Spring Update 2018 Summary
What is the Spring Statement? 'It is a shorter, snappier version of the main budget' says Chancellor Philip Hammond. Today's Spring Statement contained no tax changes, so we will have to wait for the 2018 Autumn Budget for more information on future changes. Click here for our Spring Statement report
In the meantime, please see our information below for end of year tax planning tips, and find out what you need to know about Making Tax Digital, getting ready for GDPR, and the new child care rules.
For tax rates and allowances for the coming 2018/19 tax year, please see our guide.
Income tax and capital gains tax
Have you utilised your ISA allowance of £20,000 for the year? No tax is payable on income and gains on investments held within a ISA.
Consider realising capital gains to utilise your annual tax free CGT exemption of £11,300.
Ensure you have utilised your £5,000 tax free dividend allowance. The allowance is dropping to £2,000 from 6 April 2018.
Transfer income yielding assets to your spouse/partner who pay tax at a lower rate or alter the beneficial interest. Seek advice.
Buy to lets and second homes
If you have more than one home consider making a Principal Private Residence election. You have two years to make the election.
The restriction on allowable mortgage interest for residential landlords commenced on 6 April 2017, have you considered your options? From 6 April 2020 relief will be available at the basic rate only.
Pension contributions
You can contribute up to £40,000 gross to a pension plan plus utilise any available Annual Allowance carried forward. You will receive tax relief at your marginal rate. If your income is over £150,000 you will have a lower annual allowance.
Get a pension check to ensure your pension funds do not exceed the Lifetime Annual Allowance of £1m. Funds in excess of the limit will suffer penalty tax charges when you take pension benefits. Consider making a pension protection application. Contact your IFA for more information.
Inheritance Tax
You can make gifts up to £3,000 each year, and utilise any part of the allowance not used in the preceding tax year free from IHT.
You could consider making regular gifts out of surplus income, as these are IHT free and also reduce the size of your estate for IHT purposes.
The residence nil rate band was introduced this tax year. This applies when residential property, ie the family home is passed to children or other lineal descendants. Please review your Will to ensure you qualify for the relief.
Under Making Tax Digital (MTD) businesses will be required to keep digital records and provide quarterly updates to HMRC. MTD is being phased in for businesses earning above the £85,000 VAT threshold from April 2019. Businesses will be required to enter into the MTD regime from the first VAT period that begins on or after 1 April 2019. Please therefore contact us if you require support with cloud accounting software or help with your online bookkeeping. Make sure you are ready! Get in touch to transition your bookkeeping onto software as soon as possible so any issues are ironed out well in advance of your first submission to HMRC.
For other taxes, businesses will not be asked to switch to MTD and provide quarterly updates to HMRC until at least 2020.
General Data Protection Regulation (GDPR)
GDPR takes effect from 25 May 2018.It requires that personal data held by businesses should be adequate, relevant and limited to what is necessary for the purposes held. Therefore, the period for which personal data is stored must be limited to a strict minimum taking into account any overriding regulations. The penalties are high, so make sure your business is ready.
We will be reviewing our own engagement letters and privacy policy to ensure we are compliant and to obtain any consent necessary under GDPR in due course.
The end of the Childcare Vouchers Scheme (CCV)
Childcare vouchers are only available to directors and employees. Under this scheme, your company will pay some of your childcare costs up to a maximum amount of £243 per month free of tax and NIC.
Certain criteria apply, namely;
-It must be an Ofsted registered or equivalent approved childminder or childcare provider.
-They must be made available for all employees
This scheme is closing to new applicants on 5 April 2018, so you will need to register and receive the vouchers by this date if you want to join the scheme.
Tax Free Childcare (TFC)
Under this scheme you are required to set up an online account. For every 80p you deposit in the account you will receive a top up contribution from the government of 20p. You can put in up to £8,000 per child per year, meaning up to £2,000 will be added. To qualify for this scheme both parents must work.
FUSE is an independent Chartered Certified firm of accountants and tax advisors based in Highgate Village, North London. We provide a dynamic range of services to clients working in property, media, entertainment and professional services. Our clients vary in size from self employed sole traders, small enterprises and medium size businesses. We believe that comprehensive financial planning and sound business financial advice are the keys to growth and profitability.
