December Tax Update

by Claire Bell

December Tax Update

WHEN WILL BUDGET DAY BE NOW?

It was announced on 14 October that Sajid Javed’s first budget would be on 6 November but with a general election in December when will it be now? 

The current political uncertainty makes it difficult to give clear tax advice as a number of key proposals in the draft Finance Bill scheduled to take effect from April 2020 might not now take place, due to the December general election. The key tax measures “in limbo” until legislated in Finance Act 2020 are: 

  • Extending the “off-payroll” working rules to the private sector
  • Restricting R&D repayable credit for SMEs
  • Limiting CGT private residence and lettings reliefs
  • The proposed 2% reduction in P11d car benefits

The “off-payroll” working rules will almost certainly proceed, even if not from 6 April 2020, and thus businesses and workers affected should prepare for the planned changes.  

Contact us if you need help in assessing the likely impact on your business. 

GOVERNMENT FUNDING TO HELP PREPARE FOR CUSTOMS CHANGES

£16m in new government funding is now available to help businesses train staff in making customs declarations and to help businesses who support others who trade goods to invest in IT.  

This will ensure that trade with the EU continues as smoothly as possible after Brexit. Grants can be used to support: 

  1. training costs for businesses who complete customs declarations, or who intend to in the future
  2. funding for IT improvements, which is available to small and medium-sized employers who are currently involved in trade as an intermediary

KEEP DETAILS OF YOUR DIRECTOR’S LOAN ACCOUNT & KEEP IT IN CREDIT 

In a recent Tax Tribunal case the judge agreed with HMRC that a  detailed breakdown of directors loan account transactions is required,  including dates. 

The significance is that where the loan account is overdrawn (debit balance) there may be a possible P11d benefit on the director and also a tax charge on the company.  

A taxable benefit in kind would arise where the loan exceeds £10,000 and the interest paid is less than the HMRC official rate, currently 2.5%. 

In addition, if the director is also a shareholder of a close company, there is a 32.5% tax charge payable by the company making the loan where the loan is still outstanding 9 months after the end of the accounting period.  

Thus, you can see why HMRC may require a detailed analysis of transactions between the director and the company. 

Note that where the loan is repaid to the company and a similar amount withdrawn within a 30 day period the tax legislation matches the repayment with the new “loan” and consequently the original loan would still be outstanding. 

If there is anything within this article that you would like to discuss with a member of our team then please give us a call on 01530 833474 or email carl@marlow-proactive.co.uk

We are part of the Xeinadin Group. The firm of the future!