Have you heard of HMRC’s Making Tax Digital (MTD) project?
Starting in April 2019 all VAT Registered businesses will be compelled to submit their VAT Returns through approved software as HMRC will switch off the VAT submission section of their website in order to ensure that they can capture more business information and a full audit trail of the data behind the VAT Return.
A year later will see all Limited Companies and Sole Traders with a turnover in excess of £10,000 per annum having to make quarterly profit returns to HMRC.
This is now a great time to get involved with this project and to use it as a launch pad for improving the information that you have available to help you to run your business and achieve your goals.
React Accountancy have all the tools and experience that you need to help you on this journey and our mission is to help our clients grow, become more efficient, more profitable and more successful.
Don’t worry about the changes that are coming – we are happy to offer you a free consultation to fully explain MTD and the opportunities that it represents.
Get in touch – we love to talk & love it even more when we’re helping businesses to thrive!
Mortgage Interest Relief:
Under current arrangements, interest paid on a loan or mortgage used to purchase a property which is let can be deducted from the rental income from the letting before calculating any income tax due. The Government is to change this longstanding rule and replace it with an income tax deduction at the basic rate (20%) on the interest paid.
As this is a major change for landlords the change will be phased in from 2017/18 with the amount of the tax deduction from rents reducing and the amount of basic rate tax relief given increasing. In the transition years landlords will be able to claim:
- 2017/18 – 75% of the interest against rents, basic rate tax relief on 25% of the interest
- 2018/19 – 50% of the interest against rents, basic rate tax relief on 50% of the interest
- 2019/20 – 25% of the interest against rents, basic rate tax relief on 75% of the interest
- 2020/21 – only basic rate relief will be given on the interest
Wear & tear allowance:
Existing arrangements for furnished lettings allow a fixed annual deduction for wear & tear on soft furnishings and moveable furniture of 10% of the rents – this is to end from April 2016. From 2016/17 onwards, landlords will instead claim only for expenses actually incurred during the year.
Rent a room scheme:
The annual tax free amount that landlords can receive from letting a room in their own home is to increase from £4,250 to £7,500 from April 2016 onwards.
Individuals letting a number of properties may to see an overall reduction in the tax relief they obtain on the financing element of their letting business. The Government’s stated intention is to “make the tax system fairer” however, it is perhaps inevitable that higher financing costs will be passed on by landlords to their tenants through higher rents. As regards the changes to the wear & tear allowance, additional record-keeping will be necessary in future years to ensure that all replaced items can be claimed.
I was sad to hear of the demise of the company that I worked for before setting up React Accountancy four years ago. Up until a management buyout at the end of 2011 the company had been successful and an enlightened employer with an easy going approach and very high staff morale – in my career of 25 years at that time Turney Wylde Construction were the best employer that I had worked for.
So it is sad to see that the business failed under different management and particularly sad for the many long-serving employees, subcontractors and suppliers who have lost out.
However, shortly after the company went into Administration I was contacted by Sandra who reported to me at Turney Wylde and she asked politely whether I would mind providing her with a Reference. I replied that I would be more than happy to do so due to the respect I have for her work but, as React Accountancy is expanding, perhaps we should talk about whether she could join our staff.
So, the loss of Turney Wylde has turned out to be React Accountancy’s gain & Sandra Lockey joins the company officially on 10th August.