According to a recent government announcement, 32 million people will be better off as the Finance Bill 2018-19 receives Royal Assent.  

Treasury pundits who wrote the announcement said:

A basic rate taxpayer will payat least £1,200 less income tax than they did in 2010, thanks to the government’s changes, giving people more help with the cost of living.

As well as cutting taxes for millions of people a year earlier than planned, fuel duty has been frozen for a ninth year in a row, and beer, cider and spirits duty have also all been frozen.

The Act means first-time buyers will be eligible for relief from stamp duty on shared-ownership homes, to help them realise their dream of owning their own homes.

And businesses will benefit from a new capital allowance for qualifying non-residential structures and buildings and an increase to the Annual Investment Allowance to £1 million for two years – helping to maintain our economic success by increasing investment and productivity.

Finally, the government’s commitment to a fair and sustainable tax system is further realised in this Finance Bill, through making individuals or entities that reduce their tax bill by holding intangible property in low-tax jurisdictions liable to pay the tax they owe in the UK, making non-residents liable for capital gains tax on the sale of all immovable UK property, and introducing rules to prevent firms fragmenting profits between unrelated entities to avoid tax. 

It is interesting that there is no mention of the likely outcome of the Brexit negotiations on our business community, and how this might affect these 32 million taxpayers.

Fingers crossed that all will be well, and the present uncertainties will be resolved before the end of March.

The deadline for filing 2017-18 self-assessment tax returns without paying a penalty for late submission has passed (31 January 2019).

But a new and pressing deadline now presents itself: 5 April 2019.

As we have outlined in previous posts, most tax planning needs to be considered and actioned before the end of the tax year to be effective. For example, have you considered the following?

Tax planning options for 2018-19

Income tax:

• If your income is approaching £100,000 have you considered the loss of all or part of your personal tax allowance?
• If you receive child benefits, and the income of either parent is set to exceed £50,000 you will have to repay all, or part of the benefits received and file a self-assessment tax return.
• Have you maximised payment of pension contributions?
• Have you considered the tax advantages of making charitable donations?
• If you have unused personal allowance, and your spouse (civil partner) is a basic rate taxpayer, have you considered transferring part of the unused tax relief?

Capital gains tax:

• Have you fully utilised your tax free exempt amount for 2018-19, £11,700?
• Could you transfer assets that you are about to sell into joint ownership with your spouse and divide the gains between you?
• If you have purchased a second home during 2018-19, have you considered your private residence relief options?

Inheritance tax:

• Have you utilised the various annual, tax-free gifts exemptions for 2018-19?
• If your personal circumstances have changed during 2018-19 (marriage, divorce, bereavement) have you changed your Will and/or considered the IHT consequences?
• Have you made any significant gifts in excess of tax-free limits? What are the IHT consequences?

Holiday let property owners

• Have you checked your occupancy numbers for 2018-19? Will you still qualify for the various Furnished Holiday Lets tax advantages?

The above list is the tip of the tax planning iceberg. Every tax payer’s circumstances are unique and require individual attention and consideration.

If we have not yet had an opportunity to discuss your tax planning options for 2018-19 please call; once the 5 April 2019 deadline passes so too do the majority of your options to reduce your tax liability for 2018-19.

Last year, the 23 May 2018 to be precise, the UK adapted the General Data Protection Regulations (GDPR). The deadline created a rush of publicity and activity as businesses across the UK pored over their data processing systems, making changes to accommodate the new rules.

After the deadline, its as if the curtain came down on GDPR and we moved on to consider other pressing issues, Brexit for example.

ICO has not been idle

But the Information Commissioners Office (ICO) have not been idle. The ICO have created an “Action we’ve taken” page on their website. Using their new powers, the ICO have been quick to up their audits and investigations since May 2018. Political motivated organisations, regional police groups and other data processors have come in for closer scrutiny and where necessary fines and winding up notices have been issued.

For example, an organisation received a penalty of £200,000 and an Enforcement Notice for breaching ICO regulations by sending out nearly fifteen million unlawful SMS marketing messages to subscribers.

