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Newsletter - August 2020

Welcome to this months Newsletter.
We hope you find the articles in this month’s issue of our newsletter of interest.


Changes to Capital Gains Tax underway?
Stamp duty changes (residential property)
VAT changes
Keep an eye on the numbers
Tax Diary August/September 2020


Capital Gains Tax - Changes to Capital Gains Tax underway?

In an update to the GOV.UK website recently the following post appeared:

The Chancellor has written to the OTS (Office of Tax Simplification), to ask the OTS to undertake a review of Capital Gains Tax and aspects of the taxation of chargeable gains, in relation to individuals and smaller businesses.

As well as looking at opportunities to simplify administration and the impact of technical issues, the review will explore areas where the present rules can distort behaviour or do not meet their policy intent, to help ensure the system is fit for purpose.

The scoping document for the review has also been published, together with a call for evidence and an online survey.

In his letter, Rishi Sunak also said:
This review should identify opportunities relating to administrative and technical issues as well as areas where the present rules can distort behaviour or do not meet their policy intent. In particular, I would be interested in any proposals from the OTS on the regime of allowances, exemptions, reliefs and the treatment of losses within CGT, and the interactions of how gains are taxed compared to other types of income.

Let us hope that any changes to this tax - if subsequently made - do simplify the taxation of capital gains and do not add further layers of complexity.


Stamp Duty Land Tax - Stamp duty changes (residential property)

In his recent Summer Statement, Rishi Sunak announced changes to the nil rate band of Stamp Duty Land Tax (SDLT) to be applied in England and Northern Ireland. 
This was followed by announcements from the Scottish and Welsh regional assemblies who set the rates in Scotland and Wales.

Here is a brief summary of the regional changes aimed at stimulating the UK property market. In all cases rates will revert to previous levels 31 March 2021.

England and Northern Ireland
From 8 July 2020, if you purchase a residential property you will only pay SDLT on the amount you pay above £500,000. This applies whether or not you have purchased a property before – it is not restricted to first time buyers.

Scotland
From 15 July 2020, if you purchase a residential property in Scotland you will only pay the Land and Building Transaction Tax on the amount you pay above £250,000.

Wales
From 27 July 2020, if you purchase a residential property in Wales you will only pay the Land Transaction Tax on the amount you pay above £250,000.

In all regions, it is presumed that buyers of second homes and buy-to-let residential properties will still pay the additional stamp duty charge.


Value Added Tax - VAT Changes

In an attempt to address the financial difficulties of businesses in the hospitality and tourism industries, Rishi Sunak also announced a range of VAT reductions on selected supplies for these sectors.

Summary of the changes are set out below:
Hospitality
When you supply food and non-alcoholic beverages for consumption on your premises, between 15 July 2020 and 12 January 2021 you will only need to charge 5% VAT.
You will also be able to charge the reduced 5% rate of VAT on your supplies of hot takeaway food and hot takeaway non-alcoholic drinks.

Hotel and holiday accommodation
You will also benefit from the temporary reduced rate if you:

  • supply sleeping accommodation in a hotel or similar establishment
  • make certain supplies of holiday accommodation
  • charge fees for caravan pitches and associated facilities
  • charge fees for tent pitches or camping facilities

Admission to certain attractions
If you charge a fee for admission to certain attractions where the supplies are currently standard rated, you will only need to charge the 5% reduced rate of VAT between 15 July 2020 and 12 January 2021.
However, if the fee you charge for admission is currently exempt, that will take precedence and your supplies will not qualify for the reduced rate.

Changes to your accounts’ software
In most cases these changes should be fairly easy to accommodate in your accounts’ software. If you are experiencing difficulties in this regard please call, we can help.


General - Keep an eye on the numbers

Recent economic forecasts for 2020 published by H M Treasury will do little to inspire business confidence. In their comparison of independent forecasts published last month the unemployment rate is estimated to rise to 8% and in the same period, GDP falls by 9%.

The only good news is that inflation remains on the low side, the RPI forecast is 1.4%.
Obviously, these numbers are estimates and hide wide ranging differences in various business sectors.
Based on these forecasts it would be sensible to keep a watchful eye on your business performance. This should include the calculation and response to key performance indicators.

For example, no business can support losses for an indefinite period. Exhausting hard-won reserves of profit and cash-flow is not to be recommended.
If you need help setting up financial indicators to support your efforts to stay in the game please call. Once created, you will then be able to plot your progress or otherwise as the present disruption spins out in the coming months.

Be prepared, stay informed.


Tax Diary - Tax Diary August/September 2020

1 August 2020 - Due date for Corporation Tax due for the year ended 31 October 2019.

19 August 2020 - PAYE and NIC deductions due for month ended 5 August 2020. (If you pay your tax electronically the due date is 22 August 2020)

19 August 2020 - Filing deadline for the CIS300 monthly return for the month ended 5 August 2020. 

19 August 2020 - CIS tax deducted for the month ended 5 August 2020 is payable by today.

1 September 2020 - Due date for Corporation Tax due for the year ended 30 November 2019.

19 September 2020 - PAYE and NIC deductions due for month ended 5 September 2020. (If you pay your tax electronically the due date is 22 September 2020)

19 September 2020 - Filing deadline for the CIS300 monthly return for the month ended 5 September 2020. 

19 September 2020 - CIS tax deducted for the month ended 5 September 2020 is payable by today.


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DISCLAIMER - PLEASE NOTE: The ideas shared with you in this newsletter are intended to inform rather than advise. Taxpayers’ circumstances do vary and if you feel that tax strategies we have outlined may be beneficial it is important that you contact us before implementation. If you do or do not take action as a result of reading this newsletter, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.