August 2019

tax tips & finance e-newsletter

In this issue

Off-payroll working rules going ahead

“Small” employers excepted

Changes to CGT reliefs

Company VAT penalty can be a liability of an “Officer”

Inheritance tax investigations are increasing

Good Life Show

5G Networks

Make time for your own personal development

Off-payroll working rules going ahead

The draft Finance Bill clauses issued for consultation on 11 July include legislation to extend the “off-payroll” working rules to the private sector from 6 April 2020.

These changes will have significant implications for workers providing their services through personal service companies and also the end user organisations that engage such workers.

End users will be required to determine whether the worker would have been an employee if directly engaged and hence the new rules apply to the services provided by the worker via his or her personal service company. This will be a significant additional administrative burden on the large and medium-sized businesses who will be required to operate the new rules. The current CEST (Check Employment Status for Tax) online tool would be improved before the proposed start date.

“Small” employers excepted

“Small” businesses will be outside of the new obligations and services supplied to such organisations will continue to be dealt with under the current IR35 rules, with the worker and his or her personal service company effectively self-assessing whether the rules apply to that particular engagement.

The draft Finance Bill confirms that the definition of “small” is linked to the Companies Act 2006 definition.

This is where the business satisfies two or more of the following conditions:

  • Annual turnover of £10.2 million or less
  • Balance Sheet total of £5.1 million or less
  • 50 employees or less

There will be an obligation to pass details of the status determination down the labour supply chain. The liability for tax and national insurance will be the responsibility of the entity, paying the personal service company. However, if HMRC are unable to collect the tax from that entity, the liability will pass up the labour supply chain, thus encouraging those entities further up the supply chain to carry out due diligence.

Please contact us if you would like to discuss how the proposed changes are likely to impact on your business.

Changes to CGT reliefs

As mentioned in last month’s newsletter two changes are to be introduced in the next tax year in calculating the capital gain on property sales.

The first change relates to the calculation of CGT private residence relief. As announced in the Autumn 2018 Budget, there will be a reduction in the final period exemption to just 9 months and stricter conditions for letting relief to apply.

Currently where a property has been the taxpayer’s main residence, the last 18 months of ownership counts as a period of deemed occupation. This will be reduced to just 9 months for disposals on or after 6 April 2020. It is understood that this is being introduced to counteract “second home flipping” allegedly used by MPs when they sell their London residences.

Letting relief is also being affected, currently this relief provides up to a £40,000 deduction in computing the capital gain on the disposal of a property that was at some time the taxpayer’s main residence. The relief is the lesser of £40,000, the gain attributable to the let period, and the amount of private residence relief. For a couple this could potentially exempt up to £80,000 of the gain from CGT.

The draft legislation will limit letting relief to those situations where the owner remains in shared occupancy with the tenant, i.e. has lodgers living in the house.

If you were hoping to take advantage of letting relief on the sale of a property, you might want to consider disposing of the property before 6 April 2020 to take advantage of the current rules. Contact us for advice in this area as we can estimate the additional tax that might be due following the withdrawal of this generous relief.

Company VAT penalty can be a liability of an “Officer”

A recent case before the tax tribunal saw the liability for a late VAT registration penalty being passed on to a manager of the company. HMRC have the power to impose such a penalty on an individual where (1) there is a penalty payable by the company for a deliberate failure (2) the individual on whom HMRC seek to impose liability is an “officer” of the company; and (3) the deliberate failure is attributable to that officer.

Inheritance tax investigations are increasing

Recent figures provided by HM Revenue & Customs (HMRC) show that in the tax year to 5 April 2019 HMRC increased their investigations into inheritance tax (IHT) paying estates by some 25%. Such investigations are carried out to ensure executors have reported the full extent of the deceased’s estate as well as checking that the correct reliefs and allowances have been claimed.

It is considered that this growth in investigations is at least partly attributable to the complexities of the residence nil-rate band (RNRB). This relief was first introduced in April 2017 and by 6 April 2020 there will be potential for up to £175,000 of RNRB to be claimed, with a possible doubling up of this relief for some couples to £350,000. This is a potential saving of up to £140,000 in IHT on some estates.

As executors have a responsibility to deliver a correct IHT account to HMRC, if an investigation uncovers errors resulting in underpaid IHT then, as well as interest on unpaid IHT being due, there can also be penalties imposed by HMRC on the executors.

