5 tax planning points to consider before the new tax year

5 tax planning pointsFollowing on from our last blog on New Year Tax Saving Resolutions (click here) and with a few weeks to go until the end of the 2017/18 tax year here are 5 things to think about doing before then:

There is a £20,000 limit for ISAs in 2017/18 which can be invested in cash or shares. Any income via interest or dividends from these will be tax free as well as any gains within a share portfolio.

The interest rate is often not the highest and there is an argument that with the savings allowance (£1,000 for basic rate payers, £500 for higher rate tax payers but £0 for additional rate payers) that there is no need for ISAs. However, if you have interest from a director’s loan account, or significant savings then these are still a worthwhile consideration.

The fact that all income and capital is kept within a tax-free wrapper for future years (until you withdraw it) makes it a tax saving vehicle worth using.

Making pension contributions remains a tax-efficient way of saving for retirement, with tax relief given at your highest marginal rate of income tax.

The relief is restricted to the lower of the annual allowance, currently £40,000 for most people, or your net relevant earnings (which is something to consider for additional tax rate earners).

There may also be unused annual allowance from the three previous tax years which can be utilised.

If you are a business owner, your company can make contributions on your behalf directly into a pension scheme, which will also reduce its corporation tax bill.
Note that the maximum relief (e.g. £40,000) is ALL pension contributions in a tax year (from both an individual and an employer).

Things to be wary of are the net relevant earning for higher earners, a lifetime cap if your value of pension pot is nearing £1,000,000 and reviewing your carry back pension position.
Talking to your IFA is recommended for pension planning.

Charitable Donations
Gift aid donations to charity give tax relief at your highest marginal tax rate.
Regular donations are easy to note from your bank statements but any adhoc donations to charity can also be claimed.

With the Manchester and London marathons coming up soon and many other charity events arising, it is a good time to gift aid money.
If this is done by Just Giving, Virgin money giving or other similar sites, then you usually receive an email or can logon to your account and see what donations you have made in the tax year.

Any donations made before 31 January of the following tax year, or the date of the submission of your tax return if earlier, can be carried back to the previous tax year. Cash donations made before both 31 January 2019 and the submission of your 2017/18 tax return can be included on your 2017/18 tax return.

Inheritance tax
Gifts of £3,000 can be made annually with no impact on the nil rate band of £325,000 or inheritance tax charge. If you don’t reach the £3,000 limit in one tax year, the balance can be carried forward, but only for one tax year. So, if no gifts were made in 2016/17, you can make £6,000 worth of gifts before 05/04/18.

In the 2017/18 tax year, there will be a new transferable Inheritance Tax (IHT) allowance called the ‘Residence Nil Rate Band’ (RNRB), worth £100,000, for those that want to pass on their main home to their children.
The new band will sit on top of the existing IHT Basic Nil Rate band of £325,000 (£650,000 for married couples/civil partnerships). The maximum available amount will go up yearly.

For deaths in the following tax years it will be:

£125,000 in 2018 to 2019
£150,000 in 2019 to 2020
£175,000 in 2020 to 2021

The change means individuals passing on a main residence may get a tax-free threshold worth £425,00 and couples may be able to pass on estate worth £850,000 without attracting the 40% IHT tax charge.

There are also reliefs on small gifts to any one person of up to £250 annually and gifts out of the transferor’s surplus income, although various conditions must be met such as ensuring the gifts are not putting the donor in a position where they cannot maintain their current standard of living.

Capital Gains Tax
There is an annual exemption for CGT of £11,300 for 2017/18 for individuals.

Spouses or civil partners may consider transferring assets to ensure that they both utilise their annual exemption. It may also be worth considering how any gains above this are being taxed, to make maximum use of any unused income tax basic rate band if one of them is a higher rate taxpayer.

The timing of asset disposal is also important so that the annual exemption is utilised each year rather than disposing of a multitude of assets in one tax year and not utilising the next years allowance.

