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Tax tips after January 1st 2019

When it comes to tax, it is important to plan ahead. The more you do so, the easier it is for you and your company to adapt and thrive. To help you, we have summarised the changes in the UK tax system in the coming year that are likely to affect businesses the most.

Changes to personal tax allowances

As usual, the new tax year will bring tax allowance changes. You just need to make sure that your systems are updated to reflect these.

Changes to the way offshore companies are taxed

If you are registered offshore, you will need to familairse yourself with the Offshore Intangibles Regime legislation. These rule changes will have a significant impact on some firms.

Changes to the way you file your VAT returns

The UK government is working towards Making Tax Digital. In time, everything will be done using a digital medium. The first tax to “go digital” is VAT.

From 1st April 2019, the vast majority of businesses will have to file their VAT returns digitally. If you are VAT registered or will need to be by April, it is vital that you are 100% ready for this change. Failure to follow this new process will result in fines and may make it more likely that you will receive a visit from the VAT inspector.

Tax changes for online retailers

If you sell goods online, you will also need to pay attention to changes related to the various tax regimes of the countries in which you sell. For example, for those who sell to Americans, big changes are due.

In the USA, each state has its own sales tax, which you must collect and pay to the relevant state authorities. For many decades, you have only had to do this for those states in which you had a physical presence (nexus) – for example, an office, warehouse or distributor – but that is set to change.

A recent Supreme Court ruling could mean that moving forward, you are likely to have to collect sales tax from every sale. This tax would then have to be passed onto the relevant state.

If things turn out as predicted, anyone who sells in America may have to collect tax for 47 different states. Currently, only five states have a 0% sales tax rate.

France is also changing things this year, and the EU has imminent plans to do so too. Chancellor Philip Hammond is also talking about taxing online retailers on turnover rather than profit.

Keep an eye on Brexit

Currently, it is not clear what will happen with Brexit. However, what we do know for sure is that whether we leave with or without a deal, there will be tax-related changes. If you have not already done so, list out the areas of your business that will potentially be affected by each scenario.

This exercise will force you to gain a better understanding of what the various situations will mean for your company. That way, as soon as the situation regarding Brexit becomes clear, you will instantly know which areas need to be urgently reviewed and changed.

If you import or export goods to, or buy materials from, the EU, you need to check out the potential changes to how VAT will be charged and collected. There will also be changes to custom taxes.

Posted by Louise
December 29, 2018

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