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Apr 19

How long should you keep your records?

If you are self-employed, and obliged to submit a self-assessment tax return, you must keep your tax records for at least five years after the 31 January submission deadline of the relevant tax year. For example, if you sent your 2017-18 tax return online by 31 January 2019, you must keep your records until at least the end of January 2024. Records for this purpose includes those relating to personal income etc.

If you send your tax return more than four years after the deadline, you will need to keep your records for fifteen months after you submit your tax return.

If you keep your tax records on a computer, make sure you have sufficient backups of your data to meet these requirements. If you change software during the record retention period, you may need to print relevant reports if you are unable to maintain access to data backups.

If you run your business as a limited company you must keep records for six years from the end of the last company financial year they relate to, or longer if:

  • they show a transaction that covers more than one of the company’s accounting periods,
  • the company has bought something that it expects to last more than six years, like equipment or machinery,
  • you sent your Company Tax Return late, or
  • HMRC has started a compliance check into your Company Tax Return.

If you are not in business, the minimum period is 22 months after the 31 January filing deadline and at least 15 months after filing if later.

Apr 19

Spring Budget statement

The Chancellor, Philip Hammond, was keen to promote the positive aspects of the UK’s economic performance when he stood to present his Spring Statement on 13 March.

  • Employment and manufacturing growth rising,
  • Inflation and debt falling.

The speech was also peppered with the usual political gambits to boost his party at the expense of the opposition.

The one practical change that was disclosed was a change to the next business rates revaluation that will now take place a year earlier than planned, in 2021, with further reviews every three years starting 2024.

The Chancellor also revealed new consultations that may eventually shape future legislation. These will include:

  • Reducing single-use plastic waste through the tax system. This will look at ways to reduce the impact of plastic waste in our environment such as disposable plastic cups, cutlery and foam trays. Some of the tax revenue raised will be used to fund research into new ways to encourage a more responsible use of plastic.
  • Making sure multinational digital businesses pay a fair share of tax. This is an ongoing attempt to ensure that the larger digital players pay tax in the UK on sales they make in the UK.
  • Seeking views on the role of cash in the new economy. Will cash become less relevant as digital payment processes become more widely used? This and the prevention of the use of cash to avoid tax and to launder the proceeds of criminal activity will be opened to a wider debate.
  • Supporting people to get the skills they need. Improving skills to benefit growth in the economy by investing in upskilling and retraining, especially by the self-employed.

It will be interesting to see if these initiatives subsequently drive government policy and new legislation.

Apr 11

Stamp Duty (SDLT) increases buy-to-let

From 1 April 2016, individuals who purchase additional residential properties, second homes or buy-to-let properties will pay an additional 3 percentage points above the existing SDLT rates. The higher rates will apply to property purchases in England, Wales and Northern Ireland. The additional rates are:
  • £0 - £125k: 3%
  • £125k - £250K: 5%
  • £250k - £925k: 8%
  • £925k - £1.5m: 13%
  • Over £1.5m: 15%
This will add a considerable on-cost for landlords and families that venture into multiple property acquisitions. Without this change, a residential property purchased for £250k would have had a SDLT charge of £2,500. Under the new rates this will increase to £10,000. Properties purchased for under £40,000, caravans, mobile homes and houseboats will be excluded from the higher rates. Furthermore, small shares in recently inherited properties will not be considered when determining if the higher rates apply. The budget also clarifies when companies making residential property purchases will be subject to this additional SDLT charge. In the lead up to the budget it had been speculated that significant, incorporated property businesses would be able to avoid the increase. It would appear that this is not to be. In the notes to the budget it is clearly stated: “Companies purchasing residential property will be subject to the higher rates, including the first purchase of a residential property.” Accordingly, setting up a new company for each property acquisition or transferring existing portfolios into corporate structures will not allow landlords to avoid the additional rates of SDLT on post April 2016 acquisitions. Indirectly, these changes will also affect sellers of residential property as the SDLT increases may dissuade marginal buyers from purchasing. Will we see affected house prices falling? In Scotland, property purchases are subject to the Land and Buildings Transaction Tax (LBTT), and from April 2016 a similar 3% will apply to purchases of additional property. The additional rates of LBTT in Scotland are:
  • Less than £145k: 3%
  • £145k to £250k: 5%
  • £250k to £325k: 8%
  • £325k to £750k: 13%
  • Over £750k: 15%
The surcharge applies to the full purchase price above an initial threshold of £40,000.

 

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