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Spring 2018 Newsletter


Items covered in this issue…

  • Cloud Accounting

  • Does your accounts system comply with MTD for VAT?

  • New data protection rules

  • Changes to tax relief for residential landlords

  • Minimum workplace pension contribution will soon be increasing

  • National minimum wage will increase

  • Cash basis for landlords

  • Fee protection service information

  • 2018 Self-Assessment Tax Returns

Please advise us of any change to your address, telephone

number or Email so we can ensure that our records are kept up to date

Cloud Accounting

Cloud Accounting

Imagine a cloud where your entire book keeping information is held securely. This information can be retrieved by either you or your accountant as and when needed 24/7. In a nut shell, this is Cloud Accounting!

You have probably used similar...

If you’ve used online banking, then you’ve used a similar service to Cloud Accounting. You log into online banking to view and maintain your bank accounts, from anywhere with internet access. Cloud Accounting is just using a different cloud in which you categorise all the money you’ve received and spent.

Does your accounts system comply with MTD for VAT?

Making Tax Digital (MTR) for VAT is scheduled to start in April 2019 which means that your VAT information needs to be submitted to HMRC digitally. On 18 December 2017, HMRC published draft legislation together with examples of how the business account records might link with the HMRC computer in order to comply with MTD for VAT. The legislation specifies that “functional compatible software” must be used to record and preserve prescribed VAT related data.

What are Digital records?

“Functional compatible software” must be used to calculate the VAT figures (as per the current VAT return) to HMRC, and to receive information back from HMRC.

VAT related data for each sale and purchase made by the business includes the time of the supply, the value and the rate of VAT charged, or in the case of purchases, the amount of input VAT allowed.

There is no requirement in the draft regulation that the electronic recording of this data must be done at the time the supply is made, or when the purchase is received. As long as the data is recorded electronically by the earlier of the date that the VAT return must be submitted, or is actually submitted.

Digital Links in the Trail

The business can use more than one piece of software to keep its digital records, but those separate software programmes must be “digitally linked”. HMRC provides examples of what it means by digital linked in the draft notice.

One example is a business which uses one piece of accounting software to record all sales and purchase, this software then calculates the return and submits it to HMRC. As well as the records in the accounting software the business uses a spreadsheet to keep track of a fleet of cars and work out its road fuel scale charges. The draft guidance suggests that the business can type the adjustment into its accounting software.

We can of course work with you to make sure that your accounting systems will comply with the new VAT rules before they start in 2019. Note that MTD for VAT will not be mandatory where turnover is below the VAT registration limited, currently £85,000 per annum.

New data protection rules are currently in the pipeline

GDPR – General Data Protection Regulation is going to start from May 25th 2018

There will be an increase in obligation of all businesses to safeguard the personal information of individuals that is stored by the business – whether they are suppliers, customers or employees

In a nutshell – if you are already subject to the Data Protection Act you are very likely to have to comply with the GDPR

Preparing for the General Data Protection Regulation (GDPR) – 12 steps to take now:-

Awareness

You should make sure that decision makers and key people in your organisation are aware that the law is changing to the GDPR. They need to appreciate the impact this is likely to have.

Communicating privacy information

You should review your current privacy notices and put a plan in place for making any necessary

changes in time for GDPR implementation

Subject access requests

You should update your procedures and plan how you will handle requests within the new timescales and provide any additional information.

Consent

You should review how you seek, record and manage consent and whether you need to make any changes. Refresh existing consents now if they don’t meet the GDPR standard.

Data breaches

You should make sure you have the right procedures in place to detect, report and investigate a personal data breach.

Data Protection Officers

You should designate someone to take responsibility for data protection compliance and assess where this role will sit within your organisation’s structure and governance arrangements. You should consider whether you are required to formally designate a Data Protection Officer.

International

If your organisation operates in more than one EU member state (ie you carry out cross-border

processing), you should determine your lead data protection supervisory authority. Article 29 Working

Party guidelines will help you do this.

Data Protection by Design and Data Protection Impact Assessments

You should familiarise yourself now with the ICO’s code of practice on Privacy Impact Assessments as well as the latest guidance from the Article 29 Working Party, and work out how and when to implement them in your organisation.

Children

You should start thinking now about whether you need to put systems in place to verify individuals’ ages and to obtain parental or guardian consent for any data processing activity.

Lawful basis for processing personal data

You should identify the lawful basis for your processing activity in the GDPR, document it and

update your privacy notice to explain it.

Individuals’ rights

You should check your procedures to ensure they cover all the rights individuals have, including how

you would delete personal data or provide data electronically and in a commonly used format.

Information you hold

You should document what personal data you hold, where it came from and who you share it with. You may need to organise an information audit.

Minimum workplace pension contributions will soon be increasing

The minimum amount paid into your workplace pension, both by you and your employees, is going to increase. This is a nationwide change, involving millions of people and their employers across the country. Changes will take place in April 2018, and again in April 2019 – it’s the law.

The table below shows what the base contributions are, and the dates they will rise. You can also choose to give more than the minimum amount should you wish.

Date effective - Currently until 5 April 2018

Employer minimum contribution 1%

Employee minimum contribution 1%

Total minimum contribution 2%

Date effective - 6 April 2018 to 5 April 2019

Employer minimum contribution 2%

Employee minimum contribution 3%

Total minimum contribution 5%

Date effective - 6 April 2019 onwards

Employer minimum contribution 3%

Employee minimum contribution 5%

Employee minimum contribution 8%

From April 2018, the minimum wage will increase

YEAR 25 AND OVER 21 TO 24 18 TO 20 UNDER 18 APPRENTICE

2018 £7.83 £7.38 £5.90 £4.20 £3.70

2017 £7.50 £7.05 £5.60 £4.05 £3.50

National Minimum Wage 2018

The National Minimum Wage (NMW) is the minimum wage per hour a worker is entitled to in the United Kingdom. These rates are reviewed yearly by the government and are advised by the independent body Low Pay Commission (LPC).

Cash Basis for Landlords

Under the cash basis, accounts are prepared simply by reference to money received and money paid out. By contrast, under Generally Accepted Accounting Practice (GAAP) profits must be worked out using the accruals basis (sometimes referred to as the ‘earning basis’) which recognises income earned in a period and expenditure incurred in a period, regardless of when the income is received or the payment made.

From 6 April 2017 onwards, the cash basis will be the default basis for most unincorporated landlords where rental income is less than £150,000 a year. However, if the landlord wishes to continue to prepare accounts on the accruals basis, he or she will need to elect to do so. By contrast property letting companies will need to continue to use the accruals basis to prepare accounts.

The rules for the treatment of capital expenditure under the cash basis have also been reformed from 6 April 2017 onwards. The new rules allow landlords using cash basis accounting to deduct most capital items from rental income and computing profits. However, a deduction is not available in this way for all capital expenditure – notable exceptions include land and cars.

Contact us to discuss what cash basis accounting means for your property rental business

Changes to tax relief for residential landlords

The tax relief that landlords of residential properties get for finance costs will be restricted to the basic rate of Income Tax, this began phasing in from April 2017.

The changes will:

- affect you if you let residential properties as an individual, or in a partnership or trust

- change how you receive relief for interest and other finance costs

- be gradually introduced over 4 years from April 2017