Every week we take a look at what is trending in the accountancy and tax press and share items that we think will interest you. However, these are only outlines and where they relate to tax planning should not be acted upon without looking into them more completely as everyone’s circumstances are particular to them. You need to take specific advice appropriate to your own circumstances.
While every effort is made to deliver accurate, informative and balanced articles this content is general in nature and should not be used as the sole basis for making decisions.
The Scottish Budget
Income tax rates next year will remain unchanged but the starter and basic rates will rise, while the middle, higher and top rate thresholds will remain frozen.
As a result total income tax revenues are expected to rise slightly from £12,263m in 2021-22 to £13,671m in 2022-23.
The 19% starter rate will be from £12,500 to £14,585, and the 20% basic rate from £14,585 to £25,158.
Freezing the higher rate will raise £106m in 2022-23 The higher rate of tax is paid by 17% of Scottish taxpayers. This mirrors what was announced in the UK budget earlier in the year.
As a result of the changes 46% of households will pay less tax, 30% of households will pay the same amount of tax and 24% of households will pay more tax in 2022-23.
Something to think about. Those with earnings between £43,663 and £50,270 will pay a marginal rate of tax (income tax and NI) of 54.25% next year on that portion of their income, up from 53%.
The land and buildings transaction tax will be frozen at current rates, while landfill tax rates will increase from April 2022.
Rates relief for retail, hospitality and leisure businesses will continue until March 2022 meaning that these businesses will pay 50% of their usual business rates bill for the first three months of 2022-23, capped at £27,500 per ratepayer.
In addition, the Small Business Bonus Scheme, which provides rates relief for businesses with a rateable value less than £15,000, will be extended for a further year until the end of December 2022.
There will be an expansion of the Business Growth Accelerator relief for property improvements to include the installation of solar panels as a qualifying improvement. That will provide 100% relief on new builds for up to 12 months after first occupation and no rate increases for 12 months after a qualifying property improvement.’
The Scottish government will introduce secondary legislation imminently on a Workplace Parking Levy to enable local authorities to introduce such schemes from 2022.
They will also resume work on the Visitor Levy proposal.
Self-Assessment Payment Plan
The HMRC’s self-serve time to pay system was set up to help taxpayers pay their arrears in full or manage how they pay their tax. 123,000 taxpayers used self-serve time to pay to spread the cost of their 2019-20 tax bill amounting in total to £460m.
The next self-assessment deadline is 31 January 2022 and this is also the date that any outstanding tax is due. The online payment plan service can be used to pay tax liabilities up to £30,000 without the need to talk to HMRC.
The service creates a monthly payment plan depending on how much tax is owed and the length of time needed to pay.
Rees-Mogg £6m directors loan
In a recent report it was disclosed that Jacob Rees-Mogg had taken a £6m loan from his own company and that it may not have been declared correctly.
The Rt Hon Jacob Rees-Mogg is leader of the House of Commons and lord president of the council (with a seat in the cabinet). He was also the front man for the ERG, the pro Brexit organisation within the Tory ranks.
Rees-Mogg has responded by saying that this is just a storm in a teacup and that all loans had either been repaid with interest in accordance with HMRC rules, or paid as dividends and taxed accordingly.
VAT Registration Service
The new VAT registration service for companies will be extended to all traders by the end of the year and to agents in early 2022.
As part of the Making Tax Digital (MTD) HMRC has almost completed moving all VAT records to a new platform and once this has been completed, agents will access all VAT services through their agent services account which will be a considerable improvement.
HMRC has developed a new VAT registration service that has been live for UK companies handling their own registration since November 2020. HMRC is now testing the new service with sole traders and other entities.
HMRC will then work to extend the new service to agents.
Have you ever gone to use a spreadsheet that you prepared some time ago and found that you cannot remember how or why you prepared it? Consider including an ‘About’ or ‘Welcome’ sheet to document the spreadsheet. This should give such basic information as author, purpose, version number, and description of general approach. Also include explanations of colour codes and other formatting conventions, any sources of input data (with, where appropriate, hyperlinks to the original data), and any macros and what they do.
The more complex the workbook, or the more it needs to be shared, the greater the requirement for good documentation. Conversely, a simple spreadsheet to be used only by the person who designs it might be less rigorously documented.
It is also a good idea to build in checks, controls, and alerts from the outset and during the course of spreadsheet design. These checks might include, for example, tests to ensure that a balance sheet balances, assets do not depreciate below zero, and so on.
One approach would be to build in a set of audit tests to check validity and use flags to signal compliance or non-compliance. Use a master flag to summarise all the individual flags and place it prominently (on the output sheet, or even throughout the workbook e.g., on sheet headers) so that users are bound to see it.
If you have any questions about any of these, you know where to find us. If you prefer, just give me a ring on 07770 738770 or email me at email@example.com.