As the countdown begins for the new tax year, companies and individuals need to be aware of the key changes coming into effect (from 1 April and 6 April respectively). With all the political confusion over Brexit recently, preparation for the various tax changes might have been overlooked, so we’ve pulled together a summary of some of the more important measures you need to be thinking about.
Making Tax Digital for VAT
For VAT return periods commencing on or after 1 April 2019, VAT registered businesses with turnover over the VAT threshold (currently £85,000) are required to comply with the Making Tax Digital (MTD) legislation (1 October 2019 for deferred businesses).
This means businesses will have to maintain digital accounting records, and use functional compatible software to submit VAT returns to HMRC. Signing up for MTD effectively closes the current VAT return submission area of the HMRC portal so it is vital not to sign up too early.
New payslip requirements
As of 6 April 2019, all ‘workers’, rather than only employees, will have the right to receive payslips. In addition, as part of the new requirements, payslips must include the number of hours worked for those paid for variable hours.
Employers should be checking whether their current payslips provide sufficient detail to meet the new requirements, and if not, how to update their payroll processes to facilitate this.
Failure to comply with the new rules could lead to complaints to an Employment Tribunal, so it’s important that employers are ready for these changes.
Changes to QIPs regime for very large businesses
Very large companies will now have to make quarterly instalment payments (QIPs) four months earlier, for accounting periods beginning on or after 1 April 2019. This means that for a 12-month accounting period, payments will be due in months 3, 6, 9 and 12 for that period.
Broadly, these rules apply to companies with annual taxable profits exceeding £20 million. In addition, companies hitting this threshold for the first time will have no ‘period of grace’, so will have to comply with the new regime immediately.
The new rules could have a significant impact on cash flow management for companies affected. Read our full article on the new QIPs regime here.
Fixed rate amortisation relief
Goodwill and similar intangible assets acquired after 1 April 2019 will qualify for a new fixed rate amortisation relief (6.5 percent), provided they are acquired as part of a business with other qualifying intangible assets.
The provisions, included in Chapter 15A Part 8 CTA 2009, are complex, and should be considered carefully if you are acquiring intangibles as part of a business. Our full commentary on the changes, which were introduced as part of the Finance Bill 2018-19, can be found here.
Non-resident capital gains tax on UK land
From 6 April 2019, the scope of non-resident capital gains tax will be extended to cover all UK immoveable property (including commercial property and other UK land). The tax will also apply to disposals of entities which derive their value from UK land.
There are various elections and anti-avoidance measures which accompany these rules, which should also be taken into account. You can view the draft HMRC guidance here.
Offshore receipts in respect of intangible property
New legislation in Finance Act 2019 will affect certain lower taxed non-treaty protected entities earning returns related to intangible property where the income arises directly or indirectly from the sale of goods or services in the UK. The measure will apply regardless of whether there is a UK taxable presence, and will apply income tax (at 20 percent) to gross income received (including income from the indirect exploitation of intangible property, such as manufacture and sale of products) with effect from 6 April 2019. The legislation includes a de minimis UK sales threshold of £10 million to ensure it only affects larger multinationals.
You can read further detail in our commentary from the Autumn Budget here.