Don’t forget to submit your 2017 Self Assessment Tax Return to HM Revenue and Customs

Avoid any penalties and interest and ensure you submit your Self Assessment Tax Return online to HM Revenue and Customs for the tax year ended 5 April 2017 by the 31 January 2018.

You also need to make your Self Assessment  balancing payment for tax year 2016/17, and make the first payment on account to HM Revenue and Customs for tax year 2017/18 by 31 January 2018.

Brabners v HMRC raises questions on the VAT of disbursements in the legal sector

A court case last year “Brabners v The Commissioners for HMRC” has raised a few concerns within the conveyancing industry of law firms.  Not unexpected when the firm in question was faced with a £68,000 VAT bill.

The main issue of the case was whether electronic searches should be classed as a disbursement or not when charging clients in conveyancing matters.  HM Revenue & Customs (HMRC) won the case as they said the firm was not just acting as agents in this regards as they may provide advice based on the results of the search.  The firm involved followed the guidance from the Law Society’s practice note on VAT on disbursements and no doubt other firms have done the same.  The Law Society is looking at amending its practice note on VAT on disbursements in light of this case and will issue updated guidance, as yet this is still outstanding.  The website does state though that the advice in the practice note has not been discussed or agreed with HMRC and is not binding upon HMRC, therefore it can be challenged by HMRC.

There is very much a feel of “wait and see” regarding how this may affect the legal profession as a whole, in the meantime, it may be the safest option to treat searches as a vatable recharge rather than a disbursement, to avoid any repercussions following the decision in this case.

HMRC also implemented changes to the way Local Authorities should be charging VAT, these had an implementation date of no later than 31 March 2017. Therefore you should already be seeing Local Authorities charging VAT on searches

Even if the local authority is not charging VAT on disbursements, HMRC’s approach based on the Brabners case is that the firm cannot treat the searches as disbursements and therefore VAT should be charged by the firm.

Contact us if you have any queries regarding the above or need any assistance.

Tax relief for energy saving technology

For a number of years there has been a generous 100% tax relief for businesses that install energy saving technology in their premises. This is in addition to the £200,000 annual investment allowance for plant and machinery.

The technology that qualifies for this 100% tax break includes energy efficient boilers and energy saving lighting systems. This is set out in the government’s energy-saving technology list. The list is updated each year. It was announced in the Autumn Budget that new technologies were being added but also certain items such as Biomass fired warm air heaters would no longer qualify from 1 April 2018.

Note also that where the expenditure has the effect of creating or increasing a loss for corporation tax purposes, the company can obtain a repayable first year tax credit. This credit, based on the amount of the loss attributable to the energy-saving technology spend, reduces to 2/3 of the corporation tax rate from 1 April 2018. Thus the relief reduces from 19% to just 12.67% from 1 April 2018.

New inheritance tax rules for passing on the family home started on 6 April 2017

TRADING OR A CAPITAL GAIN

New inheritance tax rules for passing on the family home started on 6 April 2017. This new relief should be taken into consideration when drafting your Will and we can work with your solicitor to make sure your Will is tax efficient.

From 6 April 2017 an additional nil rate band of £100,000 is now available on death where your residence is left to direct descendants. This is in addition to the normal £325,000 nil rate band and will increase over the next 4 years to £175,000 in 2020. This additional relief is however restricted If your assets exceed £2 million.

The rules are fairly complicated.  Contact us, we can review your personal circumstances to ensure that you take advantage of all the relief that you are entitled to.

What about downsizing to a smaller property?

The new inheritance tax relief for passing on the family home is protected even when you downsize to a smaller property.

For example, if a married couple currently live in a large house worth  £500,000 and downsize to a flat worth £250,000 they could give away some of the proceeds during their lifetime and yet still benefit from inheritance tax relief based on the higher valued property.  They could even sell up completely and move into a rental property and still get the inheritance tax relief!

No indexation of company corporation tax after December 2017

Indexation allowance was introduced in the 1970s to provide relief from paying tax on inflationary gains based on increases in RPI. The relief was abolished in 1998 for individuals and trusts, and replaced with taper relief. However, it was retained for companies. The Autumn Budget announced that indexation for corporation tax would cease for disposals from January 2018 onwards, although indexation up to December 2017 would be retained.

Although the change will apply to all chargeable assets owned by companies, it will have a significant impact on property investment companies where indexation allowance acted as a shelter from inflationary gains.

New Year resolutions to save tax

new year resolutions to save tax

At this time of year we think about New Year’s resolutions. It is also a good time to start planning your tax affairs before the end of the tax year on 5th April.

An obvious tax planning point would be to maximise your ISA allowances for the 2017/18 tax year (currently £20,000 each).

You might also want to consider increasing your pension savings before 5 April 2018 as the unused annual pension allowance is lost after three years.

For those looking to do some inheritance tax planning it would be a good time to review (or make) your Will in the light of the recent change in the inheritance tax nil rate band.

HMRC are having a computer issue with Self Assessment Statements that may affect tax payments due on 31 January 2018

HM Revenue and Customs have alerted us to a “computer” issue they are experiencing with Self Assessment Statements.   There is a possibility that if your Self Assessment Tax Return was submitted to HM Revenue and Customs prior to 31 October 2017 that any payment on account for 2017/2018 will not be calculated and included on your statement.

HM Revenue and Customs are aware of the problem and working to amend it with affected statements to be reissued in due course.

Until the issue is resolved, HM Revenue and Customs have advised that you should pay both the balancing payment for 2016/17 and payment on account for 2017/2018 regardless of the amount on the Self Assessment Statement you receive before the deadline of 31 January 2018.

Contact us if you need assistance with your Self Assessment payments if this applies to you.

Saint & Co Opening Times Christmas and New Year 2017/2018

We wish you all a very Merry Christmas and a Happy New Year.

Our offices’ opening times for the festive period are as follows:

Head Office – Carlisle (Rosehill)

Closed from 12 noon on Friday 22 December 2017  and reopening at 9 am on Wednesday 3rd January 2018

Ambleside Office

Closed from 12 noon on Friday 22 December 2017  and reopening at 9 am on Wednesday 3rd January 2018

Annan Office

Closed from 12 noon on Friday 22 December 2017  and reopening at 9 am on Wednesday 3rd January 2018

Carlisle (Harraby Green) Office

Closed from 5 pm on Friday 22 December 2017 and reopening at 9 am on Wednesday 3rd January 2018

Castle Douglas Office

Closed from 12 noon on Friday 22 December 2017 and reopening at 9 am on Wednesday 3rd January 2018

Cockermouth Office

Closed from 12 noon on Friday 22 December 2017  and reopening at 9 am on Wednesday 3rd January 2018

Dumfries (Galloway Street) Office

Closed from 12 noon on Friday 22 December 2017  and reopening at 9 am on Wednesday 3rd January 2018

Dumfries (George Street) Office

Closed from 12 noon on Friday 22 December 2017  and reopening at 9 am on Wednesday 3rd January 2018

Millom Office

Closed from 1 pm on Friday 22 December 2017 and reopening at 9 am on Tuesday 2nd January 2018

Penrith Office

Closed from 1 pm on Friday 22 December 2017 and reopening at 9 am on Tuesday 2nd January 2018

Whitehaven Office

Closed from 1 pm on Friday 22 December 2017 and reopening at 9 am on Tuesday 2nd January 2018

Wigton Office

Closed from 5 pm on Friday 22 December 2017 and reopening at 9 am on Tuesday 2nd January 2018

Saint Financial Services

Closed from 12 noon on Friday 22 December 2017  and reopening at 9 am on Wednesday 3rd January 2018