If you would like to talk to the Moore Accountancy team before the end of March to discuss any of the above, then please contact us at info@mooreaccountancy.co.uk.


New Year Tax Saving Ideas

New Year Tax Saving ResolutionsMoore Accountancy Altrincham Tax Ideas

At the beginning of every year we often think about New Year’s resolutions and these often relate to finances.

Whether it is saving for a big holiday, a new home or thinking about future retirement – good financial planning can help.


An easy tax planning point would be to maximise your ISA allowances of £20,000 for the 2017/18 tax year before 05/04/18.

Every basic rate taxpayer can earn upto £1,000pa in interest before paying tax but this reduces to £500 for a higher rate taxpayer and £0 for an additional rate taxpayer, so if you are likely to exceed these levels then an ISA is a must.

Consider also what will happen if interest rates rise – saving in an ISA now could protect you from tax in the future.



The majority of taxpayers can have up to £40,000 of pension contributions (in total across employer and employees) each tax year. This annual allowance may be reduced if your earnings exceed £150,000, but there is other criteria which will influence the tapering reduction. These taxpayers will still have at least £10,000 allowance each year.

If you are in the position of utilising your annual allowance then you should ensure that your unused allowances from the previous 3 years have been utilised. If they are not used then they are lost.

It can be tax effective for directors of their own limited company to make contributions direct from the business to the pension fund, and this should be looked into with your IFA.



New inheritance tax rules came into play in April 2017 regarding the family home. The rules are quite complex and should be reviewed with your solicitor. However more simple inheritance tax planning can be done by making regular gifts out of surplus income.

These regular gifts (maybe by Standing Order) can be outside the scope of inheritance tax provided they are paid out of “surplus income” and not capital. You will have to demonstrate that you are left with sufficient income after tax and living expenses to continue your normal lifestyle.

There is no monetary limit on these regular gifts provided the above conditions are satisfied.

In addition to this is the £3,000 annual inheritance tax allowance where you can give away up to this amount each tax year, without it being added to the value of your estate.

You can carry forward any unused annual exemption for one year, so if you did not gift anything in 2016/17, do so now to avoid losing the exemption.


There are other ways of saving money such as cashback sites (topcashback and quidco are two popular ones) and some banks now allow you to “save your change” when making a payment by rounding up to the next £.

A key point is to create a tangible goal or vision, as this is more likely to make you consider your future and encourage saving.


Moore Accountancy are unable to provide specific financial advice, but can direct you to an IFA if you want to discuss any of the above in more detail.

#SageSummit – The Moore Accountancy Learnings

Last week I took two days out of Moore Accountancy to head down to London for #SageSummit UK – the first conference held by them in the UK and part of the Sage Tour across the world.

I attended as a Sage Business Expert and Influencer and learnt lots about both Sage products and business development.


The Sage staff I met were knowledgeable about the various branches of Sage. The passion with which they had for their various service areas was obvious and created a great vibe at the event.


As an accountant, I had only really considered the Sage accounting products as “the thing they did”, but after two days with them I discovered a whole lot more.

  • They are great believers in getting to know a business and offering support to grow them using their accounting, HR solutions and Business Management tools. These include £3 trillion payments processed each year!


  • Philanthropy – At the event, the “Big Give” was held where 3 charities pitched to everyone to secure funding from the Sage Foundation. Sage staff can also donate their time each year to worthwhile causes and whilst maybe not every member of staff can go abroad to do this (like Alan Laing), it made me realise that Sage think about developing people and businesses from the inside and are not just about selling product.


Key highlights for me were the inspirational talks from entrepreneurs.

There were many comments by the great line-up of key note speakers which gave me food for thought.

Deborah Meaden (Dragons Den), Martha Lane Fox (founder of lastminute.com) and Sahar Hashemi (founder of Coffee Republic) had insights about their own business growth and failures; including:

“focusing on the right user need”,

“enabling diversity and inclusion”,

“delighting your customers by seeing things through their  eyes”

and my favourite from Sahar Hashemi is to be

“100% authentic and be yourself”.

