Flat Rate
Scheme
The Flat
Rate Scheme is designed to simplify your records of sales and purchases. The
process is to apply a fixed flat-rate percentage to your turnover to arrive at
the VAT due. Fixed-rate percentage do vary depending on the type of business.
You can find a list for percentage on this link https://www.gov.uk/hmrc-internal-manuals/vat-flat-rate-scheme/frs7300
From April
2017, there will be a new rule to start regarding the flat-rate scheme, this is
because the government is concerned that some businesses are using the Flat
Rate Scheme to pay less VAT than is appropriate. This will mainly affect
businesses that spend very little on goods, such as businesses that provide service.
So, what is changing? The new change will only
affect businesses which have a very low cost base. These businesses will now be
called “limited cost traders”. A business will be a “limited cost trader” if it
spends less than 2% of its sales on goods or less than £1,000 a year, even if
this is more than 2% of the businesses turnover on goods.
VAT returns
can be a pain and take up time and not allow you to do what you do best,
running your business! Visit www.crossaccountingservice.co.uk
to discuss your VAT issues with us.
Restricting
finance cost relief for landlords
From April
2017, there will gradually be an introduction of a basic rate reduction
restricting the relief for finance cost. Finance cost includes mortgage
interests, interest on loans to buy furnishings and fees incurred when taking
out or repaying mortgages or loans.
Landlords will
no longer be able to deduct all their finance costs from their property income
to arrive at their property profits. Instead, landlords will receive the
introductory basic rate reduction from their income tax liability for their
finance costs.
The
governments gradual change will be as follows:
·
2017 – 2018 the deduction from property income
as it currently is will be restricted to 75% of finance costs with the
remaining 25% being available as a basic rate tax reduction.
·
2018 – 2019 the deduction from property income
as it currently is will be restricted to 50% of finance costs with the
remaining 50% being available as a basic rate tax reduction.
·
2019 – 2020, 25% finance costs deduction and 75%
given as a basic rate tax reduction.
·
2020 – 2021, all financing costs incurred by a
landlord will be given as a basic rate tax reduction.
This change
is being implemented to make the tax system fairer. The government want to
ensure that landlords with higher incomes no longer receive the most generous
tax treatment.
For
landlords in Wales, there is also a new law that has come in for self-managing
landlords to obtain a licence or have an agent to deal with their properties.
This is compulsory and to find out if you need to apply visit www.rentsmart.gov.wales
We have a
lot of clients with a portfolio of properties and help them when it comes to
their
self-assessment.
If you’re a landlord and don’t understand the rules, you can contact us on 02920653995 or send through an email on nicola@crossaccountingservice.co.uk