Our Trust & Estate Support Services (TESS) team are probate regulated by the Institute of Chartered Accountants in England & Wales with substantial experience in assisting executors with completion of IHT forms and calculating the IHT tax due. They can also advise on the responsibilities of executors as well as guidance to lay executors on how to administer estates.

For further information please contact Amanda Eade or Sue Pocklington on 01323 730631. 

Good Life Show

Our Trust & Estate Support Services (TESS) team are taking a stand at the Good Life Show in Eastbourne on Thursday 26th September. The show is open to visitors from 10.30am to 3.30pm, in the new Welcome Building attached to the Congress Theatre, part of the Devonshire Park Centre.

The lifestyle show covers many areas of interest and brings together a wide range of exhibitors with an appeal to people over the age of 50.

The TESS team will be on-hand to offer further information on their services including:

  • Inheritance Tax
  • Probate Applications
  • Estate Administration
  • Trust Administration
  • Wills and Lasting Powers of Attorney

Further details can be found on the Good Life Show website at http://www.goodlife.esf-online.org/index.html

5G Networks

5G is the fifth generation of mobile phone and data networks. The rollout has already started - here's what you need to know.

Today's mobile phone and mobile data networks tend to use 4G and in some cases, 3G infrastructure. The latest 5G network is designed to work as a "network of networks" in that it will bind together multiple existing and future standards, including the current 4G networks.

5G networks are estimated to be up to 20 times faster than 4G. The new networks will offer lower latency and much greater capacity to support growth in traffic. However, 5G will offer more than just increased performance. It will enable new services such as fast mobile broadband without the need for landlines, on the road it will allow communication between vehicles (another step closer to self-driving cars), better connectivity between smart devices, smart infrastructure such as factories and airports, etc.

From a business perspective, some manufacturers are already experimenting with things like predictive maintenance and smart infrastructure. The current default connectivity mechanism is Wi-Fi but this is not always convenient, reliable or compatible with the working environment. Private networks, enabled by 5G’s capabilities and coverage characteristics, will help businesses to overcome these challenges.

The increased speeds available on 5G will accommodate and improve the lives of those who work remotely.

File sharing across networks and communication over services such as Skype will be faster, slicker and more stable. More reliable connectivity and better conference calls / video conferences will undoubtedly encourage more businesses to adopt remote working. This may help to cut down on commuting, putting less pressure on transport networks and reducing employee stress.

5G is being rolled out by various network providers including EE, O2, 3 and Vodafone. They have started by launching 5G in major cities such as London, Manchester, Birmingham, Belfast, Edinburgh, Glasgow, Liverpool, Bristol, etc.

Over time coverage in these cities will improve and the availability of 5G will grow. There are various online coverage tools which show the availability of 5G on a map and are useful for helping businesses to decide whether they are ready to invest in 5G now or wait until the new network is better established. A range of 5G devices and data SIM cards are already available from the various network operators.

Make time for your own personal development

As a leader in your firm, you are focused on developing the people around you. But who is responsible for your own development?

If you want to help your employees to grow and develop, you need to invest time in developing yourself, as a leader.

In order to focus on your own personal development, you need to schedule time to do so. If you don’t, your team and your business could outgrow you and your own career could stagnate.

Lead by example
If you want your team to take the time to invest in their own personal development, you need to lead by example. If you make time to learn and develop new skills, your team are more likely to follow suit. You may even be able to make suggestions to your team members, based on your own learning and development experiences.

Embrace technology
Learning and development doesn’t have to involve taking several days out to attend a conference or training session. There is an ever-expanding range of learning opportunities available online. The beauty of this is that you can take courses and attend webinars at a time that works for you.

Find a topic that interests you
There is no point trying to develop your skills in an area that you have no interest in. You want to feel motivated and keen to develop new skills. Do your research and find a development opportunity that you are passionate about. Personal development should be an interesting opportunity, not a chore.

Distractions can be a good thing
Focusing on your own personal development gives you an opportunity to step back from your day job. We often come up with our best ideas when we are off doing something new or exciting. Taking time away from the day-to-day can help to provide new perspectives on things and re-evaluate your priorities.

When you get back to your desk, you may have new ideas and you should feel re-energised.