Data protection essentials for 2018

From 25 May 2018, any business that stores the personal data of staff, customers, suppliers and other business contacts will need to comply with the General Data Protection Regulation (GDPR).

Basically, you will need to know what personal data you keep, where you keep it, who you share it with and how you will use this knowledge to comply with these new regulations.

You will also need to have a lawful basis for collecting and storing this data and this may involve a strict process of obtaining consent. The Information Commissioners’ Office have identified a twelve-point check list that you should have worked through before 25 May 2018:

 

  1. Awareness: You should make sure that decision makers and key people in your organisation are aware that the law is changing to the GDPR. They need to appreciate the impact this is likely to have.
  2. Information you hold: You should document what personal data you hold, where it came from and who you share it with. You may need to organise an information audit.
  3. Individuals’ rights: You should check your procedures to ensure they cover all the rights individuals have, including how you would delete personal data or provide data electronically and in a commonly used format.
  4. Communicating privacy information: You should review your current privacy notices and put a plan in place for making any necessary changes in time for GDPR implementation.
  5. Lawful basis for processing personal data: You should identify the lawful basis for your processing activity in the GDPR, document it and update your privacy notice to explain it.
  6. Subject access requests: You should update your procedures and plan how you will handle requests within the new timescales and provide any additional information.
  7. Consent: You should review how you seek, record and manage consent and whether you need to make any changes. Refresh existing consents now if they don’t meet the GDPR standard.
  8. Data breaches: You should make sure you have the right procedures in place to detect, report and investigate a personal data breach.
  9. Children: You should start thinking now about whether you need to put systems in place to verify individuals’ ages and to obtain parental or guardian consent for any data processing activity.
  10. Data Protection by Design and Data Protection Impact Assessments: You should familiarise yourself now with the ICO’s code of practice on Privacy Impact Assessments as well as the latest guidance from the Article 29 Working Party, and work out how and when to implement them in your organisation.
  11. Data Protection Officers: You should designate someone to take responsibility for data protection compliance and assess where this role will sit within your organisation’s structure and governance arrangements. You should consider whether you are required to formally designate a Data Protection Officer.
  12. International: If your organisation operates in more than one EU member state (i.e. you carry out cross-border processing), you should determine your lead data protection supervisory authority. Article 29 Working Party guidelines will help you do this.

Sent to Coventry

The origins of the phrase, to be sent to Coventry, seem to have originated in the seventeenth century when Cromwell was purported to have sent Royalist soldiers to be imprisoned in Coventry around 1648. At the time, Coventry was a parliamentary supporter and it is likely that the hapless Cavaliers would have had a miserable time.

In a contemporary sense, the phrase has been used to describe an event when a person or group was isolated or ostracised by their peers, for whatever reason. Rather like a grown-up’s version of the “naughty step”.

From an economic viewpoint, Coventry has struggled to shed its reputation as a place in decline, which is why the announcement by the Department for Digital, Culture, Media & Sport last week was such good news. In competition with cities across the UK Coventry will host the title of UK City of Culture 2021.

The decision was made after an independent panel of culture experts, chaired by television producer and screenwriter Phil Redmond, visited each of the five candidate cities before recommending Coventry as the winner. The bid impressed the judges with its focus on youth, diversity and the scale of impact not only in Coventry but across the UK.

Coventry will take the title from Hull 2017, which has used City of Culture to transform its reputation as a destination for arts and culture both at home and abroad.

It is estimated that Hull’s local economy has received a £60 million boost in 2017 and the city has been praised for how it has engaged residents in the cultural programme. Nine out of 10 residents have attended, or taken part, in a City of Culture event and since it was awarded the title in 2013 it has received more than £3 billion of investment.

John Glen, Minister for Arts, Heritage and Tourism, said:

I would like to congratulate Coventry on winning UK City of Culture 2021. The title is an incredible opportunity for Coventry to boost investment in the local economy, grow tourism and put arts and culture centre stage.

