Tax UpdateSource: | | 30/11/2018
Tax is a difficult subject to learn because it constantly changes, not only due to a yearly budget, but also because of ongoing case law changing the parameters. There are also a number of grey areas and it would be very naive to assume there is anybody in the UK, who has perfect current knowledge. The tax practitioner who lectured to other ACCA practitioners on a seminar I attended, made the point that he discovered something new every day.
If you deal directly with the HMRC , please do not assume the person who answers the phone is a technical expert with qualifications in the area who are enquiring about. That may be the case, but often ti is not.
With that in mind I did think I would highlight some key points from the seminar I recently attended:
- Under IR35 legislation, private companies will be responsible for deciding if a contractor falls within the scope of IR35 from April 2019.
This rule has been in place in the private sector since April 2017 and experience has seen incorrect decisions and tax and NI deducted incorrectly in many cases by the public body.
There have also been numerous tax cases this year, some of which are still going, some which the taxpayer has won and some lost. BBC presenters are among those being challenged in this area.
The key points to remain outside the scope of IR35 are to prove some of:
you control your own work
you have the right not to work at certain times
you have no guarantee of work
you have to rectify your mistakes at your cost
you have the right to appoint a substitute
you provide your own equipment
you pay for your own public liability insurance
- Coca Cola have recently lost a case where a VW Transporter was defined as a car and not a van. Unfortunately the legislation for Vat and corporation tax do not align in this area.The tax difference is very significant, and typically company cars are very expensive if purchased through your limited company, but vans very tax efficient.
- Corporation tax will go down to 17% from April 2020.
- The personal allowance will be £12500 from April 2019 and higher rate threshold £50000 from April 2019.
- The calculation of Private residence relief in capital gains tax will reduce, bringing more people in to tax when they sell a second home they lived in in the past.
- Electric car benefits are being significantly increased in 2020.
- The VAT registration threshold is expected to be reduced in 3 years time but will remain at present.
- Making Tax digital comes in for vat registered businesses in April 2019. This means the HMRC software will cease to work , forcing businesses to buy external software.