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Making Tax Digital - Starts 2019...I'm ready, are you ?

The end of the Annual Tax Return....well almost as now it will be 4 times a year !

Posted 30/11/2015

OK, so you are self employed and every year it's a real pain to prepare your records ready for your Accountant so he can prepare your Accounts and Tax Return.  Well, if you think you've got it bad now wait until 2020 as by then you will have to do it up to four times a year if the Chancellor has his way.

It didn't make the headlines but during his Autumn Statement speech the Chancellor promised an injection of £1.3bn to deliver “the most digitally advanced tax administration in the world” by 2020.

The new digital tax accounts (DTAs) will require most businesses, self-employed people and landlords to keep track of their tax affairs digitally and update HMRC "at least" quarterly. “This will give individuals and businesses a more convenient real-time view of their tax affairs, providing them with greater certainty about the tax they owe,” said Mr Osborne in his speech. 

There was also a sting in the paperwork tail. The government stated it will consult on "whether to align payment dates and bring them closer to the point when profits arise, so that taxpayers make a single regular payment that covers all their tax affairs”. If this happens then the self employed can look forward to their own version of PAYE.

The full details are due to be revealed at the end of January next year so watch this space but in the meantime now is perhaps the time to consider how you can digitise your record keeping.

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The Tax Return Deadline is Approaching...

Posted 1/11/2015

HMRC usually write to you in April / May every year if they think you need to file a tax return. If your circumstances have changed and you think you no longer need to file a return, you can contact them and if they agree with you, they can remove you from the self-assessment system.

You need to take care though:

  • If HMRC have asked you to complete a tax return you MUST NOT ignore it. Even if you are certain that a Tax Return is not required you have to complete it and then contact them to get the need for a tax return removed.
  • If you need to contact HMRC for any reason do this well ahead of the deadline as the phone lines get very busy.
  • Although you can appeal penalties, it’s always preferable to avoid being issued with them in the first place.

So do I need a tax return?

You probably need to complete a tax return if any of the following apply:

  • You have become self-employed. Please note, there is no minimum income limit nor any "hobby" rules.
  • You have become a director. Again, there is no minimum income limit.
  • You receive high levels of savings/ investment income (whether it’s taxed at source or not)
  • Your annual income is over £100,000
  • You have Capital Gains tax to pay
  • You receive any untaxed income (such as rental or some savings income)

This list is by no means exhaustive and there are other instances when a tax return may be required but the above are the most common.


How I can help

The costs of not attending to your tax affairs can be severe so it's important that you do not leave your Tax Return until the last minute. To do so runs the risk of penalties.

To assist you I can help or provide guidance on the following:

  • Assist you with registering with HMRC for Self Assessment and any other area of tax applicable, such as VAT or registration as an Employer for PAYE
  • Prepare your tax return for you and consider any tax planning opportunities
  • Calculate your tax liability and advise you of the amount and due date of any payments to be made
  • Review HMRC correspondence and liaise with HMRC on your behalf. This can be really useful if they are issuing you incorrect tax codes or are taking a long time to issue you your tax refund

Changes for Landlords

Posted 25/9/2015

Landlords face changes in the amount of relief that can be claimed for finance costs, which includes mortgage interest, interest on loans to buy furnishings and fees incurred when taking out or repaying these mortgages and loans.


The first change is the removal of the wear and tear allowance from April 2016. This will apply to both individual and corporate landlords, and will increase the taxable profits from furnished properties by 10% at a stroke. 

Instead of the flat 10% of rents deduction, landlords of all residential properties (furnished and unfurnished) will be permitted to deduct the actual cost of replacing furnishings, free-standing appliances, carpets, curtains and other loose items provided in the property. This will align the tax rules between furnished and unfurnished properties. Note the initial cost of providing the furniture etc, won't be deductible. 
The second major change is the removal of the interest and other finance costs as a tax deductible expense. This will only affect individual landlords, not companies. From 6 April 2017 the amount of interest deductible for tax purposes will be restricted to 75% of the amount paid. This restriction will increase to 50% in 2018/19, and 75% in 2019/20, and from 6 April 2020 100% of the interest will be denied as a deduction.    
In place of the interest deduction the landlord will receive tax credit equivalent to 20% of the restricted amount of interest. The following is a simplified example (ignoring other deductible expenses) of how the effect on a landlord who pays tax at 40% in 2016/17 compared to 2020/21.





The Chancellor also announced an increase in the rent-a-room relief from £4,250 to £7,500 from April 2016.

Pay your invoice via Paypal

Posted 12/9/2015

I'm no different to anyone else and I love being paid !

My favourite way is by instant bank to bank transfer but I am delighted to announce that I have now added a new facility via my website.

You can now pay using Paypal, Credit or Debit Cards using the payment facility on any page of my site. This gives you a chance to spread the cost should you wish (via your credit card).

National Living Wage

Posted 12/9/2015

The Budget introduced a new ‘National Living Wage’ with effect from next year.  It will be compulsory for employees aged 25 and over and will start at the rate of £7.20 per hour, effective from 6 April 2016.  It is planned to reach £9 per hour by 2020 and the Low Pay Commission will recommend future rises to achieve the Government’s aim that it will reach 60% of median earnings by 2020. The National Minimum Wage rates will still apply to those employees under 25.

Dividend Changes

Posted 8/7/2015

The taxation of dividends is to be reformed by replacing the existing Dividend Tax Credit with a Dividend Tax Allowance of £5,000 and setting new dividend tax rates applicable from April 2016.

In much the same way as the Personal Savings Allowance announced in the March 2015 Budget, the Dividend Tax Allowance provides tax-free income on the first £5,000 of dividends received each tax year.  Any dividend income received in excess of the allowance will be taxed at the following rates: 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.

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