Month: January 2017

HMRC publishes long-awaited responses to Making Tax Digital consultations

McGills

The Government’s long-awaited responses to six consultations about Making Tax Digital (MTD) which were originally opened in August 2016 have now been published.

Despite ongoing criticisms regarding the proposed short MTD timescale, HM Revenue & Customs (HMRC) has now confirmed that the project will not be delayed.

This means that mandatory quarterly digital reporting will be phased in for most landlords and self-employed individuals in April 2018, with small and medium-sized enterprises (SMEs) soon to follow.

By 2020, “most businesses, self-employed people and landlords will be able to keep track of their tax affairs digitally and update HMRC quarterly,” according to the Revenue.

Key highlights and/or changes outlined in the Government’s responses include:

  • Business that ‘cannot’ go digital will not be required to do so.
  • Self-employed businesses and landlords with a turnover under £10,000 a year do not have to keep digital records or send quarterly updates to HMRC if they do not wish to do so; but can opt into MTD if they wish.
  • Partnerships with a turnover of £10m or more will not ‘go digital’ until 2020.
  • Customers will have 12 months or more to become familiar with MTD changes before late submission penalties are applied; and HMRC will consult in the spring on a new penalty model.
  • Charities will not be expected to keep digital records or make quarterly updates.
  • Free software will be available for a number of small businesses.
  • Businesses will be able to continue to use spreadsheets to record receipts and expenditure, but this will then need to be linked to some form of software which will automatically generate and send updates to HMRC.
  • The option to account for income and expenditure on a simplified ‘cash in, cash out’ basis will be extended.
  • HMRC will pilot MTD with ‘hundreds of thousands of businesses’ before officially rolling out the project.

However, the Government has said that some of the above proposals could be subject to further changes.

HMRC’s Director General, Jim Harra, said: “There were more than 3,000 responses to the consultations and I’d like to thank everyone for their time and effort.

“Making Tax Digital will help businesses to get their tax right first time; it will help reduce the likelihood of errors, lower the chance of unwelcome compliance checks and give them greater certainty that they are getting things right”.

Financial Secretary to the Treasury, Jane Ellison MP, added: “As most consultation responses acknowledged, a digital tax system is a logical step in an increasingly digital world.

“For the majority I believe that Making Tax Digital will transform the way businesses, landlords and the self-employed interact with the tax system for the better, by providing clarity and certainty over their tax affairs throughout the year and making it easier for them to get their tax right first time”.

Self-employed people are happier, according to a new study

McGills

Self-employed people earn more money, work less, and are happier, according to new research published this week.

The survey of 5,000 self-employed workers found that they are generally better off than their nine-to-five counterparts, collecting £33,000 per year, or £5,000 more than the average UK salary, all while working 10 hours less per week.

Self-employed workers over the age of 65 saw the most success, earning, on average, £40,000 per year while working just 21 hours a week.

Around two-thirds of respondents said they were financially better off after going it alone, while 65 per cent believe they were more satisfied with their lives.

More than three-quarters (77 per cent) of respondents believe that being in control of their own work hours was the greatest benefit to the self-employed life, followed by greater flexibility, being your own boss, and not having to worry about workplace politics.

When asked why they chose to work for themselves, a quarter had become self-employed after losing a job, and seven per cent after having their hours or pay reduced.

The latest statistics show 4.7 million people are now in self-employment, up from 3.3 million in 2001.

Are you thinking about becoming your own boss? Talk to us today for advice on tax, start-ups, finance or for specific advice in your industry sector.

Wages up across the board, says study

McGills

Key UK regions and industries witnessed standout wage growth in the final three months of 2016, according to new research from online job board CV-Library.

The study, which looked at salary growth across the UK, found that pay in the North West of England grew by 14.2 per cent, while pay in recruitment grew 17.5 per cent compared to the same period the year before.

Wales (6.8 per cent), East Midlands (3.9 per cent) and the North East (3.5 per cent) followed in the regions of highest growth.

Likewise, the legal (8.7 per cent), hospitality (6.7 per cent), and property (5.7 per cent) sectors all posted an increase in wage growth compared to the year previous.

Regions Industries
North West +14.2% Recruitment +17.5%
Wales +6.8% Legal +8.7%
East Midlands +3.9% Hospitality +6.7%
North East +3.5% Property +5.7%
Scotland +2.6% Accounting/Finance +4.8%

Lee Biggins, founder and managing director of CV-Library, suggests that “widespread skill shortages” across the UK are pressing businesses to increase salaries.

“Businesses in these cities and sectors have clearly recognised the need to push up salaries ahead of the New Year rush in order to attract new recruits and it is hoped that we will see this strategy pay off in next quarter’s data,” he said.

“2016 was a turbulent year for the economy, but the fact that organisations are showing signs of investing in their current and future workforce is a positive indication for the labour market in 2017. We expect to see job and application figures pick up next quarter, as business and candidate confidence strengthens.”