Making Tax Digital: Full steam ahead

Making Tax Digital: Full steam ahead

The public consultation on the Making Tax Digital (MTD) project has failed to change HMRC’s plans in any significant way.  The timetable for implementation of MTD remains April 2018 and the income threshold for inclusion in the programme remains at £10,000.

What is Making Tax Digital?

MTD is the biggest shake-up of the personal tax system in 20 years and will fundamentally change the way taxpayers report to HM Revenue & Customs (HMRC).  Taxpayers will be required to keep records digitally and update HMRC more frequently than is currently the case.

From April 2018, the self-employed and landlords must report to HMRC on a quarterly basis, and use special software to keep their business records.

Small concessions

The consultation received over 3,000 responses.  Concern was expressed in a number of areas, particularly the ambitious timetable and the additional burdens and costs to business.  Nonetheless, the implementation date remains April 2018 and HMRC have rejected claims that the new reporting requirements will result in high costs for businesses. However,  HMRC do acknowledge that there will be a transitional cost to taxpayers, which they predict will be £280 per business on average, although business associations estimate the cost could be much higher.

The only significant concessions are:

  • Businesses will be given at least 12 months to become familiar with the changes before any late submission penalties will be applied.

HMRC are set to introduce a new regime for late submission penalties and late payment sanctions, but the details have yet to be released.  A consultation is planned for spring.

  • Businesses will be allowed to keep records in spreadsheet format, as many already do.

HMRC had previously insisted that spreadsheet based accounting would no longer be permitted.  However, extra software will be required to extract and submit their quarterly income and expenditure reports.

  • Activity at the end of the year must be concluded and sent to HMRC by either 10 months after the last day of the period of account, or 31 January, whichever is sooner.

HMRC had previously insisted that the End of Year declaration, which will replace the Tax Return, would need to be filed within 9 months.  This would have brought forward the filing deadline to 31 December for those with a 31 March year end.

  • Businesses will not be required to create and store invoices and receipts digitally.
  • Charities will be exempt from digital record-keeping and quarterly reporting.  However please note that their trading arms will not.

The reaction

The Federation of Small Businesses said the current timetable was “a total fantasy” and the MTD project cannot begin before 2020 without causing considerable disruption to economic growth, investment and employment.

The Chartered Institute of Taxation have called for the project to be delayed by at least a year.

The House of Lords finance bill sub-committee (FBSC) described the proposed £10,000 threshold for MTD as “ridiculous” and claimed HMRC had demonstrated “a complete lack of commercial reality” in their plans.

What next?

The closing date for comments on the draft legislation is 28 February 2017.  HMRC say that final decisions are to be made before legislation is introduced later this year.

MTD will be further under the spotlight this week as senior HMRC officials are called up to give evidence to a House of Lords committee considering the potential impact of the changes.  The finance bill sub-committee (FBSC) will be looking at the impact on the compliance burden and other costs borne by taxpayers, particularly smaller businesses and private landlords, and whether the measures will contribute to the modernisation, simplification and efficiency of the tax system.  The committee is due to publish its report by the end of March.

HMRC has promised that free software will be available to “the majority of the smallest business with the most straightforward affairs”.  However, it is still not clear who will produce this software.  HMRC hope the software will become available in 2017, in time for a large-scale piloting programme.

In summary

The public consultation has resulted in only minor concessions to HMRC’s plans and deep concerns remain within the profession and business community.  Unfortunately much of the detail has yet to be published and uncertainty continues on how the new system will be initiated and administered on a day to day basis.  The speed of implementation will certainly be challenging for all parties concerned, particularly HMRC, taxpayers and agents, but also software providers, banks and employers. 2017 promises to be a busy year!

 

 

Craig Walker is a senior tax manager at the firm. He advises on all matters tax related, both corporate and personal, including income, capital gains and inheritance. For more details and advice, please contact Craig on [email protected] or 0114 266 7141.

Car-tax-trophe for new car buyers

Car-tax-trophe for new car buyers

The way Vehicle Excise Duty (car tax) is calculated is changing. These changes are going to have a significant impact on all new car buyers and care will need to be taken to avoid potentially hefty tax charges. Below are details of the new rules affecting all new cars from 1st April 2017.

