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UK tax system break up - Parochial no more

13th Dec 2018
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ProActivTax helps accountants and advisers across the UK be much more successful with all aspects...
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The understanding of the international tax issues and how they interact with the UK tax legislation and comprehending how that all impacts upon our clients whether they be individuals, corporates or otherwise has exercised our mind sets for many a long year. Perhaps even more so now than when I was a young tax whipper snapper over 30 years ago. The world is a smaller place now. For us it is likely to get more interesting with Brexit just around the corner (maybe!!).

Tax monopoly no longer

Our ProActivTax members and I count ourselves as being fortunate over the past few years as we have been able to tap into International Tax specialists who can relieve the mental anguish we have been suffering to enable clients to be provided with the relevant expert advice and support required. Putting political rights and wrongs to one side, the devolvement of tax legislative powers to Scotland and Wales have created their own additional headaches for accountancy practices around the UK. I am sure that if Northern Ireland gets its political act together they themselves will not be too far behind the rest to start using their tax raising powers.

In Scotland we have seen the Scottish Landfill Tax and Land and Buildings Transaction Tax (LBTT) replace the UK’s Landfill Tax and SDLT respectively.  The Scottish Parliament have brought in their layered tax rates with a starter rate of 19%, Basic rate of 20%, Intermediate rate of 21%, higher rate of 41% and additional higher rate of 46%. Their latest Budget proposes to freeze their higher rate tax band creating a negative tax differential in excess of £1500 in comparison to higher rate taxpayers in the rest of the UK. The LBTT Additional Dwelling Supplement on the purchase of second residential properties is proposed to increase to 4% in comparison to 3% across the rest of this sceptred isle. Wales are not too far behind with their Landfill Disposal Tax and Land Transaction Tax having arrived in April 2018. The Welsh income tax raising powers coming in from April 2019.

Clients across the border

Within ProActivTax we have accountancy members from Land’s End to John O’Groats to Belfast and on to Anglesey. It’s been amazing to hear from a large percentage of them how many clients they have who are not resident within the country where the accountancy practice is based.

With Wales likely to follow Scotland’s example and Northern Ireland champing at the bit to do the same, what the poor old accountant already has to deal with will increase in magnitude. As I see it the accountant in some cases already does the following but the intensity will only increase:

a) Ascertain in which part of the UK their client is resident.

b) Run mixed payrolls between Scottish/Welsh/English and Irish resident rates.

c) Apply the different tax rates dependent upon the different residency status of their client.

d) Try to give advice on aspects of the interactions of issues such as Gift Aid relief and pension contributions, for example.

e) Provide advice/forewarn their clients on the purchase of second homes/holiday homes in another jurisdiction be that Scotland, England, Wales or Northern Ireland. Having to explain the various tax rates involved and flagging up the difference between the additional dwellings supplement (Scotland), higher rate of SDLT (England and Norther Ireland) and the Land Transaction Tax Surcharge (Wales). Not only that, but where applicable, understanding the varied timeframes in which to reclaim that 3% (soon 4% in Scotland) surcharge.

This is an ever growing nightmare for accountants to have to handle and even worse to attempt to put numbers on it for their clients to understand, as well as providing a breakdown of how those figures have been arrived at.

I take my hat off to you all.

ProActivTax help accountants across the UK

In our own way we at ProActivTax try to help our members. ProActivTax was set up to help accountants around the UK to develop their tax offering to their existing client base and to build up their tax profile within their local community and beyond.

All our tax resources from property to incorporation, proof of tax to remuneration review and year end planning cover at present Scotland and the rest of the UK and provide the numbers and breakdowns on both.  We will no doubt do the same when Wales fully comes on board.

All ProActivTax members have access to our tax specialists who cover the full ranges of taxes within the safe confines of the tax legislation.

We also help with tax marketing, tax training/webinars/seminar programmes plus you have access to us (100+ years of tax experience).

If you would like to find out more please click here to access my online diary or simply drop me an email with some provisional dates and I'll set up a conference call.

Paul Flynn

Email: [email protected]

Tele: 01246 488 200

Mobile: 07903 799091

Turning Tax Technical issues into commercial reality

ProActivTax Ltd (09540555) 7 Midland Way, Barlborough

 

 

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