Rules for “rent a room” relief to be tightened up from 6 April 2019

HMRC propose to restrict the availability of “rent a room” relief to situations where the taxpayer is living in the let property for at least some of the time that the accommodation is let. Hence renting out a house during Wimbledon fortnight while the owners are absent would not qualify from 6 April 2019!

Rent-a-room relief was introduced in 1992 to encourage individuals to make spare capacity in their homes available for rent. The government intended this to increase the quantity and variety of low-cost rented accommodation, giving more choice to tenants and making it easier for people to move around the country for work.

Currently rent-a-room relief gives relief from income tax for up to £7,500 of gross rental income to individuals who let furnished accommodation in their only or main residence.

From ‘Xero Worries’ to ‘Zero Worries’: How we helped Coomara overcome cloud accounting apprehension

Xero worries to Zero worries

For many business owners, cloud accounting plays an essential part in their day-to-day. Both short and long-term plans are confidently put into action, underpinned by real-time, accurate, and up-to-date numbers.

But for some, the idea of switching to the cloud is, well, clouded by trepidation.

They just can’t overcome their concerns regarding security, usability, or accessibility, and sometimes there’s a reluctance to abandon a familiar (if outdated) spreadsheet or desktop accounting system.

As newly crowned Xero Platinum Partners, we see it as our duty to lead the way when it comes to cloud accounting, helping those apprehensive to make the switch see the light. And that’s precisely what we did for Pete Denston of Coomara Veterinary Practice.

About Coomara

A small, independent vet practice specialising in small and large animal care, Coomara is the quintessential family business, led by husband and wife team Pete and Charlotte Denston and their team of vets and support staff. They cover Carlisle and the surrounding areas and have done so since 1989. However, Pete and Charlotte first became involved with, and bought, the practice in 2013, which is when our working relationship with Coomara began.

Pete approached us and two other accountancy firms for advice prior to purchasing the business. We quickly spotted the viability and, backed by careful analysis and cash flow forecasts, this information encouraged Pete and Charlotte to take the leap.

A Major Challenge

Coomara is a well-established and well-liked business in Carlisle (one glance at their reviews will attest to this). But even the most successful of businesses will encounter tricky challenges sooner or later. For Pete, Charlotte and Coomara, this came in the shape of financial admin and internal accounting processes.

They needed help with bookkeeping, balancing records, and VAT returns, among others, and were in desperate need of a simple, easy-to-use accounting system. We were only too happy to help.

The Solution? Enter: Xero

Pete required an accounting system that provided access to real-time, up-to-date numbers, and gave him an accurate picture of his practice’s financial wellbeing at the drop of a hat. For us, there was only one solution: Xero.

It’s known as the world’s most beautiful cloud accounting software for a reason, and after demoing the platform and taking Pete through its various capabilities, he was on board.

We took the lead with regards to set up and training, and now offer ongoing support to Pete and his team as they continue to use Xero to run and grow Coomara.

The result? Life is less stressful, there’s more time to run the business rather than getting bogged down in admin, and the access to real-time numbers has helped significantly improve decision making.

“Helpful and supportive…”

We continue to work closely with Pete, Charlotte and their team to ensure they’re making the most of Xero, its core features, and its wide range of add-ons.

Here’s what a far less apprehensive Pete had to say about his introduction to Xero and the cloud:

“The team at Saint has been very helpful and supportive in the running of my business. If I ever have a problem with Xero, I know that they’ll be able to either help resolve the problem or advise me on how best to sort it out myself if needed.”

Find Out How Xero Can Help Your Business

If you’d like to experience the benefits of Xero and cloud accounting, just like Pete and Coomara, we can help. Our team of Xero Champions are ready to show you the ropes. You’ll be saving time and money before you know it!

Simply click the link to Get Started with Xero, or call us on 01228 534371 to chat with one of our friendly advisors.

Making Tax Digital for VAT guidance issued

HMRC have now issued their detailed guidance on the digital record keeping and return requirements for Making Tax Digital (MTD) for VAT.

VAT Notice 700/22 clarifies that spreadsheets may still be used to keep business records provided that there is bridging software that links to the Government gateway.

There will however be a one year “grace” period during the first year of MTD when businesses will not be required to have digital links between software programs, referred to in the VAT Notice as a “soft landing”.

The VAT notice includes a number of helpful examples illustrating different accounting systems and the digital links required to comply with MTD for VAT.

The VAT notice is essential reading for all VAT registered businesses.

