The majority of our clients’ tax returns for 2018/19 have been submitted prior to Christmas but January is always a busy month for us as we prepare and submit the outstanding tax returns for our clients.

The final deadline for online tax returns is 31^st January – HMRC must have received your tax return by midnight.  The deadline to pay your tax bill is also 31 January.

Fines for late tax returns

It’s important to be aware that filing your tax return late, or failing to pay the tax you owe on time, will probably mean you face extra penalty fees and interest charges.

How to submit your 2018-19 tax return

If you’ve never submitted a tax return before, you’ll need to register with HMRC. You can do this online.  If, however, you would like some help with your tax return please contact us on 01324 441250 or email adviser@drummondlaurie.co.uk

… to all clients and friends of Drummond Laurie. I hope that 2020 is a happy, healthy and prosperous one for everyone.

As we entered last year we were counting down to a Brexit Day on 31st March 2019 after 2½ years of tortuous discussions and negotiations. Here we are a year later and after what surely [hopefully!!] was the most tortuous year yet, and we finally are within sight of the finishing line at the end of January when the UK will eventually leave the EU. Of course, this is not the end of the Brexit story and we now face a year of negotiating a future trade agreement with the EU. It is expected that with a sizeable and workable majority in parliament the UK Government will now have the negotiating powers to fast track this process and ensure that we do not end up in a “no deal” situation in a year’s time.

Aside from the political landscape, 2019 was the year in which Making Tax Digital [MTD] finally arrived after several years of build-up and a few false starts. All VAT registered businesses have now implemented MTD and it is fair to say that within our client base at least, the process has been managed in a controlled and sensible way. At Drummond Laurie we embraced the initiative and proactively guided our clients through the process, thanks to our Julie McVicar for her tireless work on this area. Of course, VAT is only the beginning and we await word from HMRC on the timetable for rolling MTD out to other taxes.

2019 also saw the increase in Pension Auto-enrolment contributions to their current and final [for now] levels of 3% for employers and 5% for employees. All employers have now enrolled and indeed, many have already been through the triennial re-enrolment process. In our experience, the opt-out rates have been lower than may have been expected which is encouraging and suggests that the big majority of people are taking seriously the matter of providing for their wellbeing in retirement. Once again, Drummond Laurie have been at the forefront of guiding our clients through what can be a complex process and ensured that they always comply with the rules set by the Pension Regulator.

The last 12 months has also seen the gulf in the levels of tax paid by people in Scotland diverge even further from those paid by everyone else in the UK. Whilst the difference at this stage may not be of a size to result in high earners relocating south of the border, they are certainly of a size to influence the location of people looking to set up a business in the UK or the location of people coming to the UK. This should be a real concern to those of us living in Scotland as it is clear that we need to attract more taxpayers to come to our country. Despite a huge volume of evidence which demonstrates that lower tax rates result in higher tax revenues, the Scottish government seem set on going in the opposite direction. As the U.K. moves towards lower taxes it will be interesting to see how long the Scottish taxpayers are prepared to accept this situation.

So what should we be focussing on as we enter a new year? As always, we would encourage you to ensure that you have your business plans clearly set out for the 12 months ahead [as a minimum]. Do you have appropriate funding in place to support your plans? Are there opportunities to squeeze more cash from your existing working capital? Do you have a clear picture of where your turnover is going to come from in the coming year? Are you investing time and resource in developing the next products, processes, etc. which will keep you at the forefront in your field? We are all aware of the saying “To Fail to Prepare is to Prepare to Fail”. At Drummond Laurie we work with many of our clients to ensure that these critical matters are under constant review and so avoid falling into this “failure trap”.

As always, our team at Drummond Laurie stand ready to provide advice and guidance on all of the above and the many more challenges which will lie ahead of us in the coming year. Please do not hesitate to contact us to discuss these at any time.

Best wishes

David

In the 2018 Autumn Budget, the UK government announced plans to make changes, effective from 6 April 2020, to principal private residence (PPR) relief from capital gains tax (CGT) – sometimes referred to as private residence relief or main residence relief. The changes relate to the final period exemption, and lettings relief.

On disposal of a property which has been occupied by an individual as their only or main residence, any capital gain is usually relieved in part or in full from CGT by PPR relief. PPR relief exempts any gains made in periods of both actual occupation where the owner was residing in the property, and deemed occupation where the owner was physically absent from the property but treated as if they were in occupation.

For non-exempt periods of absence, any gain is time-apportioned against the whole period of ownership.

Periods of absence are covered by two main reliefs: final period of ownership relief and lettings relief:

• Final period of ownership relief currently provides PPR exemption for the final 18 months of ownership, irrespective of whether you continue to live in the property. So for example it will apply for that period if the property is empty, or even if it is rented out, provided it has been your PPR at some time during your ownership. This is intended to give the owner time to market and sell the property.

