VAT fuel scale charges

VAT Fuel Scale Charges apply when the entire amount of VAT you pay on fuel is reclaimed via your input VAT. An output VAT charge is then made via the VAT Fuel Scale Charge. It also follows from this that if your company vehicles are not used for private usage, there’s no need to consider Fuel Scale Charges. The scale charge is calculated according to a car’s CO2 emissions.

HMRC has issued details of the updated VAT fuel scale charges which apply from the beginning of the next prescribed VAT accounting period starting on or after 1 May 2019. Click here to view.

VAT registered businesses use the fuel scale charges to account for VAT on private use of road fuel purchased by the business.

Please do get in touch for further advice on this or other VAT matters.

Making Tax Digital (MTD) May 2019 Update

Making Tax Digital (MTD) for VAT makes it mandatory for VAT-registered businesses above the £85k threshold to keep records and submit VAT returns digitally using compatible software.  MTD is an HMRC initiative designed to make sure the UK tax system is effective, efficient and easier for taxpayers.

Tax recording will be more accurate, providing fewer opportunities for errors, miscalculations and fraudulent activity.  The process will be faster and more automated for businesses, accountants and HMRC, helping them save valuable time.  With the right software, Making Tax Digital will make it easier for small businesses to record and file their tax returns online.

MTD Timeline

You may remember a blog we posted recently regarding the timeline for registering for Making Tax Digital.  For those of you that have just completed your monthly VAT return for March, this will be your last non MTD return.  The submission deadline is 7th May.  You can register for the new MTD regime 7 days after you have submitted your March return, however you MUST register by 16th May.  The process takes 72 hours so be careful not to get caught out here. Click here to see the timeline you need to be working to.

Once you have registered, you will need to link to your software.  This process will vary according to the software you are using but it must be HMRC compliant.  A full list of MTD compliant software can be found  here .

Kilby Fox are in Partnership with Xero to ease our clients through this process.  We can take out a subscription to this cloud-based software on your behalf and can provide training to those that will be using it, either at your place of work or at our offices to get you up to speed.  Click here to read through FAQ’s regarding MTD & Xero software.  Alternatively, please contact us for more information.

Changes to income tax for 2019/20

The new tax year brings changes to income tax bands and allowances.

The personal allowance is £11,850 for 2018/19 and increases to £12,500 for 2019/20. There is a reduction in the personal allowance for those with ‘adjusted net income’ over £100,000. The reduction is £1 for every £2 of income above £100,000. So for 2018/19 there is no personal allowance where adjusted net income exceeds £123,700. For 2019/20 there is no personal allowance available where adjusted net income exceeds £125,000.

The marriage allowance permits certain couples, where neither pays tax at more than the basic rate, to transfer 10% of their personal allowance to their spouse or civil partner.

The basic rate of tax is 20%. In 2018/19 the band of income taxable at this rate is £34,500 so that the threshold at which the 40% band applies is £46,350 for those who are entitled to the full personal allowance. In 2019/20 the basic rate band increases to £37,500 so that the threshold at which the 40% band applies is £50,000 for those who are entitled to the full personal allowance.

Individuals pay tax at 45% on their income over £150,000. More information can be found here.

For help with any of your tax issues, contact us now on 01604 662 670 or click here for more information.

Additional Brexit advisory documents for small businesses

The government has published additional documents containing advice on Brexit for UK small businesses.

According to the government, the information will help business owners to ‘understand how leaving the EU may affect their business’. The advisory documents cover a range of issues, from changes to UK-EU trade following Brexit, to alterations to how businesses send and receive personal data.

Amidst ongoing Brexit uncertainty the government is urging businesses to ‘prepare now’. Businesses that import or export goods to the EU are urged to apply for a UK Economic Operator Registration and Identification (EORI) number if they have not already done so, in order to continue trading with the EU post-Brexit.

Businesses that provide services to or operate in the EU may need to comply with new rules following Brexit. A business could be affected if it has a branch or branches in the EU; it operates in a services sector within the EU; it is planning a merger with an EU company; or if its employees have to travel to EU or European Economic Area (EEA) countries for business.

Meanwhile, businesses that hold intellectual property are warned that they may face changes to their copyright, patents, designs and trademarks following Brexit.