These are all learnings which I will be trying to develop within myself and the team at Moore Accountancy.


Diversity and the Gender Gap

As a female business owner hearing these speakers and also Kelly Hoppen talk about diversity in business and the workplace was important. It brought to mind the gender gap issues across the “developed” world and how much further we have to work to minimise it.

One of the stats produced stated that a woman starting university now, would be 81 years old before the pay gap closes – as a mother of 3 girls that is truly shocking and has made me realise that not enough is being done to highlight this #GenderEquality issue and it is something I shall be researching more of from a personal perspective.


On a more positive note, I met a really great bunch of people, enjoyed networking with other small business owners, talked the ear off the poor guy from The Pensions Regulator (TPR) and had quite a few Sage Mocktails from the bar.


Did I benefit from attending Sage Summit? Definitely

Can I bring what I learnt to Moore Accountancy? For sure!

Would I attend if it was held again? Without a doubt….and so should you if you get a chance 🙂

Autumn Statement Update 2016

Business Matters_Steve Woods via Dreamstime

Business Matters_S Woods (Dreamtime)

It was Phil Hammond’s first Autumn Statement since becoming Chancellor and it will be his last, as the usual spring budget is moving to the autumn from 2017.

There was lots of talk about productivity and where our gross debt is at present, but for you – our small business and individual clients, here are Moore Accountancy’s main highlights:

Increase in Personal Allowance (PA) and Higher Rate Tax (HRT) threshold

For 2016/17, the PA is £11,000 and the HRT is currently for income levels over £43,000.

Next year (2017/18) this shall rise to £11,500 and £45,000 and the eventual aim is to ensure that the PA increases to £12,500 and the HRT to £50,000 by 2020. After this point the PA is planned to rise in line with the Consumer Price Index.

An increase to these allowances is always good news for both individuals and small business owners.


National Living Wage

This was introduced last year and is separate to the National Minimum Wage. This will go up from £7.20ph to £7.50p from April 2017. Read our previous article about the differences between the two.

This is a positive thing for the country and should boost the flow of cash in the economy, although it will be an added burden for micro businesses.

Salary Sacrifice Schemes to be removed

From April 2017, any salary sacrifice schemes (aside from schemes relating to pensions, cycle to work, low emission cars and childcare) will be abolished. These include gym memberships, school fees, private health insurance, accommodation, company cars and car parking.

This does not affect many of our owner managed businesses, but if you are an employee of a large organisation, then we suggest you take up salary sacrifice schemes before April 2017 and benefit for a further year of reduced NIC and tax. After April 2018 these will no longer be protected.



Those individuals who have been prudent over the years and saved their pennies have been hit hard over the last couple of years with interest rates at a record low.

The government will be launching a new National Savings & Investment bond which allows savers to save up to £3000 over a 3 year period. It aims to offer a market leading rate. It should be launched in the spring.

In addition to this, those savers who are basic rate with more than £1,000 worth of gross interest, or higher rate with more than £500 worth of interest should continue to look at utilising ISAs. The threshold has been increased to £20,000 per annum effective from 6/4/17.


Corporation Tax rates

The chancellor confirmed that he would not change George Osborne’s plans to reduce Corporation Tax from the current rate of 20% to 19% (from 1/4/17) down to 17% (from 1/4/20). This is welcome news for all businesses in the UK as it shows that the Government’s plan to have the lowest tax rate in the G20 is still on the agenda.


VAT changes

Many small businesses have been using the Flat Rate Scheme (FRS) as a simplified way of accounting for their VAT liabilities each quarter.

Unfortunately from 1/4/17 a new VAT rate of 16.5% will be introduced for many labour only businesses who have limited costs (to be known as a “limited cost trader”) and we understand that this will supercede any existing rates which may have been used by existing VAT registered businesses.

The details have not yet been finalised but we believe that a trader whose VAT inclusive expenses on goods (not services) are < 2% of their VAT inclusive turnover or <£1,000 will fall into this category. Note that the expenses used in the calculation will also exclude: capital expenditure, food and drink consumed by the business and vehicle and fuel expenses.

