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Welcome… To December’s Tax Tips & MYOB The Christmas season is fast approaching.  Don’t forget to plan your office party & let us know when we need to process your payroll. Payroll Matters Please try and give us three working days to process your payroll. Recently we have been asked to turn around several payrolls in less than 24 hours.  Although we will always do our best to return the payroll quickly we cannot guarantee that you will get it back within less than three working days as this will depend on other work priorities. Christmas Let us know if you would like your payroll processed in time to pay your staff on Friday 21st December.  If so, please email us any changes by Tuesday 17th December.  If we don’t hear from you we will process your payroll between Christmas and New Year. Please send all payroll requests to Seasons Greetings!  – Lorraine & Jennifer   December 2018 · MTD delayed for some, including those on VAT Annual Accounting · Company vans – update · Christmas Parties & Gifts for your Staff · Special ‘K’ Tax Codes – Beware! · December questions and answers · December key tax dates MTD delayed for some, including those on VAT Annual Accounting top HMRC have now put back the start date for Making Tax Digital (MTD) for some businesses and organisations until the first VAT period starting on or after 1 October 2019. This deferral applies to trusts, not-for-profit organisations (unless they are run through a limited company) divisional and group registrations, businesses based overseas, plus those required to make VAT payments on account or who use the VAT Annual Accounting scheme. In addition, the recent House of Lords report, Making Tax Digital for VAT: Treating Small Businesses Fairly seeks to delay the start of MTD for all businesses. The report states that HMRC, taxpayers and the software market are unprepared for the implementation of MTD for VAT in April 2019. It recommends that the Government defers the date for mandating MTD for VAT for all businesses by at least one year, while encouraging businesses to join voluntarily. We will wait and see whether any of its conclusions are accepted by the Government. VAT Annual Accounting We have always recommended the VAT Annual Accounting scheme to clients who have an estimated VAT taxable turnover at the threshold of £1.35 million or less.  It is an excellent scheme that simplifies bookkeeping and reduces the requirement for submissions to HMRC. Now with the advent of MTD, VAT Annual Accounting is proving to be even more useful. As explained in our June newsletter, the complexities of accounting for VAT make HMRC’s plan for a simple one step upload process for MTD unrealistic. We are planning to use specialist VAT filing software together with MYOB and Acclivity to upload MTD returns for our own clients. With HMRC’s current implementation, the first MTD quarterly returns will need be submitted in July 2019.  We envisage chaos with the new software and HMRC’s systems. We therefore want to delay our own MTD returns as long as possible. As explained in our June Newsletter, for those on VAT Annual Accounting with a year-end of 28th February 2019,  the first MTD submissions would not be required until 30th April 2021. Now with HMRC’s six month deferral for those on Annual Accounting, the first MTD submission for these will be required will be for VAT periods starting on or after 1st October 2019. So to optimise the effect of this, businesses who move to an Annual Accounting year end of August, will have to submit their first MTD return for the VAT year starting 1st September 2020 and ending 31st August 2021, with a submission deadline of 31st October 2021!  We have already moved many of our clients onto an Annual Accounting year-end of February to delay the effect of MTD.  We are now considering moving some of them to a year-end of August. If you would like us to simplify your journey to MTD just give us a call on 01422 847500.   Company vans – update top   Christmas Parties & Gifts for your Staff top A charge to income tax will generally arise if a company van is made available, by reason of the employment, to an employee or to a member of his or her family or household. It must be made available without a transfer of ownership from the employer to the employee. Since 2016/17, when the £8,500 earnings threshold for most benefits-in-kind was abolished, the charge applies regardless of the employee’s earnings rate. The charge will however, be proportionately reduced if the van is only available for part of a tax year. The taxable amount of the van benefit may also be reduced by any payments made by the employee for private use. Read More Don’t forget that HMRC allows your company to spend up to £150 (in total) per staff member on annual parties. This could be, for example, split between a summer Barbeque and a Christmas Party. You don’t need to report to the HMRC is as long as it is: £150 or less per head, annual and open to all your employees. And why not give Christmas gifts to your staff?  Your company doesn’t have to pay tax/NI if all the following apply:  – it costs the company £50 or less to provide (the limit for directors is effectively £300). – it isn’t cash – it isn’t a reward for their work or performance – it isn’t in the terms of their contract This is known as a ‘trivial benefit’. You don’t need to pay tax or National Insurance or report it to HMRC.   Special ‘K’ Tax Codes – Beware! top Recently a number of clients received revised PAYE tax codes from the HMRC beginning with a letter K.  The fact that this seemed to happen soon after the submission of their 2017-18 personal tax return raised our suspicions. The standard Tax code for 2018/19 is 1185L – this gives you a tax free personal allowance of £11,850 throughout the year. This is appropriate for most employees and Directors who have one employment, but if you have a state pension or untaxed company benefits these will reduce your tax free allowance and the number in your tax code will usually be lower.   The letter K is used at the front (unlike other letters) of an employee’s tax code when the deductions (eg company benefits, state pension) are greater than their Personal Allowance. So for example if you have a tax code of K475 you have a negative personal allowance of £4,750.  If you earn a salary of £27,000 your taxable income will be £31,750 (£27,000 plus £4,750). Estimates of Dividends HMRC have started attempting to estimate what the level of dividends and salary will be for Directors for a particular tax year (using the previous year as a benchmark), and trying to claw back the tax using a change in tax code. Of course it is often not clear as to what that level of dividends will be as it depends on a number of factors, not least of which will be the company’s available profits.  In any case any underpayment of tax would normally be collected by 31 January following the end of the tax year.  But HMRC is now trying to accelerate the payment of tax on dividends by amending PAYE codes for 2018/19 with an estimate of the likely dividend tax.  HMRC does not want to wait for the money. Where dividend income is considerably higher than the personal allowance HMRC may issue a K code to treat the excess of dividend income over personal allowances as additional pay. What we can do As one of our clients, if you receive a reduced PAYE code in these circumstances, we can ring HMRC on your behalf and ask to have the dividend deduction removed.  They will usually accept this and make the change. What you can do If you receive an odd tax code notice from HMRC just give us a ring and we will work out why, and if appropriate help you get it changed. You can also check your own tax code on the Money Savings Expert website For more information see the article in our our April Newsletter about Dynamic Tax Codes.   December questions and answers top   December key tax dates top Q. I am aware that there is to be a temporary increase in the limit for claiming Annual Investment Allowances. Are all assets eligible for the allowance? Answer Q. Due to cash flow difficulties I have not yet paid my self-assessment payment on account, which was due on 31 July 2018. I realise that I will have to pay interest on the amount outstanding, but will I also have to pay a penalty? Answer Q. Following the 2018 Autumn Budget announcement, will my company’s capital losses be restricted? Answer 19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/12/2018 30 – Deadline for 2017/18 self-assessment online returns to be filed if you are an employee and want tax underpaid to be collected by adjustment to your 2019/20 PAYE code (for underpayments of up to £3,000 only)   Need Help? top   New Clients Welcome top Please contact us if we can help you with these or any other tax or accounts matters. In addition, if there’s anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list. If you are not already a client and are interested in becoming one, we would love to discuss how we can help and provide you with a competitive quote for our services. See details of our Business Companion Service.   About Us top Simple Accounting Limited offers a cost effective Business Companion service to business owners who use MYOB, Acclivity, Mamut, Solar Accounts, Quickbooks or Wave. ‘All clients using these software packages can benefit from our support. Visit our website http://www.simpleaccounting.co.uk for a look at the resources on offer.’   If the images do not show. If the images contained within this email do not show correctly please add this email to your safe senders list.

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