The government is urging small firms to utilise the EU Exit tool

Reporting Benefits in Kind – Forms P11D

The forms P11D which report details of benefits and some expenses provided to employees and directors for the year ended 5 April 2019, are due for submission to HMRC by 6 July 2019. The process of gathering the necessary information can take some time, so it is important that this process is not left to the last minute.

Employees pay tax on benefits provided as shown on the P11D, generally via a PAYE coding notice adjustment or through the self assessment system. Some employers ‘payroll’ benefits and in this case the benefits do not need to be reported on forms P11D but employers should advise employees of the amount of benefits payrolled.

In addition, regardless of whether the benefits are being reported via P11D or payrolled the employer has to pay Class 1A National Insurance Contributions at 13.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form. The deadline for payment of the Class 1A NIC is 19th July 2019 (or 22nd for cleared electronic payment).

HMRC has produced an expenses and benefits toolkit. The toolkit consists of a checklist which may be used by advisers or employers to check they are completing the forms correctly.

You may find the following link helpful: HMRC guidance

If you would like any help with the completion of the forms or the calculation of the associated Class 1A NIC please get in touch.

Making Tax Digital for VAT

As you are aware HMRC are introducing Making Tax Digital for VAT, for VAT registered businesses whose taxable turnover exceeds £85,000, for periods beginning 1st April 2019 onwards.  In order to submit your VAT Return under the new regime you will need to register with HMRC, please follow the steps in the link below.  When registering you will need to know your VAT number and current government gateway login information.

https://www.gov.uk/guidance/making-tax-digital-for-vat

When you have registered you will need to update the information in your software to allow submission under Making Tax Digital and you should no longer use the VAT online services to submit your VAT Return.  HMRC have stated that businesses who continue to file VAT Returns under the old regime will be penalised.

The sign up process for Making Tax Digital for VAT takes up to 72 hours to complete so will need to be completed before the VAT submission deadline.

It is not possible to sign up for the new regime until after you have submitted your final VAT return under the current system, please see below a timeline to assist in the registration process:

Monthly return from 1st April to 30th April 2019 Quarterly return from 1st April to 30th June 2019 Quarterly return from 1st May to 31st July 2019 Quarterly return from 1st June to 31st August 2019
Submission deadline for last non MTD VAT return  

7th May

 

7th May

 

7th June

 

7th July

Earliest you can sign up to new MTD for VAT 7 days after submission of last VAT Return 7 days after submission of last VAT Return 7 days after submission of last VAT Return 7 days after submission of last VAT Return
Deadline for signing up for new regime  

16th May

 

17th July

 

16th August

 

13th September

First MTD for VAT Return submission deadline  

7th June

 

7th August

 

7th September

 

7th October

 

If you require any assistance please do not hesitate to contact us.

Businesses urged to prepare for post-Brexit Customs Declarations

HMRC is urging VAT-registered UK businesses which trade exclusively with the EU to be prepared for a no deal Brexit.

In a letter sent to 145,000 affected businesses, HMRC explains changes to Customs, Excise and VAT procedures in the ‘unlikely event’ that the UK leaves the EU without a Brexit deal.

HMRC’s letter advises businesses to take three actions ahead of ‘Brexit Day’ on 29 March 2019:

  • Register for a UK Economic Operator Registration and Identification (EORI) number.
  • Decide whether a customs agent will be used to make import and/or export declarations, or whether declarations will be made by the business via software.
  • Contact the organisation responsible for moving goods (for example, the haulage firm) in order to ascertain whether the business will need to supply additional information to complete safety and security declarations, or whether it will need to submit these declarations itself.

A report jointly published by HMRC and the National Audit Office (NAO) recently revealed that approximately 55 million customs declarations are currently made by British businesses every year. This figure may rise to 255 million when the UK leaves the EU.

HMRC intends to write to businesses in the future in order to instruct them on any additional actions they will need to take, and when. We will keep you informed of developments.

GOV.UK publicationsHMRC letter

Making Tax Digital for VAT – pilot extended

HMRC has extended its Making Tax Digital for VAT (MTDfV) pilot scheme to all eligible businesses.

For most businesses, compliance with the regulations is mandated for VAT return periods beginning on or after 1 April 2019. However, MTDfV for some ‘more complex’ businesses has been deferred until 1 October 2019. This deferral applies to: trusts; not for profit organisations not set up as companies; VAT divisions; VAT groups; public sector entities such as government departments and NHS Trusts, which have to provide additional information on their VAT return; local authorities; public corporations; traders based overseas; those required to make payments on account; annual accounting scheme users.