WHEN DOES MTD FOR VAT START?

The Making Tax Digital rules apply from your first VAT period starting on or after 1 April 2019. A ‘VAT period’ is the inclusive dates covered by your VAT Return.

For example, where a business submits quarterly returns covering the periods to 28 February, 31 May, 31 August and 30 November, the business will need to comply with Making Tax Digital rules for the VAT quarter starting 1 June 2019 and ending on 31 August.

“SOFT LANDING” FOR MTD FOR VAT FOR THE FIRST YEAR

For the first year of MTD for VAT (VAT periods commencing between 1 April 2019 and 31 March 2020) businesses will not be required to have digital links between software programs. The one exception to this is where data is transferred, following preparation of the information required for the VAT Return, to another product (for example, a bridging product) that is Application Programme Interface (API) – enabled solely for the purpose of submitting the 9 Box VAT Return data to HMRC. The transfer of data to this product must be digital.

For the first year of MTD for VAT (VAT periods commencing between 1 April 2019 and 31 March 2020), where a digital link has not been established between software programs, HMRC will accept the use of cut and paste as being a digital link for these VAT periods.

However, for VAT periods starting on or after 1 April 2020, there must be a digital link for any transfer or exchange of data between software programs, products or applications used as functional compatible software.

USE OF SPREADSHEETS IN PREPARING VAT RETURNS

Example 3 in the VAT Notice describes a business that uses a spreadsheet and bridging software from April 2019, which allows the information to be transferred to HMRC via an API.  It uses a spreadsheet to record all sales, purchases, and expenses in a digital format. The VAT Return is then prepared within the spreadsheet, using formulae already written into the spreadsheet.

The VAT Return information is then sent via a mandatory digital link to bridging software, which digitally submits the information directly to HMRC.  Example 6 shows how a spreadsheet would be acceptable in order to consolidate VAT information prior to submit a Group VAT return.

If you haven’t already done so, please contact us to help you get ready for this significant change in VAT accounting and reporting.

Take a BITE out of your biggest business challenges

BITE 2018

Join us in Carlisle for a FREE one-day business event this October.

There’s no denying that technology is moving faster than ever before. You might feel like you’re the last to know about a new app, website, or software, and when you discover your competition has been using a shiny new piece of tech to gain an advantage, it can be incredibly frustrating.

But it doesn’t have to be that way.

You can move faster too. Get in there early, be an early adopter. While it’s tempting to wait and see which new technology becomes the tried and tested standard for your industry, it’s better to get in on the ground floor and lead the way.

Our upcoming business event BITE gives you the opportunity to do just that. Explore the latest and best in tech, all of which complements and integrates with the cloud accounting software Xero. Meet the app owners, download tools onto your smartphone or tablet, and discover what’s possible for your business.

Sign up for your FREE place here, or read on to learn more about what the event has in store.

What does BITE stand for?

In every sense, BITE stands for Business, Innovation, Technology, and Efficiency.

During the course of the event, you will:

  • Get to meet and network with like-minded business owners, the Saint & Co team, and representatives from Xero and the apps.
  • Be encouraged to embrace a spirit of curiosity and growth, regardless of industry or business type.
  • Find out how Xero sits at the heart of your business, and which apps apply specifically to your type of business.
  • Connect with the apps and tech that are perfect for you and your business.

Where is BITE? And when?

Where: Carlisle Racecourse (Get Directions)

When: Friday 12 October 2018, 08:30 – 16:00

Who’s speaking?

We’re delighted to confirm that dynamic content marketing duo Andrew & Pete will be our closing keynote speakers at BITE.

Bringing huge amounts of knowledge, fun, and humour to the table, they will take a look at the four BITE elements – business, innovation, technology, and efficiency – in a manner only they can, and with a huge dollop of personality thrown in for good measure.

Can I come?

Yes!

If you’re running a business in the north of England, this event is specifically for you. Take a look at the agenda below to get a feel for the day’s talks and activities.

Register for BITE 2018 (It’s Free!)

We’re anticipating that around 200 businesses will join us on the 12th of October for BITE, and we want you to be there too. You’ll learn how to save time, save money, get found by your ideal client, get paid faster, and so much more. You’ll even get lunch – and it won’t cost you a penny.

Sound good?

Register Now (Did we mention it’s free?)

