I know it is still August but the best of the summer is past, the shows are over and the silage for the most part has been gathered. The barley still has to be harvested but we seem to be moving towards the end of another year.  Time to get the staff Xmas meals booked!

The Halloween stuff will soon be in the shops, if it isn’t already then, fireworks, and then it won’t be long till the shops are getting ready for Xmas. It can seem a bit like a treadmill, but it is not. There are still 4 moths left of this year and plenty of good weather, and if we choose, plenty of opportunity to enjoy ourselves and do business.

There is always the excitement of the next MTD submissions in October! This is the second round of submissions for this new obligation. It does not affect many people yet but ultimately anyone with rental income and / or self-employment income combined of over £20,000 will be caught by the need to make quarterly MTD submissions. There are a lot of you who ultimately will be caught,

Despite all the publicity and the information we were passing around, there were people at the beginning of August who were not prepared for the first submission round. There are no penalties this year but that will be changing.

One way for sole traders to escape MTD is incorporation but that is a more expensive option. Nevertheless, there is anecdotal evidence that people are using it to escape MTD, but they may have been thinking about incorporation anyway. Not that Incorporation necessarily saves you any tax these days. Sometimes it does and sometimes it doesn’t. Then there are all the additional filing and tax return obligations. Incorporation is invariably a more expensive option. However, some of you may well choose it.

The MTD submissions are not checked by HMRC except to check they have been made. HMRC said early on that the aim of MTD was to encourage people to keep digital records. But, where will it lead. MTD submissions are four times a year but the tax payment dates remain unchanged for now. But once HMRC and Government see what a resource they have created how will it evolve. There is already talk of earlier tax payments. What stick will be used to beat us next.

A recent headline announced that inherited pension could suffer tax at 91%. That’s the rate in England. Here it is 93%. For various reasons this tax is unfair but it’s not as bad as a 93% tax rate suggests.

The headline is dramatic but is just that. It is designed to grab your attention. According to HMRC, we were all using pension pots to pass on value and avoid IHT. “Guilty as charged!”. So, according to them, they had to bring them within the IHT net.  But after that, the tax is just the same for the beneficiary as if they had drawn on their own pensions.

The killer here is the loss of the Residential Nil Rate band for IHT if your estate goes over £2M. If it did not before then adding your pension pot could put you over the limit. For a couple that’s a loss of £350,000 of IHT nil rate band on their own house, which at 40% is an additional £140,000 of IHT, and just because of the way pensions are taxed for IHT. That feels unfair.

These sort of headlines will deter people from building up their pensions, which is presumably what the government does not want. I think that perhaps government needs to put a bit more thought into its tax legislation. There seems to be too much grab and tax and little long term thinking. Maybe the collection of tax should be privatised!

Well, I don’t suppose anything is going to change anytime soon. Such is life. Better get used to it.