I cannot believe it! 20 Years! We have been writing this column for 20 Years! Or at least nearly 20 years. We have found something new to write about, every month, for 20 years, nearly. And this month is no different. In fact, for one month, in this 20th Anniversary edition, we have three changes in tax law to write about. Unfortunately, we do not have three times as much space, so we had better get on with it.
The first change will only take effect next year. Probably. But it will affect a large(ish) number of readers. We refer, of course, to the changes in the “Off Payroll” taxation. These changes will probably apply from next April, and essentially mean that when the rules apply:
- The responsibility for determining this moves from the “worker” to the contractor,
and - All income which are deemed to be within the rules will be subject to tax and NI, unlike the current regulations which allow a 5% deduction for expenses.
Unfortunately, not even HM Revenue and Customs can accurately determine when the rules apply, and they wrote them! However, they estimate that the cost in additional tax to the taxpayer will exceed £30m per annum.
The second change is more imminent, applying from 1st October. It will affect VAT registered sub-contractors and contractors in construction. The change was introduced to counter apparent fraud in this area and introduces “reverse charge” provisions. This means that rather than the sub-contractor charging the contractor VAT on his invoices, the contractor charges himself that VAT and immediately claims it back on the same VAT return, so no money changes hands. Makes sense? We will leave you to answer that for yourself!
The third change is horrendous but is still subject to consultation! It involves the cost of diesel in pleasure craft. For many years, pleasure boats used on the inland waterways could use red diesel. A few years ago it was ruled that fuel used for propulsion must be white diesel, which carries higher rates of duties and VAT, but red diesel could continue to be used for heating and cooking. Unfortunately, most craft only have one diesel tank, the contents of which could be used for either/both purposes, so when boat users purchase diesel they had to say what proportion of that diesel was going to be used in which way. Surprisingly, very few boats appear ever to move! The solution? Sorry folks, it’s white diesel for everything!
Well that’s it. 20 years of providing (hopefully) useful information to the readers of this excellent magazine. Let us all look forward to another 20 years! Happy Anniversary, Warrington Worldwide.
WatkinsonBlack have considerable experience in all areas of taxation and business services, including providing a very cost-effective payroll bureau service. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.