Accountancy Blog

The missing budget 2019

It’s been an eventful few years in British politics, but 2019 has been something else again with one jolt after another.

The 29 March deadline for the UK to leave the EU was extended to 31 October and then again until 31 January 2020. Boris Johnson replaced Theresa May as Prime Minister and Sajid Javid succeeded Philip Hammond as Chancellor of the Exchequer.

Javid was poised to deliver his first Budget on 6 November against a backdrop of constitutional crisis but, in late October, it was cancelled as Parliament voted in favour of holding the first December general election since 1923.

With all eyes on Brexit, those with an interest in fiscal policy were left bewildered: could this be the first year without any Budget at all? After all, the Spring Statement became a non-event on Hammond’s watch.

That’s not the only question. For example, we know there will be a Budget at some point, but when? More…

Protecting your business from fraud

Steps to shield your firm from threats.

Fraud costs the UK around £190 billion a year, with businesses bearing almost three quarters – £140bn – of those losses.

This worrying picture is backed up by the 2019 Fraudscape report compiled by anti-fraud body Cifas, which provides statistics for fraud committed by employees. The report read:

“Dishonest action by staff to obtain a benefit by theft or deception was the most common type of internal fraud in 2018, accounting for 46%. The most prevalent form of dishonest action during the year was theft of cash from the employer.

“The second most common fraud type was theft of cash from a customer, which rose to 22% in 2018 compared to 17% in 2017.”

Fraud can be characterised as rule-bending, but for businesses struggling to manage cashflow it can have catastrophic effects. More…

Capital gains tax and property – changes are on the way

Tax changes to private residences for 2020/21.

From 6 April 2020, HMRC is proposing three significant changes which will potentially increase the capital gains tax paid on the disposal of any residential property by an individual.

These changes seek to raise extra revenue from the disposal of residential properties and to collect these taxes more quickly.

For many of the 1.2 million residential property disposals each year, there will be no liability having been occupied throughout the period of ownership as the owner’s main residence.

If, however, you have a property which was once your main residence and you either let it out or have retained it for other reasons, these changes will affect you.

Working away, divorce or separation and other common issues could also see your entitlement to full private residence relief affected, meaning some of the rule changes could impact you.

If any of the above applies to you, these changes are likely to result in you having to pay significantly more capital gains tax if you sell or transfer these properties on or after 6 April 2020. More…

Employers need help to absorb the planned national living wage hike

Business groups want more support to help employers meet the Chancellor’s pledge to raise the national living wage to £10.50 an hour by 2024.

Chancellor Sajid Javid announced his intention to implement the hike alongside lowering the age threshold for those who qualify for the living wage from 25 to 21.

The national living wage hourly rate for over-25s in 2019/20 stands at £8.21 – but more than 6,000 UK employers currently             go further than the legal minimum.

The British Chambers of Commerce (BCC) welcomed the Chancellor’s announcement, albeit with caution.

Adam Marshall, director-general of the BCC, said:

“Companies already face significant cumulative employment costs, including auto-enrolment, the immigration skills charge and the apprenticeship levy.

“Action must be taken to alleviate the heavy cost-burden facing firms, or risk denting productivity and competitiveness.” More…

Inheritance Tax – don’t fall into the trap

A record amount of estates paid inheritance tax in 2016/17, according to government figures.

More than 28,100 estates were liable for death duties in 2016/17 – a new high for the number of estates charged.

The latest figure represented a 15% rise on the previous year’s figure of 24,500, and continued the trend of year-on-year increases since records began in 2009/10.

The average tax on an estate in 2016/17 was £179,000, while the proportion of estates liable to inheritance tax increased from 4.2% in 2015/16 to 4.6% in those 12 months.

Total duties raised from inheritance tax also reached a new record of £5.4 billion during 2018/19, which represented a 3% rise on the previous year.

The nil-rate band has remained frozen at £325,000 since 2009/10, with tax deducted at 40% on the part of an estate that exceeds this threshold. More…

Stamp duty revenue down for HMRC

The Treasury’s take from stamp duty land tax fell by the largest amount since the start of 2008/09, government figures show.

In England and Northern Ireland, HMRC collected £11.94 billion in stamp duty receipts on completed property or land purchases in 2018/19 – a 7% decline on the previous tax year.

That represents the biggest drop since the peak of the recession in 2008/09, and was largely fuelled by a 10% fall in residential stamp duty receipts.

The Revenue puts that down to the introduction of a stamp duty holiday for first-time buyers and devolution of the property tax to Wales, which has been setting its own rates since 1 April 2018. More…

Are you saving into your pension plan?

A government-backed pension provider is trialling emotive messages to nudge sole traders to start retirement saving.

The messages from NEST aim to persuade the self-employed to sign up for pensions through payment or accountancy platforms or trade and industry bodies.

Four messages are being tested to encourage savings behaviour, including ‘could you save £2.50 a day?’.

‘Flexible pension options for the self-employed’ attempts to emphasise they can pay what they can, when they can.

Loss-avoidance messages, such as ‘a tax-free way to save for retirement’ and ‘don’t miss out on pension returns’, are the other messages being trialled. More…

Regulator slams poor standards of charity accounts audits

Most auditors and independent examiners in England and Wales failed to identify failings in charity accounts in 2017/18.

The claim comes from the Charity Commission, which scrutinised 296 charity accounts with various annual incomes.

The Commission found that accounts reviewed by auditors met its benchmark more regularly than independent examiners.

How its benchmark is applied depends on a charity’s size and legal form, with closer scrutiny applied to accruals accounts.

Up to 15 criteria apply, nine of which are compulsory for all charity accounts under review. The other six only apply to the scrutiny of charities with accruals accounts. More…

Self-employed owe £1.6bn to HMRC in late tax payments for 2017/18

New figures show self-assessment taxpayers owe HMRC more than £1.6 billion in late payments on 2017/18 tax bills.

The deadline for 2017/18 submissions came and went on 31 January 2019, with more than 11.5 million taxpayers beating the midnight cut-off – a new high.

Despite a record number of tax returns submitted early this year, not all taxpayers have paid their liabilities to the Revenue.

The £1.6bn currently estimated to be owed for 2017/18 is expected to surpass the final total of £1.83bn paid late in 2016/17.

That would continue a trend – the amount of tax owed by those who missed the payment deadline has increased every year for the last three years. More…

Small employers risk losing the employment allowance in 2020

Plans to remove the employment allowance for large employers from April 2020 could impact on smaller firms.

This allowance provides employers with a reduction to their national insurance contributions (NICs) bill of up to £3,000.

Employers that claim the allowance can carry it forward from one tax year to the next, but that will stop from April 2020.

From that point, employers will only be eligible for the allowance if their total secondary class 1 NICs liability for the previous year is less than £100,000, while the allowance has also been reclassified as state aid.

Smaller employers may face issues due to the maximum amount of de minimis state aid they can receive in any three-year period. More…