We received excellent bids from all the cities and I would like to thank them for their efforts.

Coventry now has three years to prepare its year-long programme of activity for 2021. As part of its status as UK City of Culture 2012, Coventry will be eligible for a £3 million grant from the Heritage Lottery Fund.

Time also for Coventry to inject the phrase “sent to Coventry” with new and positive meaning…

Do you need to submit a self-assessment tax return

According to HMRC, you are required to send in a tax return in the last tax year if:

  • you were self-employed – you can deduct allowable expenses
  • you got £2,500 or more in untaxed income, for example from tips or renting out a property
  • your income from savings or investments was £10,000 or more before tax
  • your income from dividends from shares was £10,000 or more before tax
  • you made profits from selling things like shares, a second home or other chargeable assets and need to pay Capital Gains Tax
  • you were a company director – unless it was for a non-profit organisation (such as a charity) and you didn’t get any pay or benefits, like a company car
  • your income (or your partner’s) was over £50,000 and one of you claimed Child Benefit
  • you had income from abroad that you needed to pay tax on
  • you lived abroad and had a UK income
  • your taxable income was over £100,000
  • you were a trustee of a trust or registered pension scheme
  • you had a P800 from HMRC saying you didn’t pay enough tax last year – and you didn’t pay what you owe through your tax code or with a voluntary payment
  • your State Pension was more than your Personal Allowance and was your only source of income – unless you started getting your pension on or after 6 April 2016

Certain other people may need to send a return (for example religious ministers or Lloyd’s underwriters). Usually, you won’t need to send a return if your only income is from your wages or pension.

There are penalties for non-submission of returns, so if you are at all uncertain that you should submit a return, please call, we would be delighted to offer an opinion.

Private pension tax relief

There was much speculation prior to the budget last month, that the tax relief for higher rate tax payers was going to be scrapped, or reduced. Many pundits were expecting a flat-rate tax deduction of 33% rather than tax relief for higher rate taxpayers of 40%.

Fortunately, for those who may have been affected by a reduction, this change was conspicuous by its absence.

Presently, therefore, the annual tax-free allowance continues to be £40,000 a year. You can top-up this allowance with any unused allowance for the previous three tax years.

You may also be liable to pay tax if the combined value of all your pension pots is worth more than £1m. What counts towards your lifetime allowance depends on the type of pension you are paying into:

  1. Defined contributions schemes are valued as the money in pension pots that goes towards paying you, however you decide to take the money.
  2. Defined benefit schemes are usually valued at 20 times the pension you get in the first year plus your lump sum.

There are also certain protected policies where the expected retirement age is lower than the usual age 55 years limit, for example professional dancers and sportspersons. If this lower retirement age is written into pension plans, then the £1m lifetime allowance is reduced proportionately.

Now there is more certainty regarding the tax benefits of contributing into a pension, readers still making contributions should consider a consultation with their pensions advisor before the end of the current tax year (5 April 2018). Shifting potentially taxable income into a tax-free pension fund still makes good financial sense in appropriate circumstances.

Company capital gains relief is frozen

Before the Autumn Budget, the capital gains tax (CGT) calculations of companies included a relief called the indexation allowance. Basically, this allowed a company to increase the acquisition cost of an asset by the annual rate of inflation.

Without this relief, any CGT payable on the sale of the asset would increase. Instead of deducting the cost plus the inflation proofed indexation allowance, companies would only be able to claim the historical cost.

This allowance has effectively been axed in the budget last week.

Assets owned prior to 1 January 2018

Companies that currently own assets that will be subject to a CGT payment when they are sold, will have any indexation relief capped at the RPI for December 2017. Accordingly, they will still get a measure of relief up to this date.

Assets acquired on or after 1 January 2018

Assets acquired on or after 1 January 2018 will no longer be able to claim indexation relief.

Companies should therefore be aware that if inflation continues to rise they will be paying tax on the inflationary value of the chargeable asset sold.