This will affect many of our smaller VAT registered clients, so please ensure you contact us to discuss this further for your specific situation.


Making Tax Digital

This is the Government’s current plans to move all small businesses and Landlords to a quarterly reporting and filing regime and away from the current once a year filing.

Many bodies, including the ICAEW have contributed to the consultations which have taken place over the last few months to discuss what HMRC and the Government want from businesses and how they expect businesses to cope with the onerous requirements.

The Government intend to publish its response to these consultations in January 2017 and we shall of course update our clients as to what it will mean for you at that point.


More support for Research and Development (R&D) and finance for growing firms

The Government plan to provide a further £400m boost for venture capital funds.

They may also review the tax position of companies who undertake R&D in order to make the UK more competitive in this area.

Many companies may be eligible for R&D tax relief, and whilst this is not a speciality of Moore Accountancy, we have contacts we can pass you on to for further guidance, so please get in touch if you think you may benefit.


Letting agent fees

These have been banned which is a cash flow benefit for many renters as it will reduce any up-front costs required when taking out a tenancy.

For landlords however, agreements with agencies should be reviewed to see whether the costs will now be passed onto landlords instead. It will therefore be necessary for landlords who use agents to review their income and costs to ensure they are not disadvantaged significantly.

If you wish for a more thorough review then please read our newsletter update.

Please contact Sid at Moore Accountancy (info@mooreaccountancy.co.uk) if you think any of the above changes will affect you and we can arrange a call or meeting to discuss any tax implications.

Dividend tax for small business owners

The changes effective from 6/4/16 to dividends have adversely affected almost every company business owner.Tax magnifying glass

There is now a new nil rate which applies to the first £5,000 of a person’s dividend income each tax year.

UK residents will now pay tax on any dividends received over the £5,000 allowance at the following rates:
7.5% on dividend income within the basic rate band;
32.5% on dividend income within the higher rate band; and
38.1% on dividend income within the additional rate band.
Dividends received on shares held in an Individual Savings Account (ISA) and pension funds continue to be tax free.

Individuals in receipt of dividend income who will fall into the self-assessment regime for the first time, will need to notify HMRC accordingly. Self-Assessment returns for the 2016-17 tax year need to be submitted by 31 January 2018.

The introduction of the new allowance was designed to help the Government with its plan to reduce the corporation tax rate over the coming years from its current rate of 20% to 17% by 2020 and to avoid tax based incorporations.

The overall idea is that only those with significant dividend income, or those who are able to pay themselves dividends in place of wages, will pay more tax. It is estimated that around one million individuals will pay less tax on their dividend income due to the new dividend allowance. These are likely to be individuals with modest share ownership.

In calculating into which tax band any dividend income over the £5,000 allowance falls, savings and dividend income are treated as the highest part of an individual’s income. Where an individual has both savings and dividend income, the dividend income is treated as the top slice.

Worked example 1 – low salary, higher dividend

Non Savings Savings Dividend Total
Salary 8,000  8,000
Interest   500     500
Dividend 41,000 41,000
Personal Allowance (8,000) NIL (3,000)
Total income        49,500
Taxable  NIL   500 38,000
PSA (500 @ 0%) NIL
BR ( 5,000@ 0%) NIL
BR ( 27,000 @ 7.5%) 2,025
HR ( 6,000 @ 32.5%) 1,950
Total Personal Tax    3,975

Worked example 2 – high salary, lower dividends

Non Savings Savings Dividend Total
Salary 40,000 40,000
Interest 500     500
Dividend 9,000   9,000
Personal Allowance (11,000) NIL NIL
Total income        49,500
Taxable  29,000  9,000
PSA (500 @ 0%) NIL
BR ( 29,000@ 20%)  5,800
BR ( 3,000@ 0%) NIL
HR ( 2,000@ 0%) NIL
HR ( 4,000 @ 32.5%) 1,300
Total Personal Tax       7,100

More HMRC worked examples are available here.

