HMRC have confirmed that no further MTD for business changes will be brought in before 2020 at the earliest. The Treasury set out its revised priorities for current digital transformation projects, to make room for the additional demands on its resources of work to upgrade customs systems in preparation for Brexit. The HMRC statement notes that the convergence of business taxes from the current range of IT systems onto a

  Notable changes are listed below:   Although there is no change to the rate of corporation tax, maintained at 19%, HMRC is to freeze indexation allowance on corporate capital gains for disposals after 1 January 2018. From April 2018, business rate rates will rise by any increase in the Consumer Price Index (CPI) rather than the Retail Prices Index (RPI). The change has been brought forward two years. Historically,

  Ever since the introduction of the 7.5% increase in the rate of tax on dividends in April 2016, it has been more tax efficient for owner managed business shareholders to pay interest on their loans to the company rather than pay themselves dividends. The interest would be deductible against the company’s profits saving corporation tax at 19% (was 20%), whereas dividend payments are not tax deductible. A higher rate

  The current tax year, 2017-18, is the last year we have to prepare for the advent of the new reporting system, Making Tax Digital for Business (MTDfB). Following the recent budget, it is now clear which businesses are going to be affected and when. Dates for implementation will be:   From April 2018, unincorporated businesses (including landlords) with gross income (turnover) above the VAT registration threshold (£85,000 for 2017-18)

  Property business owners, particularly buy-to-let landlords, have been hit with a number of quite dramatic changes in their tax status. One of the most draconian is the gradual disallowance of tax relief for finance payments that starts April 2017.   We have highlighted this issue in past articles posted to this newsletter. In essence, from April 2017, finance charges will be progressively disallowed and replaced with a tax credit

  We have now seen the response of HMRC to representations made by accountants and other interested parties to their Making Tax Digital (MTD) agenda.   A reminder that MTD will result in the gradual digitisation of small businesses (including landlords) reporting to HMRC. The present proposals will oblige smaller businesses to upload quarterly data to HMRC from April 2018.   HMRC’s response included a number of relaxations, primarily:  

  The Scottish Government has the devolved power to set certain tax rates, principally income tax and land transaction tax (equivalent to SDLT in England and Wales). Although it proposes to freeze the basic, higher and additional rates at 20%, 40% and 45% respectively, the thresholds will not be the same as the rest of the UK.   The higher rate income tax threshold will increase by inflation to £43,430

  In the December edition of this newsletter we flagged up that new anti-avoidance legislation in Finance Act 2016 will tax certain transactions in UK land as trading transactions instead of capital gains.   Just before Christmas, HMRC issued guidance to clarify the scope of the new rules. The legislation as enacted in Finance Act 2016 was drafted in such a way that it could be interpreted as catching certain

  In order to qualify for CGT entrepreneurs’ relief on the disposal of shares, the shareholder must have been an officer or employee of the trading company or group throughout the twelve months up to the date of disposal. Although there is no minimum number of hours, it is important that there Is evidence that this condition is satisfied, so for example the employee/ director should not resign before the

  Entrepreneurs’ Relief reduces the rate of CGT to 10% on the first £10 million of gains on the disposal of qualifying business assets. This would include sole traders disposing of their business and partners disposing of their interest in a partnership carrying on a business. With many businesses operating as limited companies these days it is important to appreciate that not all shareholdings qualify for this generous relief.