The Autumn statement will take place on Monday 29 October.  Many rumours are swirling including the usual tax grab on pensions.   Off payroll working in the private sector is also likely to be dealt with much to the dismay of the contractor industry.  Lets see!  Watch this space.

We sat down to watch the Budget yesterday with much trepidation given the various rumours swirling around! But fortunately there were minimal changes which would have a negative impact on our clients.

Thankfully Mr Hammond did not the lower the VAT threshold as recommended by the Office of Tax Simplification, which would have been catastrophic for small businesses, but has instead frozen the threshold at £85,000 for the next 2 years. They have also addressed the problems surrounding business rates.

There were small increases in the tax free personal allowance and higher rate threshold.

There was no mention of changes to the pension regime this time around thankfully.

There was no mention of moving “off payroll working” rules currently in operation in the public sector into the private sector but they have announced a ‘careful consultation’ to look at impact on the public sector and this will be published in 2018. I will write a further blog when this is published.

Some highlights:-

• Tax-free personal allowance on income tax to rise to £11,850 in line with inflation in April 2018
• Higher-rate tax threshold to increase to £46,350
• VAT threshold for small business to remain at £85,000 for two years
• Help for first time buyers with a 0% rate of SDLT on the first £300,000 of the purchase price of a home, where the total price paid for the property does not exceed £500,000. If the purchase price is more than £500,000 the exemption will not apply and the normal SDLT rates will be charged.
• Capital gains tax relief for overseas buyers of UK commercial property to be phased out, with exemptions for foreign pension funds
• National Living Wage to rise in April 2018 by 4.4%, from £7.50 an hour to £7.83.
• Existing diesel supplement in company car tax to rise by 1%
• Capital gains tax relief for overseas buyers of UK commercial property to be phased out, with exemptions for foreign pension funds

HMRC have announced that from 4 September 2017, they will stop issuing paper copies of clients’ tax calculations and tax year overviews for mortgage applications, insisting that they have come to an agreement with the Council of Mortgage Lenders for them to accept online print outs.

Up until recently HMRC, at a push, have issued SA302 statements setting out a person’s income and tax for each year and this has been an essential document for the self-employed and members of partnerships obtaining mortgages.

But in the last couple of years HMRC have made it increasingly difficult to obtain SA302’s and there seems to have been a lack of communication between what the mortgage industry requires and what HMRC is prepared to provide. In my experience this has been unsatisfactory as many mortgage brokers and lenders would not accept the substitute SA302 information or were unaware of the procedure.  HMRC refused to provide the information and thus we as Accountants were faced with an accusation of being unhelpful.

As part of its drive towards digital tax HMRC now require every tax payer in this country to open a Personal Tax Accounts (PTA), although this message does not appear to have reached the public at large! Many routine matters can now be dealt with only through PTAs but Accountants cannot yet access clients’ PTAs.

Understandably, many clients either see no need for a PTA if they use an agent, or are confused by the fact that the Agent online service is different from a PTA.

HMRC said that the Council of Mortgage lenders will accept self-served copies of the tax calculation from the HMRC online account or the commercial software used to file the Self Assessment return and that the majority of lenders have now agreed to do so.  I am able to provide these documents from my software and HMRC online account.

If a lender refuses to accept self-serve copies, HMRC suggests that agents check if they are on the List of Lenders who accept them.

In the future, anyone applying for a mortgage will need to either persuade their prospective lender that the new procedure is acceptable, or go through the process to open a PTA.

I am pleased to advise of a few changes:-

I have been joined by a former colleague, Angie Withers, who is Member of the Association of Accounting Technicians and will work alongside my tax expertise helping small businesses with book keeping and accounts. HMRC are keen to have all businesses keeping digital records and Angie is on a mission to show businesses how good online bookkeeping is allowing businesses to track payments and expenses and have financial information at their fingertips  so you know your profitability both in terms of invoices issued but more importantly in terms of cashflow movements.  I am a convert – it is easy to use and helps me to track my business payments on a daily basis.

I am sharing the office with another business, Ferry Financial which provides financial planning services. I have known David Ferry who runs the business for many years and he has made me understand the benefit of long term planning ie. knowing where you want to be in the future and making some effort to plan for it.  This can be by way of insurances, investments, ISA’s and pensions.

Pensions are never out of the news and it seems like the state pension age moves ever further away. If nothing else it pays to keep track of any pensions that you might have accrued in the past (whether final salary or money purchase) and your entitlement to the state pension when the time comes.  There is no doubt that the earlier you start to save for a pension the better the outcome. But its never too late. Pension freedom has opened up opportunities that now makes pension saving a much more interesting proposition for you and your family.  I have recently gone through the exercise of looking at my pensions and I feel in a much better place for the future.

My clients best interests are at the heart of everything that I do and I am delighted to be working alongside Angie and David.

If you would like any more details about Angie or David, please do not hesitate to contact me on Jayne@stratfordtaxstudio.co.uk

Making Tax Digital for business has been dropped from the Finance Bill 2017 for now, but Making Tax Digital for individuals starts in this month. So how will it affect you?

HMRC have a lot of information at their fingertips; every time you are paid a monthly salary or pension HMRC are told, if you get a company car HMRC are told, they are given details of the interest paid to you by your bank etc. etc.

If you get multiple sources of income, to date HMRC have only been able to establish if you have underpaid or overpaid tax at the end of the tax year.

But from 31 May they are going to look each month to see if you have underpaid or overpaid tax. If you’ve overpaid tax you should get it back very quickly but if you have underpaid tax they will adjust your tax code so you pay more tax for the rest of the year.

Thus if you have underpaid tax HMRC will seek quicker and more significant tax deductions as they look to square off your tax by the end of the tax year. This will accelerate the receipt of taxes by the Treasury.

The net effect of these changes is that you will receive more frequent coding changes, maybe several a year if your affairs are more complex. But these do need to be checked to ensure they are correct. This can be done via your personal tax account and every tax payer can access theirs online via www.gov.uk/personal-tax-account

The other useful information on the personal tax account is your National Insurance contributions record and a forecast of your entitlement to state pension at pension age.  We all need between 10 and 35 qualifying years to receive an amount of state pension – ideally you will aim for the full 35 years. If there appears to be a shortfall you can act on it. In particular parents who have not claimed child benefit in recent years may be missing out on National Insurance credits for years that they are out of work due to childcare responsibilities.

If you wish to discuss this in more detail please do not hesitate to contact me.