Note that there are other tax implications such as employees and employers NIC on salary, as well as the corporation tax charge of 20% prior to any dividends taken from the company, so please ensure you take advice before extracting funds from your limited company business.

Moore Accountancy can help with providing advice to owner managed businesses. Contact us on 07542299247 or at info@mooreaccountancy.co.uk

Residential landlord? Read up on the changes

Many of our Moore Accountancy clients are buy to let landlords.

Some have become landlords due to circumstances (aka Accidental Landlords) where properties are being rented as they have been unable to sell or have been inherited; whilst others are intentional landlords who are purposely investing in bricks and mortar for further annual income or as an alternative pension fund.

Recently there have been a number of changes to the tax rules relating to what expenses are allowable for buy-to-let landlords when furnishing and repairing a property. It is therefore important to be aware of what can and cannot be claimed so that you don’t lose out.

Old Allowances

Previously, buy-to-let landlords had been able to opt for either a “wear and tear allowance” or, by HMRC concession, the “renewals basis” and this would depend on whether the property was fully furnished or part/unfurnished.

Wear and Tear Allowance

The landlord claimed 10% of the rent as a deduction to cover the cost of replacement of items in the property. This was only available for properties let fully furnished though.

Renewals Basis

The landlord would be allowed a deduction for replacement items of furniture. The initial purchase cost was however not allowed. This relief was available on all properties and was therefore beneficial where a property was not rented as fully furnished.

After 6/4/13 this was removed but landlords could still claim a deduction for replacement ‘tools’. . These could include cutlery, crockery, bedding, bed linen etc. but not carpets, sofas, beds or free-standing ‘white goods’.

New Allowances

From 6/4/16, both the 10% wear and tear allowance and the renewals allowance was replaced by a new relief which allows all landlords to deduct the costs of replacing furnishings in a property. The relief will still not be available for the initial cost of furnishing the property (similar to the old renewals basis).

The new relief will cover the costs of replacing items such as:

• Moveable furniture and furnishings e.g. beds and sofas
• Fridges, freezers, freestanding cookers
• Carpets and floor coverings
• Crockery and cutlery
• Curtains and bed linen

Replacement of integral fixtures (ie items which are not normally removed by the owner when the property is sold) are not included. These would include fitted kitchen units, boilers and baths. Note it may be possible to class the replacement cost of such items as a deductible expenses (as a repair to the property directly).

General repairs such as painting and redecoration will still be allowed as a deduction from rental profits, as will replacement of double glazing windows and doors to a property.

These changes will primarily affect landlords who generally have low repairs and maintenance costs. They will have previously had the benefit of the 10% wear and tear allowance but now will have a much lower level of expense to declare and this may increase their tax liabilities.

There are also further changes to the interest allowable on residential properties, which will be covered by a separate blog post.

If you want to discuss anything further then please get in touch with Moore Accountancy via email (info@mooreaccountancy.co.uk) or phone (07542 299 247).

National Minimum Wage Update – October 2016

Every October, the National Minimum Wage rates change. The recently added National Living Wage rates change every April.

This update gives you the rates to use from October 2016 so that you do not fall foul of the current legislation.

Age 25+ 21 – 24 18 – 20 Under 18 Apprentice*
From 1/10/16 £7.20 £6.95 £5.55 £4.00 £3.40
To 30/9/16 £7.20 £6.70 £5.30 £3.87 £3.30

The Low Pay Commission will soon make recommendations on the National Living Wage rates which will apply from April 2017. We shall update you about these once we know more.


Note that apprentices are entitled to the minimum wage for their age, unless they are

  • aged under 19
  • aged 19 or over and in the first year of their apprenticeship

If you have any general payroll queries then please get in touch with us at Moore Accountancy via email (info@mooreaccountancy.co.uk) or phone (07542 299 247) to see if we can help.


National Minimum Wage (NMW) and National Living Wage (NLW) 2015 Update

Every October the National Minimum Wage (NMW) changes.