• A separate relief can apply to periods where a property was let out, and the owner was not in occupation or deemed to be in occupation. This is called lettings relief and can be available in addition to PPR relief. Where lettings relief applies, gains arising during the let period can be reduced by up to £40,000.

Both reliefs will be restricted for property sales after 5 April 2020.

How are the tax reliefs changing?

• Final period of ownership relief reduces from 18 months to 9 months

The 9-month restriction period will come into force on all disposals made from 6 April 2020 onward. It is important to note that the property sale date for capital gains tax purposes is the date of exchange of unconditional contracts and not the date of completion.

Any taxpayers who are registered disabled or who are moving into social care won’t be affected, their entitlement to PPR will remain at the original 36 months.

• Lettings relief is restricted unless the owner is in ‘shared occupancy’ with the tenant

Currently, PPR lettings relief provides up to £40,000 of relief (or £80,000 for a couple) to those who sell a property which has been their PPR and has also been rented out. The relief applies whether a single room is rented, or the whole property.

From 6 April 2020, lettings relief will be restricted and will only be available to those who are in shared occupancy with a tenant e.g. where they are renting out rooms to lodgers but also remain living in the property.

Please note: the current annual CGT allowance of £12,000 per taxpayer can also be used to reduce any remaining gains on a property sale. Note that this annual CGT allowance cannot be carried forward if unused nor can it be backdated. If unused during the relevant tax year, the allowance is lost.

Payment of CGT from 5^th April 2020

Just as a reminder that from 5^th April 2020 you will be required to submit a provisional calculation of any gains made from the sale of a residential property AND pay any tax due within 30 days following completion of the sale. Ultimately the gain will be recorded on your self-assessment form (if you are not registered for self-assessment – you have to register) with an adjustment made for any additional tax that is due or recoverable. You have to wait until the submission of your return before obtaining a recovery if you have accidentally overpaid.

If you have any questions or concerns just get in touch.

We are delighted to announce that Sarah Hannigan has recently been promoted to Reporting Accountant. Sarah has been with us for 4 years and is currently studying towards an ACCA qualification.

She is our current Star Baker but we are in the middle of another highly competitive challenge…she’ll be hoping to keep her star!

We thought we’d ask Sarah a few questions and share them with you; 

Where were you born?

Falkirk

Where do you live now?

Denny

What do you like to do in your spare time?

Spend time with friends and family…and bake cakes!

If you won the lottery what would you buy first?

A ticket to travel the world

Dream job, apart from Drummond Laurie obviously?

Cake Baker

(here’s a picture of our 6th Birthday celebration cake – tastes as good as it looks!)

Finally share with us one of your favourite pictures>

Our little dog Allie on her 16th birthday

There are many reason why you might need to register and complete a Self-Assessment Tax Return, including;

• Self-employed sole traders earning more than £1,000
• Directors of limited companies
• Partners of both general and limited liability partnerships
• Individuals who receive rental income
• Individuals earning more than £100,000 a year

The deadline for registering for Self–Assessment is the 5^th October after the end of the relevant tax year. So if you met the registration criteria during the tax year 2018/19 (6^th April 2018 – 5^th April 2019) you have until the 5^th October 2019 to register with HMRC.

Your 2018/19 tax return will then be due by the 31^st October 2019 if being submitted on paper or alternatively by the 31^st January 2020 if being submitted online. Any tax or national insurance due will be payable by the 31^st January 2020.

Failure to register on time could result in you being fined!

If you are unsure whether or not you need to register for self-assessment or need help completing your tax return then we can help. Please contact us via email adviser@drummondlaurie.co.uk  or call us on 01324 441250.

Drummond Laurie are now recruiting for our summer 2020 intake of graduate / school leaver’s to join our successful and expanding business. The vacancies will include full study support as well as a competitive salary, and as a firm who strongly believes in the wellbeing of its employees, a generous benefits package is also included. Based in modern and accessible offices in Grangemouth our location has plentiful parking facilities.

We are looking for individuals with a strong desire to succeed, with a view to progressing their career with a forward thinking company. We offer a 3 (graduate) or 5 (school leaver) year training contract to support the completion of the CA or ACCA qualification. To be considered for the role you must have a positive attitude and be a confident and effective communicator who is hard working and dedicated.  You must have strong communication skills and have an ability to work using your own initiative and to strict deadlines.

In return we will commit our full support as you progress through your professional qualification, receiving a wide variety of practical experience along the way. You will be mentored and developed by a team with a wealth of skills and knowledge, who will strive to provide you with all the help you will need to reach your professional goals.