According to HMRC:

The measure aligns the treatment of capital gains by companies with that for individuals and non-incorporated businesses for whom indexation allowance was abolished in 2008. It will also align the treatment of capital disposals with disposals of similar assets as part of a company’s trading activities.

In addition, it will simplify tax computations and remove a source of potential errors.

What this measure will do, is to increase the corporation tax of companies that dispose of assets subject to CGT.

 

First time buyer bonanza

HMRC have laid out the detail of their budget plans to support first-time home buyers in their quest to buy their first home. There are fears that this strategy will simply drive up prices as demand is stimulated, and that this will replace stamp duty savings with house prices that once again move beyond the reach of younger buyers.

The text is reproduced below:

First-time buyers will benefit from a permanent stamp duty land tax (stamp duty) relief worth £1,660, to someone buying the average first-time buyer property. All first-time purchases below £500,000 will benefit from the relief. This will come into effect on Budget day (22 November 2017) and provides immediate support for first-time buyers while the government’s wider housing reforms take effect.

 

  1. First-time buyers are more cash constrained than other buyers and stamp duty land tax (stamp duty) can represent an upfront cash burden on top of a deposit and conveyancing fees. This will mean 80% of first-time buyers pay no stamp duty, helping them get on the housing ladder.
  2. Previously, first-time buyers paid stamp duty on purchases above £125,000. On and after Budget day, stamp duty will be abolished for first-time purchases up to £300,000 – the largest ever increase in the point at which first-time buyers become liable for the duty – and they will pay £5,000 less on purchases between £300,000 and £500,000. To focus this relief on those who need it most, it will not apply on purchases above £500,000.
  3. As a result of these changes:
  • in every region of England outside London, and in Wales and Northern Ireland, the average first-time buyer property will pay no stamp duty
  • the stamp duty bill of the average first-time buyer in London will nearly halve, from £10,500 to £5,500
  • 95% of first-time buyers who pay stamp duty will benefit, including almost 80% in London
  • Over the next five years, this relief will help over a million first-time buyers get onto the housing ladder

 

       4. To ensure that all first-time buyers purchasing a house on Budget day benefit and               to avoid disruption, the relief will take effect from Budget day (00:01 hours                           November 22nd).

       5. First-time buyers (or their solicitors, who generally complete the stamp duty return)             have to enter a code on their stamp duty return indicating that they are first-time                 buyers, and calculate the stamp duty due according to the new rates.

       6. The definition of a first-time buyer for this relief is in line with the definition for                     previous reliefs. A first-time buyer is someone who has never owned freehold or                 leasehold interest in a dwelling before and who is purchasing their only or main                   residence. Residential property anywhere in the world is counted when                               determining  whether someone is a first-time buyer. Where there are joint                           purchasers, all purchasers would need to be first-time buyers.

       7. Stamp duty is devolved in Scotland and it applies in Wales until April 2018, when it              is devolved, and the Welsh Government’s new Land Transaction Tax is                              introduced. Welsh First Time Buyers will benefit from this stamp duty relief until                  then. It will be for the Welsh Government to make any decisions about introducing              future reliefs in Land Transaction Tax.

The Autumn Budget 2017

Autumn Budget 2017

Prospects for growth, especially for productivity have been downgraded, but the Chancellor was bullish in his forecasts for investment and the Government’s intention to sort out the slow pace of house building in the UK. A few non-tax comments of note were:

 

• Unemployment at its lowest rate since 1975.

• Chancellor is providing an extra £3bn to prepare for Brexit over the next two years.

• Government to create 5 new garden towns, make better use of land and aim to be building 300,000 new homes a year by the mid-2020s.

• Devolved administrations will have more money to spend. An increase of £2bn for Scotland, £1.2bn for the Welsh Government and £660m for the Northern Ireland Executive.

 

Our summary of a selection of specific tax changes and other budget announcements for 2018-19 and future years follow.

 

Personal Tax and miscellaneous matters

 

Personal Tax allowance

 

The personal allowances for 2018-19 is £11,850 (2017-18 £11,500). According to HMRC, this means that an average taxpayer will pay £1,075 less tax than in 2010-11.

