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Brexit and Budgets

8/1/2016

Brexit has certainly dominated the headlines over the last few weeks. I deliberately held off writing about it until the dust as settled so I can deal with a few topics of conversation that have been bubbling around with clients over the last few weeks.

There is much to talk about in this post so hopefully the breakdown will make things more simple.

We now know that there will be no emergency budget – the next budget will be the regular ‘Autumn Statement’ on 25 November 2016
Its becoming increasingly safe to say that retrospective changes to 2016/17 taxation already in place are looking less likely – but never say never so assume it’s ‘business as usual’ until we hear otherwise
I think its fair to say a ‘new broom is likely to sweep clean’, so depending on how the economy is performing we might see further changes to business taxation to stimulate growth – if you recall last time, the key weapon against recession was the ‘Annual Investment Allowance’ and the reduction in the rate of Corporation Tax
VAT will continue as normal until we exit the EU. Despite having the reputation as being an EU based tax, it’s a huge revenue earner for the Treasury and we’re unlikely to see huge ‘give aways’ in this area – many non EU countries have ‘Goods and Services tax (GST)’ which is at similar rates to the UK

So for the time being it really is business as usual but I’m sure we will see some changes filtering through later this year.

As always, any questions or concerns to new or existing clients, please contact me and I'll always do my best to answer and help you with your enquiries.

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Letting Property Refresher -

8/1/2016

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Photo by Tierra Mallorca on Unsplash

I’ve been working on a large number of tax returns that do include income from property and the conversation has drifted to the new rules which are being phased in over the next few years. I have featured a similar article previously but felt it was appropriate to refresh some of the points.

As a reminder its really important to complete a tax return and declare the income if you let property. HMRC have some pretty sophisticated ways to identify let properties and also do monitor Land registry transactions when it comes to sell the property. In recent years the former Chancellor George Osborne has seemingly made it less attractive to let property with a series of measures aimed at Landlords aimed at rebalancing the housing market.

Lets take a look at the changes:

Unfurnished Properties - The renewals basis for things like white goods was abolished 6 April 2013 for unfurnished property leaving landlords with no relief against expenditure on things like fridges and cookers (unless built in) - ironically they could be rented and this would be allowable! The good news is that this has been reinstated from 6 April 2016.

Furnished Properties (remember these properties need to be ready to move into - not just a table and a bed!) - Landlords currently enjoy a 10% wear and tear allowance on rents received which can be very helpful. 2015/16 will be the final tax year when this can be claimed. Furnished property is being aligned with the replacement basis for unfurnished property with effect from 6 April 2016.

All properties - at present full tax relief is available for interest on a loan used to fund a property or improvements. This is charged as an expense and the ‘profit’ is then incorporated into your tax calculation. The relief is being reduced with effect from 6 April 2017, so the current tax year is the last tax year for gaining full relief on mortgage interest payments for higher / additional rate tax payers. Sadly this is where the simplicity ends. Because interest will no longer be a ‘deduction’ (it will be a tax adjustment instead) the income (pre interest) is shown as a ‘profit’ in your tax calculation – this determines things like tax credits, child benefit, higher rate tax thresholds etc. The reduced interest relief is then deducted from your tax bill. This could be quite a nasty trap for people with properties that are breaking even in the £40,000 to £50,000 band with unplanned tax consequences.

Obviously this may still leave some of you with questions or you might just need some additional information. Here at Nigel Gosrki Consulting, I'm used to taking these calls and advising my clients on the best course of action for them. Please feel at ease to contact me for an informal chat.

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Employer Funded Childcare

8/1/2016

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As it’s the school holidays, I thought I’d update you on employer supported childcare. It was planned to abandon the existing scheme whereby employees (including Company Directors – not sole traders / partners) and close existing schemes to new entrants when the new Government funded scheme rolls out.

There have been delays to the new scheme so schemes whereby (if initiated correctly) employees may claim upto £55 per week have may be launched and are open to new members until April 2018.

If you or your business wish to find out more about Childcare and how it impacts the business financially, or if you have any questions, then why not contact us for a chat?

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Brexit and Budgets

Letting Property Refresher -

Employer Funded Childcare

Nigel Gorski

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