Making Tax Digital
There were no further announcements in respect to the anticipated roll out of digital tax accounts for landlords and small businesses, with the consultations only closing on 7th November. A full consultation response is due in January 2017.
However, it is still widely anticipated that digital tax accounts will start to be rolled out with effect from April 2018 for small self-employed businesses and landlords. Therefore, we strongly recommend that you consider moving your bookkeeping to a cloud-based system in good time.
To find out more, take a look at our recent blog article.
Ban on Letting Agents’ fees to Tenants
Pre-announced before the Autumn Statement proper, letting agents in England and Wales will no longer be able to charge fees to tenants, although no date has been announced as to when this will become law.
Letting agents will pass these fees onto the landlords instead who will again pass on the additional costs to the tenants in the form of increased rents. The intention of the new rules will be to make the industry self-regulating and limit fees charged by some letting agents deemed to be too high.
Landlords in areas of competitive rentals where fees may not be passed onward as easily may therefore seek to change letting agents, or could perhaps consider options of either converting their property into a potentially more profitable arrangement such as a HMO or Furnished Holiday Let, managing the property themselves without letting agents, or even redevelopment and sale.
Contact Janice Offer if you would like to consider the options potentially available to you.
Likewise, if you are a Letting Agent, and are struggling to cope with the changes on residential property, please contact one of our Principal Advisers to find out ways in which you could make your business more efficient.
Restricting tax relief for Buy to Let landlords
On the same theme of residential property lettings, with effect from April 2017, landlords of residential property will also be restricted on the amount of tax relief that can be claimed on mortgage interest.
If rental profits (before deducting mortgage interest), along with any other income, is sufficient to push the landlord into the higher rate of tax, only basic rate relief will be applicable on any costs of finance.
If you are a landlord or in the property industry and wish to find out how these changes could affect you, why not come along to one of our ‘Calling All Landlords!’ workshops? You can book your place here.
Extension of free Childcare
From September 2017, parents of 3-4 year olds will be able to access free childcare for 30 hours per week. This will be available to all parents working at least 16 hours per week who earn less than £100,000 per annum.
This will be combined with the ‘tax-free childcare’ system that is due to be introduced from early 2017, with this system then providing 20% effective tax relief on the first £6,000 of childcare costs (per child).
However, the more beneficial childcare vouchers scheme will continue for new entrants until April 2018 allowing basic rate taxpayers to claim up to £55 per week (per parent) for regulated childcare for children up to 15 years old. Higher and additional rate taxpayers can claim £28/week and £25/week respectively.
Childcare vouchers are available tax-free from employers (including owner-managers themselves). If you would like to find out more, speak to your Principal Adviser.
Changes to the taxation of non-domiciled individuals
Generally speaking, if you were born outside of the UK and have a non-UK father, you may be aware of the term ‘non-domiciled’.
For many years, this term has been more associated with Inheritance Tax than anything else. However, changes from April 2017 mean that anyone who has been tax resident in the UK for more than 15 years, will be automatically subject to UK tax on their worldwide income and gains, meaning that they are no longer able to pay UK tax based solely on the monies brought into the UK.
If you are caught by the new rules and wish to discuss the effect on your tax position, please contact Janice Offer who will be able to provide you with the advice you need.
As announced in the 2016 Budget, and available from April 2017 for adults under the age of 40, contributions may be made of up to £4,000 per annum to a Lifetime ISA up to the age of 50, receiving a potential 25% bonus from the government.
These funds, including the bonus, may be used to purchase a first home (after 12 months of account opening), or withdrawn from the age of 60 as part of retirement funding – perhaps alongside more traditional pensions.
As with all ISA’s, no tax will be payable on withdrawal, although if funds are withdrawn for reasons other than above, a charge of 5% will be levied and the government bonus will be lost.
The overall annual ISA subscription limit will also increase to £20,000 from 6th April 2017.
For those of you who are over the age of 55 and in pension drawdown, there was a further restriction announced on the ‘recycling’ of pension funds where funds are drawn down and other funds reinvested in a pension.
From April 2017, the amount that can be reinvested in a pension plan by those already in drawdown will fall from £10,000 per annum currently to £4,000.
This will therefore restrict the amount of ‘double’ tax relief available from this sort of planning, but as with any type of retirement planning, we would suggest speaking with an Independent Financial Adviser to assess your options.
Launch of New Investment Bond
In order to help savers affected by the historically low interest rates, the Chancellor also announced a new 3 year NS&I Investment Bond with predicted returns of 2.2%, although this may be changed to reflect market conditions when the product is launched in Spring 2017.
A maximum of £3,000 may be invested, although as with any investments, we would always recommend speaking to an Independent Financial Adviser about your options. Contact us in order to speak with one of our own Independent Financial Advisers at A4G Wealth.
For anyone who dabbles in a very small business, or who perhaps lets their property out for a couple of weeks a year through a website such as AirBnB or OneFineStay, welcome news came in the form that two new £1,000 allowances will be introduced from April 2017.
Individuals with property income or trading income below this limit will no longer need to declare this income or pay tax on that income. Individuals with income above these levels could opt to use the allowance as an alternative to working out their exact expenses.
Fuel Duty and Insurance Premium Tax (IPT) Changes
A mixed bag with these two announcements….
On one hand the Chancellor froze fuel duty for another year – making this the 7th year in succession.
On the other hand, despite rises of 4% over the past 12 months, a further 2% increase was announced in IPT, bringing the rate up to 12% with effect from 1st June 2017, meaning insurance premiums may be increased slightly next year.