Accountancy Blog

Filing self-assessment 2017/18 – what you need to know

 

As the year draws to a close, the thought of your tax return is there, at the back of your mind. But with so much time before the deadline, you decide not to worry about it for now.

Then the weeks start to fly by, Christmas comes and goes, and soon you’re planning for the New Year and getting back to work as normal.

Before you know it, it’s the end of January, you’re searching for your registration details, and HMRC’s waiting times are growing longer as thousands of other taxpayers in the same predicament try to get in touch.

More than a quarter of tax returns in January 2018 – that’s 1,290,948 altogether – were submitted less than 48 hours before the self-assessment filing deadline at midnight on 31 January. More…

Have you made a will?

Most people don’t like to think about their own mortality, but planning for the future is important to ensure your property, money and possessions are distributed the way you intend.

Writing a legally valid will is an essential part of this, and can provide peace of mind for you and your loved ones.

Despite this, a study from YouGov found that 62% of the UK’s adult population did not possess a will in 2017. In fact, most people tend to put it off, with only 36% of 45 to 54-year-olds saying they have a will, compared to 67% of over-55s.

When asked why they hadn’t made a will, the main reason was simply that they “hadn’t got round to it yet”. More…

National Insurance and the higher rate taxpayer

Individuals set to benefit from an increase to the higher-rate threshold in 2019 will only see half of the tax reduction expected, as a result of a Budget measure not mentioned in the Chancellor’s speech.

In Budget 2018, the Chancellor announced that the higher-rate income tax threshold would increase from £46,350 to £50,000 in 2019/20.

Taxpayers earning between £46,350 and £50,000 will see their income tax rate reduced from 40% to 20%, providing what looks like a tax cut of 20%.

More detailed documentation published alongside the Budget says the upper profits and upper earnings limit for national insurance contributions (NICs) will increase at the same time.

This means employees will see their NICs rate within this earnings bracket rise from 2% to 12%. More…

IR35 pitfalls and current views

Contractors could face a higher tax bill from April 2020 when reforms to IR35 legislation are set to take effect in the private sector.

This is expected to raise more than £3 billion between 2020 and 2024, as self-employed individuals who fall within the rules, and the businesses engaging them, will face a higher tax charge.

IR35 rules were reformed in the public sector in 2017, with the aim of stopping work HMRC regards as ‘disguised employment’.

This describes a situation where an individual works much like an employee, but does so through a company to avoid paying additional income tax and national insurance.

The reforms mean that the responsibility for determining the worker’s employment status will move to the firm engaging them.

Those who are considered an employee under IR35 will have to pay income tax, as well as national insurance at the higher 12% rate. More…

Small retailers business rates lowered

Small retail businesses in England will see a reduction to their business rates, as announced in Budget 2018.

Business rates will be reduced by a third for many retail properties with a rateable value below £51,000 for two years from April 2019, subject to state aid limits.

The Chancellor said this will mean “an annual saving of £8,000 for up to 90% of all independent shops, pubs, restaurants and cafes”.

This was part of a series of measures announced to support high streets in the UK under the pressures of high costs and growing competition from online retailers.

While industry bodies have welcomed the boost, some have argued that the system needs wider reform. More…

Annual investment allowance to rise to £1m

The annual investment allowance is set to temporarily increase from £200,000 to £1 million, allowing businesses to gain more tax relief on their investments.

This will take effect from 1 January 2019 and remain in place until 31 December 2020, after which it is due to revert back to £200,000.

Using the annual investment allowance, businesses can deduct the full value of qualifying plant and machinery from their profits before tax.

This does not include cars, items owned for another reason before they were used in the business, or items given to the business or business owner. More…