By the end of last year, the ICO had 79 cases under investigation, and on 17 December 2018, new powers were adopted through amendments to the Privacy and Electronic Communications Regulations 2003. The ICO says:

The new law allows the ICO to serve monetary penalties, of up to £500,000, on directors and senior officers of companies held responsible for making nuisance calls or sending nuisance messages or emails.

The new data protection regulations are here to stay

GDPR, and its enforcement by the ICO, is here to stay. In the coming months we will probably see an increasing number of cases bought by the ICO as their initial enquiries turn into litigation and the issue of penalty notices. Readers should also be advised that the GDPR has now been absorbed into UK law by the Data Protection Act 2018 (DPA). Even if we leave the EU and abandon its legislation the DPA will still apply. Data regulation and enforcement, it would seem, is here to stay.

In what amounts to a single-issue mini-budget the Treasury posted a welcome announcement for the manufacturers and consumers of alcoholic products last week. They said:

The Chancellor announces that alcohol duties are frozen

From today, (1 February 2019) taxes on beer, cider and spirits are frozen for another year, keeping costs down for industry and consumers alike.

• alcohol duty cuts and freezes over the last six years have provided £4.4 billion of support to pubs and drinks industry,
• a typical pint of beer is 14 pence cheaper than if taxes had risen in line with inflation.

Beer lovers, brewers, and landlords alike can raise a toast today as Dry January comes to an end and alcohol duties are frozen for another year.

The Chancellor, Philip Hammond, during a visit to an independent brewery in Liverpool, praised the contributions made by the British beer and drinks industry to the economy and communities, including local pubs.

Previously announced in the 2018 Budget, the freeze will keep costs down for beer, cider and spirits, and builds on the numerous cuts and freezes to duty by the government since 2013. The move has saved the public an average of 14 pence on every pint of beer, 4 pence on a pint of cider and £1.50 on a bottle of Scotch whisky.

As well as the duty freeze, the Treasury also announced at Budget that it will be looking at the Small Brewers Relief to make sure the scheme continues to support the country’s smallest beer makers, helping them to grow and expand into new markets. A survey asking small brewers for their views on the relief was launched this week.

In addition to pubs, the duty freeze on cider will support the economies of British rural communities and help fuel investment and innovation in whisky and gin producers.

Cynics may infer that any increase in alcohol production is designed to help us cope with other government interventions in the coming months? They are probably right.

Happy days…

Recession literally means “the act of going back, of receding…”

Economic pundits have hijacked the word to mean “a period of temporary economic decline during which trade and industrial activity are reduced…”. It is usually heralded by a fall in Gross Domestic Product (GDP).

According to many commentators on the state of the UK economy we are about to revisit recession.

The cause this time around is not the failure of the banking system, but our imminent withdrawal from the EU. Most informed sources on either side of the remain-leave debate are resolved that our exit from the EU will slow-down economic activity in the UK in at least the short term, and there is a possibility that we will experience a “temporary period of economic decline”.

If so, how do we cope with recession?

On a personal level, we generally cope best with physical stress if we are fit and healthy. Our suggestion for weathering economic stress is roughly the same: we need to get financially fit. For example, we would suggest that businesses large and small should be considering:

• Selling any assets that are no longer used in your business – convert redundant assets into cash and free up space.
• If you have spare floor space, what are the opportunities for sub-letting? Convert unproductive real estate into an income stream.
• How much credit do you allow customers? Could you reduce your average days credit allowed and shift your money from your customers’ bank accounts into yours?
• Do you have a three to five year business plan? Has it been tweaked to reflect the effects of a Brexit slowdown?
• Have you undertaken a risk assessment of the impact of disruptions to your supply lines?

This is by no means a comprehensive list of to-dos. Every business will likely experience their own unique challenges in the weeks ahead, what is clear is that we should be getting match fit to face these challenges.

And as we have said before, this getting-prepared activity will not be wasted whatever the politicians finally decide is the best course for our EU exit. There are no downsides to being financially fit, it will always allow you to hit the ground running.

1. we haven’t spoken to you about the challenges that your business may be facing in the coming months, call now so we can start to create your business fitness training program. If recession becomes a reality, we would suggest running at the front of the pack is the best place to be.