Best of the Finance Act - 2018
The UK government generally releases details of updates to finance law once a year. It’s called The Finance Act, and in the main it’s pretty dry reading.
However being the bang-on, upstanding folks we are at Moose, we pick through it and pass on key bits to our clients. A bit like one of those 10-minute World Cup highlights-of-the-day clips the BBC does.
Let’s have a quick skim through.
Making Tax Digital
Or MTD, if you’re an AF (Acronym Fan). HMRC have been working on ditching the paperwork and spreadsheets for some time, and the latest step they’re taking is for VAT returns. From the start of April 2019, VAT-registered businesses will be expected to keep on top of their VAT records – and submit them – digitally.
Good news – Moose has been operating this way for some time (apple for teacher!) so this doesn’t affect the way we or our clients need to work.
Rent a Room relief
Twenty-odd years ago, and to help alleviate the housing crisis of the day, HMRC introduced Rent a Room relief. It meant that you could rent out your spare room to a lodger and enjoy up to £7,500 of income (2017/18 figure) without paying tax on it.
There were a few stipulations, and with the popularity of online sites like AirBnB over recent years, these stipulations have been lost. For example, the relief’s meant to be for rent within your ‘only or main home’ – you’re supposed to be living there yourself at the time the lodger’s there too. So going on holiday and renting your home out for the duration technically falls outside of what the relief’s for.
HMRC are going to clamp down on this kind of thing a bit more from now on. So those of us using AirBnB for additional income might find we have to provide a bit more evidence in the future that we’re not bending the rules to breaking point.
Hunting down the ‘hidden economy’
The success of innovative and disruptive business models has been known to rattle HMRC’s cage. While the likes of Uber and Deliveroo aren’t strictly breaking any rules, HMRC are wary of the lack of taxes they end up paying – laws that were once comprehensive suddenly aren’t delivering the goods.
So they’re looking to focus on these ‘fashionable’ businesses – particularly the ones operating using self-employed drivers – by giving them a few more hoops to jump through. As these drivers are self-employed, they pay tax through Self Assessment. So forcing their bosses to ensure boxes are ticked before licenses are issued should help HMRC resume some degree of control.
Again, something to keep an eye on if your business relies heavily on these businesses for travel or courier services.
Top of the tax agents
The final ‘highlight’ made us chuckle a bit. HMRC plans to introduce some kind of grading system for tax advisors. While this should put an end to recent stories of ‘tax advisors’ setting up with no accreditations, charging new clients, liquidating and pocketing the cash… it does seem a bit rich.
There’ve been some pretty high-profile HMRC bloopers (missing correspondence, incorrect PAYE codes, inaccurate tax calculations, crazy statements) of recent, so while Moose – as a chartered accountants and chartered tax advisor – has nothing to worry about, the prospect of having our homework marked by a student seems a bit… ironic, don’t you think?