Our newsletter this month highlights: fiscal outlook following the recent election, a few items to add to your January to-do list, spousal tax advantages and a note of how long you need to keep business records if you are self-employed.
Even though many of the uncertainties that have plagued UK politics during 2019 are still to be decided, at least the hiatus in parliament has been resolved; the Conservatives now have a working majority and we can expect action on a number of fronts.
Business readers with any sort of trading platform with the EU need to consider their options as the EU withdrawal agreement is likely to be ratified by 31 January 2020. At a minimum, EU traders should complete their Brexit impact assessments and take steps to mitigate any apparent risks identified.
Please call if you would like our help with this process.
When will the 2020 Budget be announced?
The new government will probably concentrate on the EU withdrawal process during January and it is unlikely Budget announcements will be in evidence before February.
Budget issues do need to receive fairly urgent attention as there are a number of Income Tax reliefs that are still to be determined for 2020-21.
The end of the calendar year is a popular accounting date for many businesses, but for those of us with a year-end accounting date of 31 March 2020, reviewing your management accounts for the nine months to the end of December 2019 is a must-do. Please use the following notes as a check list when you undertake this review:
Needless to say, if you are concerned by the historical results to 31 December 2019 or the outlook for 2020-21, let’s get together and see how best to meet these challenges. With the external pressures that Brexit may pose for your business this is not a time for wishful thinking. Be prepared.
It is fairly common knowledge that the UK tax system is biased in favour of married couples or those partners who have entered into a formal civil partnership.
Note that from 2 December 2019, the Civil Partnership (Opposite Sex Couples) Regulations 2019 came into effect in England and Wales allowing opposite sex couples to enter into a Civil Partnership for the first time.
Transfers of chargeable assets for CGT purposes are exempt between spouses and civil partners. Also, the annual exemption is available to both parties. This combination means that couples may be able to share the gain on a disposal of assets and reduce their overall CGT charge.
This strategy, of transferring partial ownership to a spouse (or civil partner), can also reduce an overall CGT charge if the transferring partner/spouse is due to pay CGT at the higher 20% or 28% rate (as their gains fall to be taxed in the higher rate tax band) and the receiving partner/spouse would only be liable to pay CGT at the lower 10% or 18% (as their share of a transferred gain would fall into their free basic rate band).
The 10% and 20% rates have applied from April 2016, but do not apply to disposals of residential property or carried interest ? for these latter items, disposals are taxed at 18% to 28%, dependent on where the gains sit in the basic or higher rates bands.
And don’t forget, CGT is assessed and payable as part of your self-assessment. Any tax payable for 2019-20 will be due for payment 31 January 2021. On the same day you will also have to pay any other underpayment of Income Tax for 2019-20 and your first payment on account for 2020-21.
Also, please note that from 6 April 2020, any CGT due on the sale of a residential property by a UK resident will need to be reported and paid within 30 days of the completion of the sale transaction.
If you own assets that are subject to CGT on disposal and you, and possibly your spouse, are struggling to fully utilise your CGT annual exemption, or you would like to discuss ways to minimise any CGT payable, please call to discuss your options.
Now that we are approaching the end of the 2019-20 tax year it’s worth noting that you are required to keep your self-employed business records ? that underpin your self-assessment tax return for 2019-20 - for 5 years after the 31 January 2021 submission deadline.
This means that you will need to retain your 2019-20 business records until the end of January 2026.
If you lose your business records or if they are stolen or destroyed and you are unable to recreate the transactions, you must do your best to provide figures for your tax return. You will need to advise HMRC if you use estimated or provisional figures.
Your records will need to back-up your business sales, expenses and VAT/PAYE records if you are registered for VAT or employ people.
HMRC may ask to see your:
Also, if you have produced accounts using the traditional, accruals method, HMRC may ask to see further records that provide details of:
1 January 2020 - Due date for Corporation Tax due for the year ended 31 March 2019.
19 January 2020 - PAYE and NIC deductions due for month ended 5 January 2020. (If you pay your tax electronically the due date is 22 January 2020)
19 January 2020 - Filing deadline for the CIS300 monthly return for the month ended 5 January 2020.
19 January 2020 - CIS tax deducted for the month ended 5 January 2020 is payable by today.
31 January 2020 ? Last day to file 2018-19 self-assessment tax returns online.
31 January 2020 ? Balance of self-assessment tax owing for 2018-19 due to be settled on or before today. Also due is any first payment on account for 2019-20.
1 February 2020 - Due date for Corporation Tax payable for the year ended 30 April 2019.
19 February 2020 - PAYE and NIC deductions due for month ended 5 February 2020. (If you pay your tax electronically the due date is 22 February 2020)
19 February 2020 - Filing deadline for the CIS300 monthly return for the month ended 5 February 2020.
19 February 2020 - CIS tax deducted for the month ended 5 February 2020 is payable by today.