 

Income Tax bands, rates and the dividend allowance

The Income Tax bands for 2018-19 have been increased. They are:

• Basic rate band increased to £34,500 (2017-18 £33,500)

• Higher rate band £34,501 to £150,000 (2017-18 £33,501 to £150,000)

• Additional rate, no change, applies to income of more than £150,000.

There is no change in Income Tax rates, and the tax rates applied to dividend income. Readers should note that the present £5,000 tax-free dividend allowance will, as previously announced, be reducing to £2,000 from April 2018.

The Scottish parliament sets the basic rate limit for Scotland meaning that higher rate taxpayers may pay more tax in 2018-19.

 

Marriage Allowance extended

There is a small increase in this allowance to £1,185 from April 2018. This is the amount of unused personal tax allowance that can be transferred between spouses, or civil partners, if the person receiving the transfer is not a higher rate tax payer.

 

From 29 November 2017, the Government will also allow Marriage Allowance claims on behalf of deceased spouses and civil partners, and for the claim to be back dated four years in appropriate cases.

 

Offshore trusts

Changes will be made to ensure that payments from an offshore trust intended for a UK resident individual do not escape tax when they are made via an overseas beneficiary or a remittance basis user. This will take effect from April 2018.

 

 

Abolishing Stamp Duty Land Tax for certain first-time buyers

With immediate effect, first-time buyers will pay no stamp duty on homes costing no more than £300,000.

First-time buyers of homes worth between £300,000 and £500,000 will not pay stamp duty on the first £300,000. They will pay the normal rates of stamp duty on the price above that. This will save £1,660‎ on the average first-time buyer property.

80% of people buying their first home will pay no stamp duty, but there will be no relief for those buying properties over £500,000.

National Living Wage (NLW) and National Minimum Wage (NMW) increases

From April 2018, the NLW will increase from the present £7.50 per hour to £7.83 per hour.

 

From the same date, the NMW rates will also increase to:

 

• £7.38 per hour for 21 – 24 year olds

• £5.90 per hour for 18 – 20 year olds

• £4.20 per hour for 16 and 17 year olds

• £3.70 per hour for apprentices

 

Fuel duty no change

For 2018, the fuel duty will remain frozen, for the eighth consecutive year.

 

New railcard for the 26 to 30 age group

No doubt to win back the support of the younger generation, the government will work with the rail industry to introduce a new railcard from Spring 2018.

 

Duty frozen for most alcoholic drinks

The duty on beer, wine, cider and spirits to be frozen. However, cheap, high strength cider will be subject to a new band of duty from 1 February 2019.

 

Duty on tobacco products to increase

The duty on cigarettes will increase by 2% above inflation and hand-rolling tobacco by 3% above inflation, with effect from 6pm, 22 November 2017.

 

Universal Credit (UC) changes

In response to recent adverse publicity the Government has agreed to various changes that are intended to ease the financial hardship for new claimants. They include:

• Households in need, who qualify for UC will be able to access a month’s worth of support within 5 days. This will be funded by an interest free loan that can be repaid over a 12-month period.

• Claimants will be eligible for UC from the day they apply, the present 7-day rule will be scrapped.

• Low-income households affected by areas with higher rent increases will receive an extra £280 on average to meet these higher costs.

 

Pension lifetime allowance increased

The lifetime allowance will increase to £1,030,000 from April 2018.

 

Diesel Vehicle Excise Duty (VED) change

From April 2018, the first year VED (car tax) rate for diesel cars that don't meet the latest standards will go up by one band. The Chancellor emphasises this is cars only, and that the money will go to a new Clean Air Fund.

 

 

Business Tax changes

 

Corporation Tax changes

Although there is no change to the rate of Corporation Tax, maintained at 19%, HMRC is to freeze indexation allowance on corporate capital gains for disposals after 1 January 2018.

