A Look Back at 2018 - Top 10 Tax Trends

Posted on in Business Tax

As we celebrate our 10th anniversary, here is a look back at the top 10 tax trends emerging since I founded On The Spot Tax Limited from digitalisation and the impact on accountancy services to increased tax complication despite naive attempts made at simplification:

  1. Digitalisation HMRC and Companies House through gov.uk are embracing this. Through the speed of setting up a company and filing forms, to checking your state pension online, we are now moving to filing VAT returns direct from a spreadsheet. At the same time, ‘Making Tax Digital’ is expected to increase taxes raised although we’re not sure that will prove true.
  2. Apps Allied to the above, there are many user-friendly apps to help record your receipts, business mileage, or review your profit or cash balance, integrating with your accounting records, making life a bit easier – assuming you’ve got smart devices!
  3. Self-employment crackdown The large growth in self-employment with lower national insurance has warranted several government responses, such as pushing one-person limited companies into being taxed as employees without any employment rights. But true self-employment in large numbers is probably here to stay.
  4. Simplification and complication! Large tax-free personal allowances, tax-free interest and dividends at low levels help focus HMRC’s attention on bigger figures and is often sold as a simplification. On the other hand, there has never been so much tax law, with many trip-ups for the unwary because politicians like to fiddle to meet their agendas. You can bet that as long as there’s an Office of Tax Simplification, tax will continue to get more complicated!
  5. Buy-To-Let properties are bad The adverse tax rules that have continued to be introduced over the last few years, with a further blow in the last Budget, shows that Governments see this as an area for some pickings. Buy-to-let owners will sell up, many by April 2020, adversely affecting the housing market, but perhaps that’s the plan?!
  6. Tax avoidance crackdown This is another thing that’s expected to improve public finances. This has continued for many years and has raised some money, but we must remember that evasion is illegal and needs more attention. Tax avoiders using the law to its extreme, but often losing in the courts, tend to be known to HMRC. What about all the unknowns, unregistered people who should pay tax?
  7. Accountants aren’t needed Simpler ‘micro’ accounts are allowed for small companies, cash accounting for sole traders and ‘Tax doesn’t have to be taxing’ campaigns all have their place, but the actual experience of the uninitiated is very different and HMRC will admit they couldn’t run the tax system without accountants.
  8. Reference to family income For child benefit, HMRC need to know both parents’ income (married or not) and you need to know each other’s income. For some, this is an unusual and not always easy conversation to have, and there have been many mistakes by HMRC in this area.
  9. Encouraging Research & Development – a bit! Seen as a good thing for the overall economy, there are good tax reliefs available to help reduce large and small companies’ tax bills and cashflow. The last Budget was a blow to small businesses where new restrictions were brought in, because a few people were making fake claims.
  10. Encouraging Entrepreneurship and Investment With income tax and capital gains tax incentives to invest in young businesses, a low 10% capital gains tax rate when business owners sell their businesses, and no Inheritance Tax on many businesses, these reliefs are very welcome and do encourage growth.

I’m very interested to see how things pan out over the next 10 years, both from a UK and global perspective. There’s never a dull moment in accountancy!

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Guest Wednesday, 23 January 2019