New Vehicle Excise Duties

From 1st April 2017

New Vehicle Excise Duties (VED) rules come into force for new cars registered after 1st April 2017. These tax changes mean that all new car buyers will face a significant increase in their car tax in the first year of registration, depending on CO2 emissions. Whilst currently low emission cars are exempt, the new VED system will only be free for vehicles with no emissions i.e electric and hydrogen cars.

There is also a new five-year supplement to pay for cars costing more than £40,000 which will be £310 per annum. Buyers of smaller, more economical cars will face the largest increases in duty as they have previously benefited from the old regime favouring low emission cars.

Why change?

Manufacturers have slashed CO2 emissions resulting in less tax revenues for the Exchequer. It is estimated that a quarter of new cars pay no road tax as CO2 emissions are below 100 g/km.

The new changes in detail

Cars registered after 1st April 2017 will pay a one off tax charge for the first year under a revised CO2 based band system. From the second year onwards, the CO2 scale becomes irrelevant as there will be two flat rates. A zero rate for zero emission vehicles and a flat rate of £140 for other cars.

Cars costing over £40,000 will pay the £140 from year two plus £310 for the first 5 years, meaning a total of £450 pa. After five years they revert back to the £140 flat rate. A £40,000 plus car with zero emissions will pay the £310 expensive car supplement.

As part of the changes, alternative fuel vehicles eg hybrids, bi-ethanol and liquid petroleum gas will benefit from £10 lower rates for the first 5 years.

The VED tax bands from April 2017 are as follows:

 

Emissions (g/km of CO2) First year rate Standard rate
0 £0 £0
1-50 £10 £140
51-75 £25 £140
76-90 £100 £140
91-100 £120 £140
101-110 £140 £140
111-130 £160 £140
131-150 £200 £140
151-170 £500 £140
171-190 £800 £140
191-225 £1,200 £140
226-225 £1,700 £140
Over 225 £2,000 £140

 

Cars above £40,000 pay £310 annual supplement for five years.

Cars registered before 1st April 2017

Existing VED bands will remain in place so that these cars continue to pay the current VED rates even after the new bands come into force.

Current (pre-April 2017) vehicle VED tax bands:

 

VED Band Emissions (g/km of CO2) Annual rate First year rate
A Up to 100 g/km £0 £0
B 101-110 g/km £20 £0
C 111-120 g/km £30 £0
D 121-130 g/km £110 £0
E 131-140 g/km £130 £130
F 141-150 g/km £145 £145
G 151-165 g/km £185 £185
H 166-175 g/km £210 £300
I 176-185 g/km £230 £355
J 186-200 g/km £270 £500
K 201-225 g/km £295 £650
L 226-255 g/km £500 £885
M Over 255 g/km £515 £1,120

 

Road tax refunds when you sell your car

Any remaining road tax is refunded to the seller and the buyer has to re-tax the car. The tax refunds should be sent automatically when the DVLA receives notification that the car has been sold. Sellers must inform the DVLA of the change of ownership immediately and fines for not doing so are £1,000.

Conclusion

With the news that only cars with zero emissions costing less than £40,000 will qualify for the new £nil rate tax band, it’s clear that the government is keen to put pressure on manufacturers to provide more vehicles within this bracket. This is another step on the road towards the Transport Ministers goal for all cars and vans to be zero emissions by 2050.

 

 

Craig Walker is a senior tax manager at the firm. He advises on all matters tax related, both corporate and personal, including income, capital gains and inheritance. For more details and advice, please contact Craig on [email protected] or 0114 266 7141.

7 ways on how to keep on top of your charity’s reporting requirements

7 ways on how to keep on top of your charity’s reporting requirements

7 ways on how to keep on top of your charity’s reporting requirements 

A recent article published by the Charity Commission showed that over 3,500 charities with income in excess of £250,000 and a financial year ending 31st March 2016 still needed to file their accounts by 31st January 2017.

This is quite worrying as good procedures for accountability are at the heart of best practice for charity trustees. Demonstrating a good and timely compliance record can enhance a charity’s reputation, increase public trust in what that charity is doing, and strengthen applications for funding from grant issuing bodies.

