The new tax year
28TH MARCH 2019
When I wrote last November about the increasingly hectic Tax Return season for the year ended 5 April 2018, we had had the first spell of bad weather and the clocks had just gone back giving us instantly darker evenings. Here we are now with a not too bad winter (hopefully!) behind us and the onset of Spring and lighter nights.
I purposely didn’t mention Brexit, and there’s not a great deal I can say about it still, since, as I write this article, things are pretty much unchanged. The Chancellor of the Exchequer, Philip Hammond, in his Spring Statement kept plugging away with Brexit being mentioned it seemed more times than financial and tax news.
For those clients trading or employed overseas, especially with the European Union, the uncertainty continues.
Amidst all of this, we have the new tax year starting on 6 April and which will mean Self Assessment Tax Returns or notices to file landing on doormats in early April.
These Returns will need to be filed by 31 January 2020 and our tax team will be writing to clients shortly to set out the information that we will need to complete those Returns and which covers the year ended 5 April 2019.
As always, the team will be looking to make the information-gathering process as painless as possible and so, in addition to paper communication, they will be contacting you by email, telephone, mobile and our portal to provide the level of personal service upon which we pride ourselves.
For those clients who have an advance payment on account payable on 31 July 2019, this Return provides the opportunity to adjust the level of that payment should the agreed liability for last year exceed the provisional liability used by HMRC to set those advance payments. If this looks to be the possible for you then early filing of this Return would be desirable.
In some cases, there might be a repayment of tax due and, again, giving early attention to the completion and filing of the Return will hasten the issue of the refund.
All of our Return filings are carried out online and which ensures that any repayment being claimed would typically be issued by HMRC around 10-14 days after filing.
We will also have one eye on the start of Making Tax Digital for VAT from 1 April. Whilst this process is currently for VAT-registered businesses only, HMRC see this as a pre-cursor to quarterly reporting for all businesses and landlords.
We will keep you updated as to developments.
The new tax year is the final year of the phasing in of reduced tax relief for buy to let mortgages. From 6 April, only 25% of interest paid will be permitted as a deduction in the let property accounts with the remaining 75% being given as a relief but only at the basic rate of 20%. For example, assuming mortgage interest is paid of £1,000, £250 would be allowable as a deduction in the property accounts with the remaining £750 giving a tax relief reduction from the tax due on the letting profit of £150 (ie £750 @ 20%).
This change is going to continue the increasing yield of tax on let property income whilst not necessarily driving up the rent being able to be charged.
The new tax year is the second year for which the £2,000 dividend allowance is applied to company dividend income. There had been rumours ahead of last year’s Budget that, having been cut from £5,000 to £2,000 from 6 April 2018, it might have been abolished altogether from this April and it might yet be under threat in this year’s Budget.