If you are an employer, then you will need to be aware of the increases taking place from October 2015.

NMW Changes October 2015

RTI Payroll provided by Moore Accountancy
(Image courtesy of Stuart Miles/FreeDigitalPhotos.net)

Currently the NMW rates are as follows:

  • £6.50   rate for workers aged 21 and over
  • £5.13   rate for workers aged 18-20 year old
  • £3.79   rate for workers above school leaving age (16/17) but under 18
  • £2.73   rate for apprentices aged under 19, or 19 and over and in the first year of their apprenticeship

From 1 October 2015 (1/10/15), the NMW rates will increase as follows:

  • £6.70   rate for workers aged 21 and over
  • £5.30   rate for workers aged 18-20 year old
  • £3.87   rate for workers above school leaving age (16/17) but under 18
  • £3.30   rate for apprentices aged under 19, or 19 and over and in the first year of their apprenticeship

Note also that after the recent Budget in July 2015 the Government introduced the new National Living Wage (NLW) effective from April 2016.

This is a new mandatory rate for workers aged 25 and over, and will be set initially at £7.20 from April 2016.

The NMW will continue for workers aged 21 and over, with the expectation of an alignment over the years.

It is important for employers to be aware of both these figures, and their employees’ date of birth, as it will help with budgets and forecasts as well as ensuring that no errors are made in calculating the correct rate of pay.

Moore Accountancy can help with providing payroll services for small businesses who wish to delegate this job; so that they can focus on the running and growing of their companies.

If you want further information on the payroll services we provide, then please call us on 07542299247, email us at info@mooreaccountancy.co.uk or via our website www.mooreaccountancy.co.uk . .

Emergency Budget – July 2015 Moore Accountancy Top 10 Points

There have been many changes in George Osborne’s “Emergency Budget” today, 8/7/15, many of which we at Moore Accountancy did not expect.
Below are our top 10 things to consider for small businesses and Individuals:

Individual’s personal allowances will increase from £10,600 to £11,000 in April 2016. Moore Accountancy had been expecting a rise of £200 to £10,800. It does bring things in line with the planned £12,500 allowance by 2020.
The level at which higher rate kicks in has also increased more than expected from a current £42,385 to £43,000 next year. Hopes are that £50,000 will be the eventual threshold but no timescales have yet been provided for this.

From April 2016 a new living wage will be introduced for employees aged 25 and over. This will be at £7.20 (versus current minimum wage of £6.50). By 2020 it is set to reach £9ph. Whilst this is great news for low income earners, small businesses may have to evaluate their costs and it may restrict the ability for SMEs to expand.

Moore Accountancy has numerous clients who have rental property portfolios and this change is bad news for many of them.
At present, finance costs, such as mortgage interest, are fully tax deductible against rental profits. But from tax year 2017/18 this will begin to be limited for higher rate tax payers.
The proposal is that income will be taxed at your marginal rate, but whereas the mortgage expense is currently also expensed at the marginal rate, in the future they will be restricted to the basic rate of 20%.
Our clients will need to evaluate their portfolios and if highly geared, may be less likely to meet mortgage liabilities.
Further changes were made to the wear and tear allowance that landlords of furnished property can claim. From 6/4/16, this will be withdrawn, to be replaced by a tax deduction when the expense is incurred.

As expected, George Osborne has put a restriction on pension tax relief for individuals earning over £150,000 of £10,000 compared to the £40,000 currently in place.

At present, dividends is the most tax efficient way of taking funds from a company, especially for many of Moore Accountancy contractors and one person companies. If you are a basic rate taxpayer, then there is no further tax to pay. Even if you are a higher rate, you only pay a marginal rate of 32.5%.
From 6/4/16, the first £5,000 of dividend income is tax free but anything above this will be taxed at 7.5%, 32.5% or 38.1% depending on your tax bracket.
This means shareholders of owner managed companies will be paying a lot more tax going forward and it may be in their best interests to bring forward dividend payments into the current tax year.