 

£64m for construction and digital training courses

The new funding will be split as to:

 

• £34m to teaching construction skills, and

• £30m towards digital courses using Artificial Intelligence.

 

Partnership tax

Legislation has been revised to be more compatible with commercial arrangements for allocating shares of profit, and to avoid additional administrative burdens for taxpayers. The changes will have effect for the tax year 2018-19 and subsequent tax years.

 

 

Business rates changes

From April 2018, business rates will rise by any increase in the Consumer Price Index (CPI) rather than the Retail Prices Index (RPI). The change has been brought forward two years. Historically, the RPI has tended to be higher than the CPI.

 

Rates revaluations will now be undertaken every 3 years rather than the present 5 years. This will start after the next rates revaluation due during 2022.

 

Pubs with a rateable value up to £100,000 will continue to receive a £1,000 discount next year. 

 

Venture Capital Schemes

Changes are to be made to the Enterprise Investments Scheme, the Seed EIS and Venture Capital Trusts. The aim is to target Venture Capital Schemes on companies where there is a real risk to the capital being invested, and will exclude companies and arrangements intended to provide ‘capital preservation’. 

 

Incentives to encourage VCTs towards higher risk investments will include:

 

• removing certain ‘grandfathering’ provisions that enable VCTs to invest in companies under rules in place at the time funds were raised, with effect on and after 6 April 2018;

• requiring 30% of funds raised in an accounting period to be invested in qualifying holdings within 12 months after the end of the accounting period, with effect on and after 6 April 2018;

• increasing the proportion of VCT funds that must be held in qualifying holdings to 80%, with effect for accounting periods beginning on and after 6 April 2019;

• increasing the time to reinvest the proceeds on disposal of qualifying holdings from six months to 12 months for disposals on or after 6 April 2019;

• introducing a new anti-abuse rule to prevent loans being used to preserve and return equity capital to investors, with effect on and after Royal Assent of Finance Bill 2017-18.

 

EIS and VCTs will also see increased limits for investments in knowledge-intensive companies:

The Government will legislate to:

• double the limit on the amount an individual may invest under the EIS in a tax year to £2 million from the current limit of £1 million, provided any amount over £1 million is invested in one or more knowledge-intensive companies;

• raise the annual investment limit for knowledge-intensive companies receiving investments under the EIS and from VCTs to £10 million from the current limit of £5 million. The lifetime limit will remain the same at £20 million;

• allow knowledge-intensive companies to use the date when their annual turnover first exceeds £200,000 in determining the start of the initial investing period under the permitted maximum age rules, instead of the date of first commercial sale.

The changes will have effect on and after 6 April 2018. This measure is subject to normal state aid rules.

R & D expenditure credit increase

The Government will legislate to increase the rate of the R&D expenditure credit from 11% to 12%, to support business investment in R&D.

This change will have effect on and after 1 January 2018.

Diesel car supplement increase

The diesel car supplement is to be increased from 3% to 4% from 6 April 2018. This will increase the company car tax and car fuel benefit charge (for company cars provided with an element of private use).

This change will apply to all diesel cars registered on or after 1 January 1998 that do not meet the Real Driving Emissions (Step 2) standards.

End of year tax planning

We are moving closer to the end of the current tax year – 2017-18 – and as we have mentioned in previous posts on this blog, the opportunity to take advantage of perfectly legal tax planning opportunities expires once the year end date passes: 5 April 2018.

To capitalise on these opportunities, we need to know if your circumstances have changed since our last conversation on these matters. The sort of information we need to know includes:

If you are in business

 

  • Are your profits increasing or decreasing as compared to the previous trading period?
  • Have you recently committed to, or undertaken a significant investment in new or second-hand plant of other equipment?
  • Have you disposed of existing plant or other equipment?
  • If you run a property business have you purchased or sold property this year?
  • If your property business is intended to benefit from the tax advantages of a Furnished Holiday Lets business, have you checked that your occupancy is on track to qualify for this tax year?
  • Have you, or will you be, acquiring or selling a business during 2017-18?