Filing a charity’s accounts and annual return has been made easier via the use of the Charity Commission’s online services, meaning that the information available to the public can be updated overnight. A charity has 10 months from the end of its financial year to submit its accounts to the charity commission, and the detail required, along with the level of scrutiny depends on its level of income.

The Charity Commission gives seven top tips for trustees to keep on top of their accounting and reporting requirements:

  1. Don’t wait for deadlines – submit as soon as you can.
  2. Submission is a board responsibility – all trustees are equally responsible, not just the treasurer or secretary.
  3. Ensure all trustees know the password to access the annual return and other online services.
  4. Make sure your charity’s trustee details are up to date before you complete the annual return.
  5. Record income of expenditure in whole pounds without decimal points or rounding them into thousands.
  6. Don’t mistakenly tick the box that says your accounts are “qualified”.
  7. Ensure the trustees declare any serious incidents in the annual return.

At Hawsons we try to help our charity clients file on time and keep the process as painless as possible. If your charity is struggling to file accounts correctly and on time, give one of our experts a call.

Paul Wormald is a partner at Hawsons, working in the Doncaster office. He worked previously with two national firms of Chartered Accountants prior to joining Hawsons in 2001. For more information or advice on anything covered in this article, please contact Paul on [email protected] or 01302 367 262.[/author_info]

GP contract changes 2017/18

GP contract changes 2017/18

GP contract changes 2017/18

The Department of Health (DH) and the British Medical Association (BMH) have agreed a £238m overhaul for the 2017/18 GP contract. This will see funding cover rising expenses and CQC fees as well as the unplanned admissions Direct Enhanced Services (DES) being scrapped. £157m will also go into the global sum from the unplanned admissions DES from April 2017.

A deal has been agreed for an expenses and pay uplift, which will see a 1% pay rise for GPs, as well as an uplift of £3.8m to cover increased superannuation costs of NHS pensions changes. With the population growing, an extra £58.9m will be invested in order to cover the costs of it.

Practices which close for half a day during the week will now not normally be eligible for funding under the extended hours DES from October, the new deal states. This will not affect practices closing once a month for staff training and nor will it affect practices with local agreements or for branch or small practices, according to the GPC.

It has also been agreed in the deal that £30m will be included in order to cover rising GP indemnity costs, while the GPC has also warned that it expects partners to make sure that salaried and locum GPs receive a fair share of the uplift after it was announced that practices will receive a share of the fund on a patient per patient basis.

To help the service recover costs from overseas visitors, practices must now determine a new patients NHS eligibility for healthcare under the new contract. Additional and non-contractual funding will be available for practices that work together to provide evening and weekend appointments.

“Much needed stability”

GPC chair Dr Chaand Nagpaul said: “I am pleased to say we have reached an agreement which we believe offers important and significant improvements to the contract. The changes will provide some much-needed stability and respite for GP practices by reducing bureaucracy and providing financial relief in key areas. Progress on ending the bureaucratic unplanned admission DES is welcome as it will enable GPs to spend more time looking after frail older patients, rather than on box ticking.”

“Reimbursements for CQC fees and rising costs of indemnity will protect practice resources so that they can be concentrated on frontline care for patients. Guaranteed cover for reimbursement to the sickness and maternity leave system will help practices continue to provide GP appointments when staff are unwell.”

“It is encouraging that NHS England were prepared to listen to GPs’ concerns in many of these areas and work with the BMA’s GP committee to deliver workable solutions. However, we should not pretend that these changes will solve the enormous challenges confronting general practice that have left many GP practices facing closure. Stagnating budgets, staff shortages and rising patient demand are combining to overwhelm services in many areas of the country.”

The 2016/17 GP contract in summary

  • Unplanned admission DES scrapped and  £156.7m added to the global sum
  • 1% pay rise for GPs.
  • £3.8m uplift for pensions superannuation.
  • £58.9m for population growth.
  • £30m for rising indemnity costs.
  • £2m extra to cover additional costs of medical records handling created by primary care support services.
  • Fee per health check under the learning disability DES raised from £116 to £140.
  • Changes to eligibility criteria for vaccinations.
  • Practices closing half a day in the week ineligible for extended hours DES funding from October 2017.
  • Practices collaborating to provide additional appointments outside core hours will get extra funding.
  • Practices required to check new patients’ eligibility for NHS care and identify those with non UK EHICs or S1 forms, supported by recurrent funding of £5m. 
  • Workforce census will become a contractual requirement with £1.5m added to core funding to cover the workload.
  • A new GP retainer scheme with tighter criteria for joining. Practice payments will remain the same as the 2016 interim scheme to be sued towards the GP’s salary.
  • No changes to QOF indicators. QOF point value to increase. A working group will immediately begin work on the future of QOF after April 2018.
  • All practices will be required to allow collection of data for the national diabetes audit and a selection of agreed indicators retired from QOF and enhanced services.
  • Prisoners will be allowed to register with a practice before leaving prison to enable better care.

