Is your business
compliance ready? With HMRC announcing that changes to both IR35 and Capital Gains Tax will come into effect on 6 April 2020, it’s important to be fully aware of the latest legislation and prepare to act quickly. To discover what these changes are and whether you’re ready to comply with them, simply continue reading the following article providing essential information regarding the changes due to come into practice from the start of the 2020/21 tax year.
IR35 and its upcoming changes Originally implemented in April 2000, IR35 is a form of tax legislation that was put in place by HMRC to combat tax avoidance and determine whether a contractor is genuine as opposed to a ‘disguised employee’. Back in April 2017, off-payroll rules for the public sector were introduced, but responsibility for whether IR35 applies remained with the taxpayer for those in the private sector. From 6 April 2020, this isset to change for contracts where a medium or large end-client is concerned. From 6 April 2020, it will be the end-client who is responsible for determining whether off-payroll rules apply. However, endclients will only need to assess whether the off-payroll rules apply regarding contracts that continue beyond 6 April 2020. The most important thing is to check if your business falls under IR35 implications. You can do this online by heading over to the HMRC website where you’ll find a handy tool (CEST – Check Employment Status Tool). Be sure to answer all of the questions to the best of your knowledge to ensure full compliance.
8 | Business Connexions
PAYE Registration If you intend to run an annual payroll, then you’ll need to register for PAYE at the earliest possible opportunity. This is because the employer’s reference number can often take some time to come through, after which you’ll need to register for online services to submit RTI.
Upcoming changes for Capital Gains Tax Capital Gains Tax (CGT) is a form of tax on the gain in the value of most assets between purchase and sale. From the start of the new tax year in April 2020, a 30-day payment window will be brought into place, meaning that you will have to pay the tax owed within 30 days from the point of sale or disposal. First introduced in 2015, an updated announcement was made in the 2017 Budget, after which it was stated that the measure would be delayed until 6 April 2020. The new rules state that you must submit a provisional calculation of the gain to HMRC and pay any tax that is due. If tax is over or underpaid, this will be dealt with accordingly. With the updated legislation for Capital Gains Tax soon to come into force, you’ll need to work out if your property requires retrospective valuation. Once you’ve done just that, you should speak to a professional who can provide you with guidance on what to do next. Entrepreneurs’ Relief (ER), introduced in 2008 by then chancellor Alistair Darling, is also set for an overhaul, limiting the
tax break available to those selling their businesses to £1m over a lifetime. The rules allow business owners of two years or over to pay less capital gains tax when they sell (10 per cent rather than 20 per cent), but this relief will now be capped at £1m for any one person. So, it’s worth paying attention to this if you feel any changes may affect you.
Conclusion Complying with the latest set of tax regulations is incredibly important if you want to remain on the right side of the law. Thankfully, taking into account the information above ensures that you’ll be able to prepare for the changes set to be implemented from 6 April 2020 onwards. So, if you haven’t already taken action, now is the time to do so!
Aurangzaib Chawla FCCA MSc Partner and Tax Specialist
www.lanop.co.uk +44 (0) 20 8392 9375 info@lanop.co.uk