Trust Taxation

We are still awaiting the promised consultation on the taxation of trusts announced in the Autumn 2017 Budget. However, in the meantime HMRC have updated their guidance on how different types of trust income are taxed, what management expenses and reliefs can be deducted, and understanding the tax pool.

Please contact us if you are an existing trustee, considering setting up a trust or wish to discuss trust or estate planning more generally.

Short-term business visitors

business visitors

HMRC are consulting on ways to simplify the tax treatment of short-term business visitors from the foreign branch of a UK company, to ensure the UK is an attractive location for business headquarters.

The consultation considers potential changes to the PAYE arrangements under which UK employers need not operate PAYE for employees of their overseas subsidiaries on short stays in the UK. This treatment does not currently apply to visits to the UK by employees from overseas branches of UK companies

The consultation proposes two broad options:

  • Extending the UK workday rule from 30 to 60 days.
  • Introducing a new tax exemption for short-term visitors from overseas branches.

Good news! We’ve gone Platinum

We’re very pleased and incredibly proud to announce that Saint & Co is now a certified Xero Platinum Partner.

This has been a long road, from Bronze to Silver, to Gold and beyond, but it represents our unwavering commitment to the Xero platform, and our staff’s dedication to learning and improving every single day.

They’ve put in the hard yards, earning the appropriate certifications and delivering expert advice and guidance to our clients. A massive congratulations must go to each and every one of them!

What Does This Mean for You?

So, what exactly does our newly acquired Platinum status mean for you? In a word: Value.

As Platinum Partners, we are now in a position to pass on even more value to you by the way of access to promotions, expert assistance, consultancy, and project support.

Your experience with Xero is incredibly important to us, and our shiny new status will go a long way towards making it even better.

Find Out How Xero Can Help Your Business

Our team of Xero Champions are primed and ready to help you discover the many benefits of switching to a cloud accounting system, and to Xero in particular. You’ll quickly save time, save money, and wonder how you ever did without it.

Simply click the link to Get Started with Xero, or call us on 01228 534371 to chat with one of our friendly advisors.

 

 

HMRC plans points-based overhaul of penalties for late tax payments

HMRC plans to overhaul the penalties for late payments by businesses and individuals for corporation tax, income tax and self assessment, using a brand new points-based system.

From 2020, late payment penalties will consist of two penalty charges, one charge based upon payments and agreements to pay in the first 30 days after the payment due date, and another charge based on how long the debt remains outstanding after the 30 days.

However, if a time to pay agreement is not agreed, then the payment window will only be 15 days.  There will be no penalty if payment in full is made before the end of the 15-day period.

If a time to pay agreement is made, but the taxpayer then breaks the deal and fails to pay, a second penalty will also be charged.

As with existing penalties, there is a ‘reasonable excuse’ clause, with the usual provisos that inability to pay and reliance on a third party are not acceptable excuses.

Although the new VAT penalty regime will take effect from April 2020, the government has not confirmed yet when the income tax and corporation tax penalty system will come into force.

In a statement, HMRC said:  ‘The changes will ensure that people who pay late can avoid a penalty if they take action to make arrangements to pay, and that those that do not will receive a penalty that is proportionate to both the value of the debt and the amount of time it is outstanding for.

What is the 2019 loan charge?

This is a tax charge on any outstanding loans that exist as a result of a disguised remuneration tax avoidance scheme. It applies to any loans that were taken out under a disguised remuneration scheme since 6 April 1999.

The most common schemes were Employee Funded Retirement Benefit Schemes (EFRBS) and Employee Benefit Trusts (EBT). When used for tax avoidance, both involved the diversion of employment income to a trust; the trust would then ‘loan’ the employment income to the individual (meaning no PAYE/National Insurance tax was paid) who sought to benefit from the Scheme.

It is the responsibility of the employer/company to pay the 2019 Loan Charge under PAYE legislation. The employer is then expected to pass this cost on to the individual. Whilst the initial liability falls to the employer, it can be passed to the individual beneficiary of the scheme by HMRC if unpaid.

By contacting HMRC to settle your tax affairs now, you can obtain certainty of what you owe and if required, arrange a payment plan.

Notify HMRC of employee benefit trusts and similar loans by 30 September

HM Revenue and Customs (HMRC) have published revised guidance on settling tax liabilities in relation to the use of disguised remuneration schemes involving Employee Benefit Trusts (EBTs) and similar arrangements.

In order to settle on preferential terms before the outstanding loan charge arises on 5 April 2019, taxpayers must register with HMRC and provide all of the required information by 30 September 2018.

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