More from our GP practice experts

You can find all of our latest GP practice sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Scott Sanderson

Scott Sanderson Partner

Scott Sanderson began his career with Hawsons and trained as a Chartered Accountant, becoming a partner in 2015, specialising in the healthcare sector and small businesses. For more details and advice, please contact Scott on [email protected] or 0114 266 7141.[/author_info]

How technology may impact the charity sector in 2017

How technology may impact the charity sector in 2017

In this article we look at some of the ways in which technology may impact the charity sector over the next 12 months.

Data security

With the amount of hacking scandals that dominated the press last year, data security will continue to rank very high on the agenda in 2017. With the new data protection mandates being introduced, it is now a requirement for data to be held in a professional, managed and highly secure data store. Desktop virtualisation could prove to be very important, along with certain restrictions and what is allowed to be printed outside of work. Data security, as well as cyber security, are vital in protecting all your charity’s data and should be considered at the earliest possible opportunity. If you need advice with improving your data security, Hawsons can help. Find out more here: IT and Cyber Security

Multiple platform integration

While charities are preparing themselves for the new General Data Protection Regulation (GDPR) rules, it is essential they do not overlook the ability to integrate data from a number of platforms and databases. It is important that data collected from websites, social media, events and mobile devices is all connected. This will ensure that data can be tailored and targeted to individual donors and supporters.

Digital disruption

Many charities see digital transformation as ‘digital disruption’ affecting the day-to-day activities of an organisation. But 2017 could be the year that charities see digital transformation as a positive rather than a negative and seize upon the opportunities that present themselves in order to give donors a clearer, enhanced experience. Many charities are worried about the new opt-in rules as well as clear consent to add people to their mailing list, they fear this will have a significant impact on their target lists when sending out letters or emails. However, some charities are already seeing opportunities with this and are embracing the technology, focusing on the transparency which is resulting in donors and supporters choosing to opt-in due to the charity’s openness. Those charities who see digital transformation as a positive are more likely to receive opt-ins and subsequent engagement from donors than those who do not.

Cloud services

Although on site services are still popular, Cloud services are expected to gain traction with charities in 2017. The opportunities for smaller charities are definitely there, for example not having to rely on in-house IT expertise while also being able to increase security in line with new cyber crime initiatives. One of the biggest strengths of Cloud is that it can be accessed from more or less anywhere, providing greater flexibility to its users. If you wish to find out more about the Cloud, please click here: Cloud accounting. Or if you would like to view a previous article about the benefits of Cloud accounting, please click here: The benefits of Cloud accounting.

Data responsibility

With digital transformation comes added data responsibility. This requires organisations to be digitally ready to handle the data and to ensure it is held efficiently and responsibly. It is absolutely vital to keep close control of data in order to ensure that an audit trail is maintained. This means that computer systems need to be integrated to allow the free flow of data and to ensure the data is properly secured along the way.

Trust building

2017 could be the year that defines the way charities interact with their donors. It is very difficult to manage the way someone donates to a charity, donors want to donate on their own terms according to their own timescales. Supporters of a charity need to have a reason to donate or at least a tempting offer of digital options so they can be the ones who decide how to have a relationship with the charity. Different social media platforms offer a variety of ways to interact, so charities need to keep this in mind when they decide how to communicate with new and existing donors. The charities that thrive respond to their donor’s wants and needs and engage on as many fronts as possible.

Simon Bladen Partner

Simon Bladen is the partner responsible for looking after the firm’s legal clients and has worked at Hawsons throughout his career. For more information or advice on anything covered in this article, please contact Simon on [email protected] or 0114 226 7141.[/author_info]