Commenting on the pilot scheme, Clare Sheehan, Deputy Director for MTD for Business, said:

‘The MTD pilot is now available to all businesses who will need to use the service from April. This marks a significant milestone towards our delivery of a modern tax administration.’

‘We encourage all eligible businesses to join and try out the service before they are mandated to use it.’

HMRC has also confirmed that Brexit will not affect the introduction of MTDfV. In a recent letter, Jim Harra, Deputy Chief Executive of HMRC, wrote:

‘Our system is already live and by the end of February we’ll have written to every affected business, encouraging them to join the thousands of others who have registered.’

More information can be found at  GOV.UK publications.

Please contact us if you need help with MTDfV.

 

Increase of automatic enrolment contributions

The minimum contributions you and your staff pay into your automatic enrolment workplace pension scheme will increase from 6 April 2019. This is also sometimes known as phasing.  It is your responsibility to make sure these increases are implemented.

 

Who does this apply to?

All employers with staff in a pension scheme for automatic enrolment must take action to make sure at least the minimum amounts are being paid into their pension scheme. This applies to you whether you set up a pension scheme for automatic enrolment or you decided to use an existing scheme.

However, you don’t need to take any further action if you don’t have any staff in a pension scheme for automatic enrolment, or if you are already paying above the increased minimum amounts.  If you’re using a defined benefits pension scheme the increases do not apply.

 

What are the increases?

This table below shows the minimum contributions you must pay and the date when they must increase:

 

Date Employer minimum contribution Employee minimum contribution Total minimum contribution
New rate:6 April 2019 3% 5% 8%
Current rate: 6 April 2018 – 5 April 2019 2% 3% 5%

 

By law a total minimum amount of contributions must be paid into the scheme. You, the employer, must make at least the minimum employer contribution towards this amount and your staff member must make up the difference.   If you decide to cover the total minimum contribution required, your staff won’t need to pay anything.

 

The amount you and your staff pay into your pension scheme will vary depending on the type of scheme you have chosen and the rules of that scheme. Your staff contribution may also vary depending on the type of tax relief applied by your scheme. You can find this information in the scheme documents sent to you when you set up the pension scheme or you can speak to your pension provider.

 

Most employers use pension schemes that from April 2019 will require a total minimum of 8% contribution to be paid. The calculation for this type of scheme is based on a specific range of earnings. For the 2018/19 tax year this range is between £6,032 and £46,350 a year (£503 and £3,863 a month, or £116 and £892 a week). These figures are reviewed each year by the government.

 

When you are calculating contributions for this type of scheme you include the following:

  • salary
  • wages
  • commission
  • bonuses
  • overtime
  • statutory sick pay
  • statutory maternity pay
  • ordinary or additional statutory paternity pay
  • statutory adoption pay

Contact us for all your payroll and auto enrolment queries.

BREXIT – Deal or no Deal?

The UK will be leaving the EU on 29 March 2019. Leaving the EU with a deal remains the Government’s top priority, however the government and businesses should continue to plan for every possible outcome including no deal.

In December, HMRC wrote to VAT-registered businesses that trade only with the EU advising them to take 3 actions to prepare for a no deal EU Exit, including registering for a UK Economic Operator Registration and Identification (EORI) number. You can read the full letter here.

Businesses that only trade with the EU will need an EORI number:

  • to continue to import or export goods with the EU after 29 March 2019, if the UK leaves the EU without a deal; and
  • before they can apply for authorisations that will make customs processes easier.

If you are a UK business that trades with the EU and do not already have an EORI number then you should register for an EORI number at GOV.UK now. It only takes 10 minutes to apply. These businesses should also decide if they want to hire an agent to make import and/or export declarations for them or make the declarations themselves.

Businesses can find further guidance on customs declarations at Declaring your goods at customs if the UK leaves the EU with no deal. HMRC have also published a new ‘Prepare your business for the UK leaving the EU’ tool on GOV‌.UK to help businesses with their EU Exit preparations that provides further support and guidance at Prepare your business for the UK leaving the EU.

Make sure you are prepared for every eventuality.

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