Welcome to the January 2018 Newsletter from Beatons Group
HMRC recently unveiled plans to replace the £100 late filing penalty for late or missing self assessment tax returns with a new points-based, 'driving licence-style' system.
Meanwhile, as the dust began to settle on Chancellor Philip Hammond's Autumn Budget, Derek Mackay, Finance Secretary for Scotland, delivered the Scottish Draft Budget on 14 December, outlining a series of changes to income tax rates and bands.
Additionally, a recent government survey on Making Tax Digital (MTD) has revealed that seven in ten respondents are 'unaware' of the new digital tax initiative, with a further 40% reporting that they need additional guidance to begin preparing for the introduction of MTD in April 2019.
We would like to send all of our customers our best wishes for the festive season and a happy and prosperous New Year.
Government proposes replacing self assessment penalties with new points-based system
The £100 penalty regime for filing a late tax return could be scrapped and replaced with a new 'driving licence-style' points system, HMRC has revealed.
Under the current system, taxpayers who fail to submit their tax return by the 31 January deadline are liable to an instant £100 fine, with further penalties applying for prolonged delays.
Under new plans being considered by the tax authority, taxpayers who miss the self assessment filing deadline could receive points instead of an immediate fine. Only those taxpayers accruing too many points would then be penalised. Individuals would also see points wiped from their record after a set period of time.
It is thought that around 840,000 taxpayers missed the filing deadline in the last tax year.
The new 'holistic' approach is intended to focus on taxpayers who persistently break the rules rather than those who make genuine errors of judgement.
The proposals are included in the Treasury's Red Book, which states: 'The government will reform the penalty system for late or missing tax returns, adopting a new points-based approach. It will also consult on whether to simplify and harmonise penalties and interest due on late payments and repayments'.
HMRC intends to consult on the plans, and must seek approval from Parliament. If approved, the new points-based system could undergo a phased introduction for different taxes.
However, some experts have warned that the abolition of the £100 late filing penalty could have 'unintended consequences'.
The Association of Taxation Technicians (ATT) warned that a new points system could generate anomalies, and has urged the government to ensure that the consultation details exactly how the new system would work, in order to avoid such anomalies.
We can help to ensure that your tax returns are filed accurately and on time - please contact us for further assistance.
Scottish Budget outlines changes to income tax
Derek Mackay, the Scottish Finance Secretary, delivered the Scottish Draft Budget on 14 December, outlining a series of changes to income tax rates and bands.
As widely anticipated, Mr Mackay confirmed an increase in income tax rates for higher earners, together with the introduction of two new income tax bands.
The changes will see the higher rate of income tax increasing from 40p to 41p, while the top rate will rise from 45p to 46p. A new 'intermediate' band of 21p for those earning more than £24,000 a year will also be introduced, together with a new 'starter' rate of 19p. See more here.
The Finance Secretary also confirmed that the Scottish government will maintain Land and Buildings Transaction Tax (LBTT) at its current rates, together with the planned introduction of a new relief in 2018/19 for first-time buyers purchasing property worth up to £175,000.
The announcements are the latest in a series of devolutionary measures being introduced across the UK.
The Welsh Draft Budget 2018-19, which was published in October 2017, outlined the proposed rates and bands for its new Land Transaction Tax (LTT), which will replace Stamp Duty Land Tax (SDLT) in Wales from 1 April 2018.
Key changes include a higher starting threshold, together with higher rates of duty for some higher value residential properties. Those seeking to buy residential property worth up to £180,000 will pay no tax on the purchase.
The starting threshold for LTT was originally set at £150,000. However, Mark Drakeford, Finance Secretary for Wales, increased the rate to £180,000 on 11 December. In a written statement published on this date, he announced that individuals purchasing property worth between £180,000 and £250,000 will pay a proposed 3.5% in LTT, and those purchasing a home worth between £250,000 and £400,000 will pay 5%.
From April 2019, the National Assembly for Wales will have the power to vary the rates of income tax payable by Welsh taxpayers.
Commenting on the plans, Mr Drakeford said: 'From April, Wales will introduce the first Welsh taxes in almost 800 years, supporting first-time buyers and boosting business.
'The devolution of tax powers provides us with the opportunity to reshape and make changes to improve the existing taxes to better meet Wales' needs and priorities.'
For more information on the devolutionary powers granted to the Scottish and Welsh governments, please visit the Hot Topics section of our website.
ESSENTIAL TAX DATES FOR JANUARY
Due date for payment of corporation tax for period ended 31 March 2017.
Due date for income tax for the CT61 quarter to 31 December 2017.
PAYE, Student loan and CIS deductions are due for the month to 5 January 2018.
PAYE quarterly payments are due for small employers for the pay periods 6 October 2017 to 5 January 2018.
Deadline for submitting your 2016/17 self assessment return (£100 automatic penalty if your return is late) and the balance of your 2016/17 liability together with the first payment on account for 2017/18 are also due.
Capital gains tax payment for 2016/17.
Balancing payment - 2016/17 income tax, Classes 2 and 4 NICs.
QUOTE OF THE MONTH
'Businesses trading between the UK and Europe have done their best to focus on the potential impact of Brexit on their operations, rather than on the day-to-day political noise.'
Dr Adam Marshall, Director General of the British Chambers of Commerce, commenting on the business group's call for the commencement of transition and trade talks in the Brexit negotiations.
WEBSITE OF THE MONTH
Financial news and information from around the world.
ON OUR WEBSITE
A wealth of resources for businesses
With topics ranging from payslips to husband and wife businesses, the Your Business section of our site is a hub of essential information.
Useful information for individuals
For a comprehensive bank of guides covering the Statutory Residence Test, inheritance tax planning and much more, please visit the Your Money area of our website.