To find out more and details of how to apply please go to Become a CA

HMRC have recently announced the postponement of the VAT Reverse Charge within the Construction Industry. This is good news for the Construction industry who have been voicing their concerns that they would not be ready to implement the changes by the 1st October 2019.

Please be aware this is simply a delay and the reverse charge will commence on 1st October 2020.

Businesses should use the next 12 months to speak to their advisers and ensure their accounting systems are ready for the new implementation date.

In the event that you have already changed your systems and invoices in anticipation of this change going live on 1st October 2019, you should take steps to change back at your earliest opportunity.

If you have any queries on this please do not hesitate to speak to your usual Drummond Laurie contact.

All contractors will be aware of the IR35 legislation in some way or another.  The IR35 legislation requires an assessment as to whether work done by a contractor through their own limited company, or Personal Service Company (PSC) as it’s often referred to, falls within or out with the IR35 legislation.

Using well established criteria, such as Right of Substitution, Supervision, Direction and Control, Mutuality of Obligation and Business Risk, the legislation is designed to determine whether the contractor is effectively employed, or self-employed, for tax purposes.

Currently, this decision is made by the contractor.  The risk, and subsequent liability of getting this decision wrong, also lies with the contractor.  In 2017 changes were introduced to the public sector and these changes are now being rolled into the private sector in April 2020.

What is changing?

1. It is important to note here that the rules themselves are not changing, however, the responsibility for determining the contractor’s IR35 status, whilst in a particular assignment, will shift from your own PSC (i.e. the contractor), to the end client. The liability for getting this decision wrong, lies with the ‘Fee Payer’.  The ‘Fee Payer’ is the entity who pays the PSC, so this may be the end user, or more commonly, an agency.
2. If the end-client determines you to be within IR35 (or caught by IR35 legislation), any payments made to the PSC (or contractor), must be subject to a deduction of tax and national insurance as if that contractor were an employee.
3. With responsibility for determining your IR35 status lying with the end-client from April 2020, the government has developed an on-line employment  status assessment tool to assist end-clients with this exercise. The tool is known as CEST, and can be accessed online at HMRC.
4. If it transpires that, in making a status assessment, the end-client makes an error, responsibility for any underpaid tax and national insurance which arises as a result will lie with the end-client, or more commonly, with the agency (whoever is deemed to be the ‘Fee Payer’). It is worth a note that if the agency defaults on their responsibilities here, the liability will ultimately fall to the end-client company.

What to do next

Start entering into dialogues with your current end-user company now, especially where you are involved in an assignment which is likely to run over April 2020.

As end-client companies will potentially be held liable for any underpaid tax and national insurance, we anticipate that they will take their new responsibilities in this area very seriously and will be open to discussions with their contractors.

Each individual case will be different, so it is important to also consult with your accountant to discuss your specific circumstances.   Please get in touch, if we can help, email adviser@drummondlaurie.co.uk.

It is important to note that the proposed legislative changes have not yet been finalised, and are unlikely to be until later this year.  However, we do not anticipate significant changes to the proposals. 

We should all be aware that new Capital Gains Tax [CGT] reporting procedures come into force from 6^th April 2020.  These procedures will affect those disposing of second homes or rental properties, i.e. residential properties which are not your main principal residence.

The person disposing of the property will be required to submit a “payment on account return” within 30 days of completion of the sale notifying HMRC of the gain.  They will also be required to make a payment on account of the CGT within the same timescale.  Therefore, when selling a relevant property for a gain on the 7^th April 2020, this would previously require to have been included on a personal tax return due to be submitted by 31^st January 2022 with the tax payable by the same date.  Under the new rules, a payment on account return must be submitted by 6^th May 2020 with the tax payable on the same date.  People selling relevant properties are advised to contact their tax advisers in advance of the transaction completing in order to establish the tax payable and to make arrangements to submit the return and the payment within the required timescales.

At Drummond Laurie we try to keep our clients informed so that they can plan ahead and have no surprises!  For more information please contact us via email adviser@drummondlaurie.co.uk or call us on 01324 441250.

We were delighted to be able to sponsor the Youths 200m at the 163rd Alva Highland Games for the second successive year earlier this month.  The games took place at Johnstone Park in Alva in glorious sunshine and in front of a crowd of over 3,000 spectators. The race was won by Caleb McLeod from Pitreavie and the prizes were presented on behalf of Drummond Laurie by William Main.

The games were the first in a series which were part of the annual “week away” taking in such locations as Rosneath, Burntisland, Inveraray and Mull. One of our team, Andrew Gibson, took part in races at each of these highland games with the aim of winning some hard earned prize money. It was a successful week for him ending with a win in the Open Mile at Mull Highland Games retaining his title from 2018.