repercussions if your exported goods are mired in red-tape at border crossings – your EU customers may look elsewhere for supplies – or your production and delivery in the UK may be affected if you cannot affect delivery of supplies from the EU.

There is a simple online application process to apply and there is no obligation to use the number if by some miracle we agree withdrawal terms with the EU before 31 October.

Employers and employees don’t have to pay tax on such a benefit if all of the following apply:
• it cost you £50 or less to provide,
• it isn’t cash or a cash voucher,
• it isn’t a reward for their work or performance,
• it isn’t in the terms of their contract.
HMRC describes these payments as a ‘trivial benefit’.
You can’t receive trivial benefits worth more than £300 in a tax year if you are the director of a ‘close’ company. A close company is a limited company that’s run by 5 or fewer shareholders.

 

1 August 2019 – Due date for Corporation Tax due for the year ended 31 October 2018.

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

19 August 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 August 2019.

19 August 2019 – CIS tax deducted for the month ended 5 August 2019 is payable by today.

1 September 2019 – Due date for Corporation Tax due for the year ended 30 November 2018.

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

19 September 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2019.

19 September 2019 – CIS tax deducted for the month ended 5 September 2019 is payable by today.

In a bid to accommodate yet more electric vehicles on our roads, the government has launched a consultation aimed at increasing the number of homes with electric car charge-points. In a recent press release they said:

“All new-build homes could soon be fitted with an electric car charge-point, the government has outlined today (15 July 2019) in a public consultation on changing building regulations in England. The consultation comes alongside a package of announcements to support electric vehicle drivers and improve the experience of charging.

The proposals aim to support and encourage the growing uptake of electric vehicles within the UK by ensuring that all new homes with a dedicated car parking space are built with an electric charge-point, making charging easier, cheaper and more convenient for drivers.

The legislation would be a world first and complements wider investment and measures the government has put in place to ensure the UK has one of the best electric vehicle infrastructure networks in the world – as part of the £1.5 billion Road to Zero Strategy.

The government has also set out today that it wants to see all newly installed rapid and higher powered charge-points provide debit or credit card payment by Spring 2020.”

The government has already taken steps to ensure that existing homes are electric vehicle ready by providing up to £500 off the costs of installing a charge point at home.

The government has started a consultation to transform support for sick and disabled staff and remove barriers for employees.

The Department for Work and Pensions has recently set out new measures to transform how employers support and retain disabled staff and those with a health condition.

Under the new measures the lowest paid employees would be eligible for Statutory Sick Pay (SSP) for the first time, while small businesses may be offered a sick pay rebate to reward those who effectively manage employees on sick leave and help them get back to work.

Under current legislation, to be eligible to receive SSP you must:

• be classed as an employee and have undertaken work for your employer,
• have been ill for at least 4 days in a row (including non-working days),
• earn an average of at least £118 per week, and
• tell your employer you’re sick before their deadline – or within 7 days if they do not have one.

Each year more than 100,000 people leave their job following a period of sickness absence lasting at least 4 weeks, and the longer someone is on sickness absence the more likely they are to fall out of work, with 44% of people who had been off sick for a year leaving employment altogether.

If you rent out all or part of your home this may create a Capital Gains Tax (CGT) charge when you sell the property.

Presently, HMRC excludes the last 18 months of your ownership – even if the property is let for this time – when assessing any CGT liability. In a draft of the Finance Bill released last month, HMRC have confirmed that this 18 month period will be reduced to 9 months from April 2020.

The exemption for disabled property owners or those in a care home will continue to be 36 months.

The draft Finance Bill also confirms a change to the letting relief rules.

Letting relief is an extra deduction you can make from any CGT payable as a result of letting your home. You can claim the lowest of the following three amounts:

1. The same amount that you can claim as private residence relief.
2. £40,000.
3. The same amount as the chargeable gain you made from letting your home.

From April 2020, you will only be able to claim this letting relief if you are in shared occupancy with the tenant.

Property owners contemplating the disposal of their home – which is or has been let for any period – may be advised to complete their sale before April 2020. In this way they will benefit from the 18 month exemption and the more flexible lettings relief.