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Just over half of businesses are prepared for Making Tax Digital

A new study into preparations for Making Tax Digital amongst businesses has found that only 57 per cent of firms are ready to comply with the new regime by 1 April 2019.

Despite the various delays and changes to the Government’s new digital tax system, businesses have had several years to prepare themselves for this landmark change in taxation.

Initially, the new system will only apply to the recording and reporting of VAT on a quarterly basis for those VAT-registered businesses over the VAT threshold (£85,000).

However, the Government intends to extend the system out to other areas of taxation and to other businesses from April 2020 at the earliest.

Businesses will be offered a “soft landing” period of a year during which they won’t be fined if they don’t comply with the reporting requirements in time.

HM Revenue & Customs has also recently confirmed that during this period “where a digital link has not been established between software programs, HMRC will accept the use of cut and paste as being a digital link for these VAT periods.”

Despite its recent communications HMRC has been heavily criticised for not doing enough to make businesses aware of the new regime, with it only launching its social media and email campaign to small businesses in Autumn last year.

Link: Overview of Making Tax Digital

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Payroll sector prepares for key changes in 2019/20

The next 12 months will see a number of new changes to payroll policy that could have an impact on a wide range of businesses.

To give an overview of how businesses could be affected by these changes, below are some of the highlights that employers will need to prepare for.

Private Sector IR35

From April 2020, where an individual is engaged by a medium or large-sized business in the private sector and works through a company, the employer will be responsible for assessing the individual’s employment status under the off-payroll working rules (IR35).

Where the rules apply, the business or agency will be responsible for deducting income tax and National Insurance contributions (NICs) via PAYE and will be required to pay employer NICs.

Businesses will be able to use the Check Employment Status for Tax (CEST) service, which is available to help businesses determine whether the off-payroll working rules apply. These new rules will not affect small businesses.

Postgraduate Loans (PGL)

From April 2019, taxpayers will be required to start repaying PGLs if they meet the threshold of £21,000 (England and Wales only). If they do meet the threshold, a deduction of six per cent will be taken from their wages.

The existing starter checklist provided by the Government will be updated to include a section for PGL. Employees’ P60 forms will also be changed to include a new box for PGL deductions, however, the existing P45 form will remain the same.

Parental Bereavement Leave and Pay

Employers will have to get to grips with a new workplace right to Parental Bereavement Leave and Pay for parents who lose a child under the age of 18.

This new right will include parents who have suffered a stillbirth after 24 weeks of pregnancy.

Those who qualify for the new right, which will commence from 6 April 2020, will be entitled to two weeks of paid Parental Bereavement Leave.

During this period, they will be paid at the statutory flat weekly rate of £145.18 or 90 per cent of average earnings (whichever is lower), if the person has at least 26 weeks continuous service at the date of their child’s death and earnings above the Lower Earnings Limit.

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