If you are a higher rate tax payer

  • Is your income approaching £100,000 for the first time?
  • What pension arrangements have you committed to this year?
  • Have you made, or will you be making significant charitable contributions?
  • Has your marital status changed?
  • Have you bought or sold a property in addition to your main residence?
  • Have you bought or sold any other assets that are subject to capital gains tax?

Estate planning:

  • Has the taxable value of your estate increased this year?
  • Do you need to reconsider your Will due to family changes?
  • Do you need to reconsider any existing trust arrangements?
  • Have you made any significant gifts? Should you provide for the possible IHT consequences?
  • Have you taken advantage of the various IHT reliefs available for 2017-18?

Essentially, we need to know what has changed, or is likely to change before 5 April 2018, so that we can assess your options to mitigate any tax consequences. Occasionally, we can also advise on a change in your future intentions to give you a more effective tax result. The purpose of this post is to invite you to keep in touch; if we know what your intentions are, we can advise accordingly.

Are your bank deposits protected

The Financial Services Compensation Scheme (FSCS) is the place to go if your bank or other regulated organisation is unable to pay claims against it.

For most of us this will mean that our deposits with banks authorised to hold deposits by the Financial Conduct Authority (FCA and the Prudential Regulation Authority (PRA) will be able to recover funds up to certain limits.

What are the current limits?

From the 30 January 2017, deposits with approved institutions are covered up to £85,000 per person.

Please note the following:

  1. All your eligible deposits at the same bank are added together and the total is subject to the £85,000 limit.
  2. The limit of £85,000 applies to each person. In the case of joint deposits, the £85,000 limit applies to both depositors.
  3. Deposits held in the name of business partnerships or similar groupings are treated as if made by a single depositor.

Additionally, from 3 July 2015, the FSCS will provide up to a £1 million protection limit for temporary high balances held with your bank. For example, funds held after:

  • The sale of a main residence.
  • A death.
  • The depositor’s marriage or civil partnership, divorce, retirement, dismissal, redundancy or invalidity.
  • The receipt of insurance benefits, or compensation for criminal injuries or wrongful conviction.

How long before I get my money back?

Reimbursement will be made in line with the following published time limits:

  • Up to 31 December 2018 – within 20 working days
  • From 1 January 2019 to 31 December 2020 – within 15 working days
  • From 1 January 2021 to 31 December 2023 – within 10 working days
  • From 1 January 2024 – within 7 working days

January 2018 and taxes to pay

January is the month when individuals and businesses are required to pay tax.

If your business is a limited company, and your tax year ends 31 March 2017, any corporation tax due for that year is payable 1 January 2018. Unlike your self-employed counterparts – see below – no payments on account are required for 2017-18.

If you are a self-employed business person, sole trader or in partnership, any underpayment of self-assessment tax, Class 2 and 4 NIC (for 2016-17) will be due for payment 31 January 2018. On the same date, tax payers in this category will need to make a possible payment on account for the tax year 2017-18. This is based, initially, as 50% of your actual liability for the previous year, 2016-17.

Which is why it’s worth taking a moment to consider what your financial results may be for 2017-18. If you consider that your self-employed profits, or other taxable earnings will be lower during 2017-18 (as compared to 2016-17) then you can elect to recalculate the payments on account for 2017-18.

We should always be on the lookout for ways to protect our hard-earned cash resources, which is why undertaking this simple review may help to take the sting out of the January tax payment.

You will also be glad to know, that if the results of this exercise show that your profits or taxable income have increased during 2017-18 (compared to 2016-17) it is not necessary to increase your payments on account for 2017-18. However, self-assessment taxpayers in this position should be aware that any shortfall between payments on account made and the actual liability for 2017-18 will still be payable, albeit later, on 31 January 2019.

If you feel that your earnings will be lower for 2017-18 we can help you crunch the numbers to see if a valid election to reduce your tax payments next year is a viable option. Every little helps.