These have come down over recent years to 20% for all companies. Surprisingly, further cuts in the tax rate will take place from 1/4/17 with the rate dropping to 19%. From 1/4/20 the rate will drop further to 18%.
This is good for UK businesses and also for encouraging overseas investment in the UK

This allowance allows businesses to claim 100% of the cost of qualifying plant and machinery in the year of purchase.
It had been indicated that it would reduce from the current rate of £500,000 to £25,000 but George Osborne announced today it would be set at a new level of £200,000 from 1/1/16.

Currently all employers running a PAYE scheme receive a £2,000 allowance to offset their employer Class 1 NIC liabilities.
This is increasing by 50% to £3,000 from 6/4/16. However this will be withdrawn from companies with one director/employee. This is not good news for many of Moore Accountancy owner managed businesses. Further information as to how this will be recorded is still to come.

This had been publicised already by the Conservative government.
Currently everyone has a £325,000 nil rate band after which Inheritance tax (IHT) is payable. The new relief adds a further £100,000 (from 6/4/17) up to £175,000 by (6/4/20) to the IHT exemption level to be used against a residential property.
By 2020, everyone will have £500,000 or £1 million for couples.
There are further tweaks in place, such as if someone downsizes and a reduction in relief for estates exceeding £2million but for the majority of people, this is a welcome relief.

Proposals will affect many people in the UK.
Tax credit (and the new Universal credit) will be restricted for families with more than 2 children; only affecting those born after April 2017.
Many benefits will be frozen for the next four years, but maternity pay and disability benefits should be exempt from this.
Local Authority/Housing Association tenants who earn more than £30,000 will lose their subsidised housing. They will have to start paying the market rate for their property. The income level will be £40,000 for those in London.
Young people will no longer be able to automatically claim housing benefit. There will be a new “earn to learn” scheme put in place.

This budget had lots to give, but lots to take away too.
Many of the changes have different implications depending on your personal and business situation and if you would like further advice to discuss any of these with Moore Accountancy, then please contact us at info@mooreaccountancy.co.uk , on 07542 299 247 or via twitter at @sidmooremanc

Guide to VAT changes for digital services in the EU #VATMoss

If your business supplies digital services to customers in EU countries you will have started the New Year with a new place of supply rule for VAT and a new online tool to avoid having to register in all your EU business places.

Who is affected by this change in VAT?

Broadcasting, telecoms and e-service are concerned with the change which means the sale of apps, e-books or streaming services as well as dating services, online journals, newspapers and magazines. This only affects B2C (business to consumer) services, in other words supply of digital services to non-business customers in the EU. Some of the digital services are not affected by the EU VAT change.

What do the new rules mean for the UK?

As of the 1st of January 2015 supplies of digital services are subject to VAT in the EU member state where the customers is located. This means that customers from EU countries will pay UK VAT no matter where they live. But also it means that UK supply will have to comply with the VAT regulations in each EU country where they provide services. Fortunately your company will not have to register in each EU states members where it does business. The VAT MOSS will make the process simpler.

What you need to do?

You can either:

  • Register for VAT in each EU member state where you have customer
  • Register your business to use VAT MOSS which was available to use from the 1st January 2015.

What is the VAT MOSS?

The VAT Mini Stop Shop (VAT MOSS) is an online tool introduced so that digital services suppliers will not have to pay tax separately in each country in which they have customers. You will only have to submit one quarterly return and payment to HMRC. This will account for the VAT due on sales in other EU countries. Although you need to register your business yourself, once registered, you can authorise an agent to act on your behalf.

Will the changes affect you?

Businesses selling under £81,000 worth of products a year are still exempted from paying VAT in the UK. So if you are trading with UK customers and are under the threshold, you will not have to pay VAT.

However if you make a sale in another EU country you will be required to pay VAT in your customer’s country. Also once you are registered, the £81,000 does not apply to your business anymore so you will be required to charge UK VAT on all your sales.

Contact us if you have any question on VAT MOSS.