Spring 2018 Newsletter

Spring 2018 Newsletter

Hello and welcome to the Barrette Spring 2018 Newsletter.

1. General Data Protection Regulation (GDPR)

With the new General Data Protection Regulation (GDPR) deadline fast approaching, it is important for you and your business to stay compliant. We have attached a booklet published by ICO, which provides some useful information for you and steps you can take before 25 May 18.

2. Personal Tax

The allowance is £11,850 but some individuals do not benefit from the full personal allowance. There is a reduction in the personal allowance for those with ‘adjusted net income’ over £100,000, which 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.

The basic rate of tax is currently 20%. From 6 April 2018 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. Additional rate taxpayers pay tax at 45% on their income in excess of £150,000.

3. Dividend

In 2017/18 the first £5,000 of dividends are chargeable to tax at 0% (the Dividend Allowance). From 6 April 2018 the Dividend Allowance is reduced to £2,000.

If you have not taken advantage of this tax free allowance, please do so by 5 April 2018.

Dividends received above the allowance are taxed at the following rates:

•    7.5% for basic rate taxpayers
•    32.5% for higher rate taxpayers
•    38.1% for additional rate taxpayers.

Dividends within the allowance still count towards an individual’s basic or higher rate band and so may affect the rate of tax paid on dividends above the Dividend Allowance.

To determine which tax band dividends fall into, dividends are treated as the last type of income to be taxed.

4. The Marriage Allowance

The Marriage Allowance allows certain couples, where neither pay tax at more than the basic rate, to transfer 10% of their unused personal allowance to their spouse or civil partner, reducing their tax bill by up to £230 a year in 2017/18. The government will legislate to allow Marriage Allowance claims on behalf of deceased spouses and civil partners, and for the claim to be backdated for up to four years where the entitlement conditions are met.

5. Individual Savings Accounts (ISAs)
The overall ISA savings limit for 2017/18 and 2018/19 is £20,000. Please ensure you use up your allowance before 5 April 18.

6. Corporation tax rates
Corporation tax rates have already been enacted for periods up to 31 March 2021.

The main rate of corporation tax is currently 19%. The rate for future years is:

•    19% for the Financial Years beginning on 1 April 2018 and 1 April 2019
•    17% for the Financial Year beginning on 1 April 2020.

7. Minimum wage & NIC

National Minimum Wage (NMW) rates from 1st April 2018

Age Group                 April 2018
National Living Wage (25+)    £7.83 p.h.
NMW (21-24)                £7.38 p.h.
NMW (18-20)                £5.90 p.h.
NMW (16-17)                 £4.20 p.h.

Class 2 NICs will be abolished from April 2019. The Chancellor confirmed in March 2017 that there will be no increases to Class 4 NICs rates in this Parliament.

8. Making Tax Digital (MTD)

For businesses who have not yet got a system in place to submit financial data online to HMRC on a quarterly basis, it is time to look into it. Starting with VAT registered businesses, HMRC will require businesses to submit quarterly digital records. If you need more information please do get in touch.

9. Digital Ecomony & Payment

With an increasing prominent market place in the economy is the digital economy, like social media platforms or search engines, create value in ways that are not reflected in existing tax rules, which has put the corporate tax system under pressure, creating imbalances between those firms with and without a physical presence.

Digital payments maybe made more easily available to crack down businesses or individual entirely reliant on cash payments as HMRC is determined to further strengthen the crackdown on the use of cash as a method of money laundering and tax evasion.

10. VAT collection – split payment
The government wants to combat online VAT fraud by harnessing new technology and is consulting on VAT split payment. This will utilise payments industry technology to collect VAT on online sales and transfer it directly to HMRC, which may significantly reduce the challenge of enforcing online seller compliance and offer a simplification for business.

The government considers that the current design of the VAT registration threshold may be dis-incentivising small businesses from growing their business and improving their productivity. Currently UK VAT threshold is the highest amongst EU.

 

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