MTD: Are you ready?
VAT-registered businesses with a taxable turnover above the VAT threshold are required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns from 1 April 2019.
Lettings Relief to be scrapped?
Lettings relief is a capital gains tax break that is available to anyone who lets out a property that is, or was in the past, their primary residence.
It has been possible to claim a maximum £40,000 in letting relief against capital gains tax when a let property is sold, rising to £80,000 for a couple, if you ever lived in it. This was in addition to principal private residence relief.
However, April 2020, subject to a consultation, owners will only qualify for this relief if they occupy the let home alongside the tenant, in other words, effectively letting out rooms.
Also, whilst currently, sellers receive capital gains tax relief for the last 18 months that they own the property, from 2020 this “final period exemption” may be halved to nine months.
Parents failing to make use of tax-free childcare
According to data published by the government, its Tax-Free Childcare (TFC) scheme ‘has not had the uptake expected’, with only 22% of eligible families making use of it.
Official figures have suggested that the government had planned and budgeted for 415,000 families to be using the TFC scheme by October 2017. However, the data has revealed that, by December 2018, only 91,000 families had signed up to the scheme.
The TFC initiative replaced the Employer Supported Childcare (ESC) scheme, which closed to new entrants on 4 October 2018. TFC is available to both employed and self-employed individuals, and is paid per child rather than per parent, allowing single parents to benefit.
Under the initiative, tax relief of up to 20% is available for childcare costs, up to a total of £10,000. The scheme is therefore worth a maximum of £2,000 per child (£4,000 for a disabled child). Children aged under 12 are eligible for the scheme, as well as disabled children aged up to 17.
HMRC reveals 700,000 couples are 'missing out' on Marriage Allowance
HMRC has estimated that around 700,000 couples are 'missing out' on the Marriage Allowance, which could save them up to £238 in tax.
Introduced in April 2015, the Marriage Allowance enables spouses to transfer a fixed amount of their personal allowance (PA) to their partner. The option is available to couples where neither pays tax at the higher or additional rate. If eligible, one partner will be able to transfer 10% of their PA to the other partner (£1,190 for the 2018/19 tax year).
For those couples where one person does not use all of their PA, the benefit will be up to £238 (20% of £1,190).
UK small businesses spending more on tax and employment obligations
UK small businesses are spending 15% more on tax and employment obligations when compared to 2011, according to new research.
The Impact of Government Policy Index (IGPI), which was compiled jointly by the Federation of Small Businesses (FSB) and the Centre for Economics and Business Research (CEBR), found that the average UK small business spends £480,788 on complying with government policies, including business rates, auto-enrolment and Insurance Premium Tax (IPT).
The IGPI also revealed that small firms lose an average of £5,000 per year to tax administration and paperwork.
'Come the beginning of April, small firms will not only have Brexit Day to worry about, but also Making Tax Digital (MTD), a higher living wage, rising employer auto-enrolment contributions and further business rate hikes,' said Mike Cherry, National Chairman of the FSB.
'The competition to attract entrepreneurs to the UK is more intense than ever. With Brexit on the horizon, it's critical that the government at all levels does its utmost to help, rather than hinder, the UK small business owners who are being tempted to other shores.'
Confidence amongst small businesses 'falls to seven-year low'
Confidence amongst UK small businesses has 'fallen to its lowest point since 2011', the quarterly Small Business Index (SBI) published by the Federation of Small Businesses (FSB) has revealed.
The SBI currently stands at -9.9 – which, according to the FSB, reflects a 'level of pessimism not seen since the aftermath of the financial crash'.
The FSB also found that 43% of firms expect their performance to worsen over the coming months. A further 67% of businesses do not expect to increase capital investment in the next three months, according to the SBI.
'We've not seen political uncertainty weighing on small business confidence like this for many years. Planning ahead has now become impossible for a lot of firms as we simply don't know what environment we'll be faced with in little more than 100 days' time,' said Mike Cherry, National Chairman of the FSB.
'A pro-business Brexit is one that ensures we can trade easily with the EU and have access to the skills we need. The latter is already proving a challenge, and – if we crash out of the EU on 29 March without a deal – the former will go out the window.'
However, the SBI also revealed that some small firms are continuing to recruit, with 16% having taken on a new member of staff in the past three months. An additional 68% have increased pay, and 50% of firms plan to grow their business over the next 12 months.
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