Abbey

Chartered Tax Advisers
Old Bishops' College
Churchgate
Cheshunt
Hertfordshire
EN8 9XP

T: 01992 642024

E: abbey@abbeyaccountants.com

Smiling businessmen and women

  TAX E-NEWS - July 2017


Welcome to the July tax newsletter. We hope you enjoy reading and find it useful. These newsletters are designed to keep you informed of the latest tax issues.

Please contact us if you need further information on any of the topics covered.

Peter McDaid
CTA ATT TEP
Director



MAKING TAX DIGITAL (MTD) DELAYED

HMRC have just announced that MTD which was due to go live in April 2018 will now be delayed and significant changes will be made to its implementation.
The original planned timetable for the implementation of MTD was always far too ambitious and the strenuous protests and feedback from the accounting and tax profession appeared to be completely ignored. I suspect that a change in thinking might have arisen as a result of Jane Ellison MP, the Chief Secretary to the Treasury, losing her seat in Battersea in the election. Ms Ellison was day-to-day lead for Making Tax Digital, so her demise may well have led to these changes. What has been announced is as follows:
- As from 2019 only businesses with turnover above the VAT threshold (currently 85K) will have to keep digital records and only for VAT purposes.
- Businesses will not be asked to keep digital records for other taxes until at least 2020, instead of 2018 as originally proposed.
- Small businesses will be able to file digitally on a voluntary basis for other taxes.
This is very good news indeed as although MTD is the way forward, a slow and considered implementation is necessary to get this right and to avoid placing an undue burden on small UK businesses and their owners.

WHAT IS THIS “DEMENTIA TAX”?

The Conservative Party Manifesto announcement and subsequent U-Turn on the requirement to pay for social care may have caused many voters to switch their allegiance in the June Election. Although this so-called “Dementia tax” is not strictly a tax, paying for social care has become more important than Inheritance Tax for many families

If a local authority arranges for an individual to enter a care home on a permanent basis the individual will be means tested to see whether or not they should make a contribution towards the cost of their care. The individual may want to pass on savings or other capital to children or others during their lifetime, but it can affect eligibility for local authority assistance with care fees and Pension Credit.

Under current rules if an individual’s capital adds up to more than £23,250, the local authority may assess them as being able to meet the full cost of their care.

The Coalition Government published a White Paper on the reform of adult social care in July 2012. This proposed to implement the recommendations contained in the Commission on the Funding of Care and Support (known as the Dilnot Commission).

The Coalition Government proposed a cap on the maximum that an individual/family would be required to contribute. A figure of £76,000 was suggested to be introduced in 2016 but the Conservative Government, elected in 2015, deferred this until 2020 at the earliest. In their 2017 Election Manifesto the Conservative party announced that the £23,250 threshold would be raised to £100,000 and would also be the threshold for assessing whether the local authority would pick up the bill for Care in the Community. There was however no mention of any cap on Social care costs.

This resulted in a very rapid u-turn following the launch of the manifesto. We are now told that there will be yet another Green Paper to consider a cap on care fees.

This issue will need to be closely monitored as it will have a significant impact on any planning undertaken.

Inheritance tax planning, such as transferring an asset out of your name, does not necessarily mean that it will not be taken into account in a means test. Both the local authority and the Pension Service can, when assessing a resident’s eligibility for assistance, look for evidence of deliberate, or intentional, deprivation of capital, such as a property transfer. Deliberate deprivation occurs when an individual transfers an asset out of his or her possession to put him or herself in a better position regarding the means test for care home accommodation.

This is a complex matter so please contact us to discuss the implications for you and your family’s assets.


ONE BUSINESS OR TWO FOR VAT?


A recent VAT Tribunal had to decide whether two hairdressing businesses should be treated as a single business for the purposes of VAT registration. The distinction was critical as the two separate businesses were operating below the registration limit (currently £85K) and the combined operation would have exceeded the limit meaning that VAT would need to be charged.

Note that HMRC have been successful, in a number of cases, in aggregating the turnover of two businesses carried on by the same person(s).

However, in this recent case it was established that the couple had never intended to run a single business in partnership. There was also physical separation of the premises, separate clientele, different stylists worked for each salon and separate books were kept.

Note that where the same person carries on several businesses, the combined turnover of all those businesses need to be considered in deciding whether or not the VAT registration threshold is exceeded.


ADVISORY FUEL RATE FOR COMPANY CARS

These are the suggested reimbursement rates for employees' private mileage using their company car from 1 June 2017.

Where there has been a change the previous rate is shown in brackets.

Engine Size

Petrol

Diesel

LPG

1400cc or less

11p

 

7p

1600cc or less

 

9p

 

1401cc to 2000cc

14p

 

9p

1601cc to 2000cc

 

11p

 

 

Over 2000cc

21p

(22p)

13p

14p




TAX DATES AND PAYMENTS



19th July PAYE & NIC deductions, and CIS return and tax for month to 05/07/2017  (due 22/07/2017 if you pay electronically).
31st July 50% payment on account of 2017/2018 tax liability due.
1st August Corporation tax for year to 31/10/2016 (unless paid quarterly)
19th August PAYE & NIC deductions, and CIS return and tax for month to 05/08/2017  (due 22/08/2017 if you pay electronically).