From Shipshape July 2017 | Uploaded 19th July 2017
Following arguably one of the poorest campaigns in British political history, we now have a minority government for the first time since 1974 (when we had two elections and the three day week!). Jeremy Corbyn surprised many with the late surge in seats won by his party, in part due to apparently firing up younger voters, with over 60% of under 40s voting Labour.
Theresa May ostensibly called the election looking for a strong mandate going into the Brexit negotiations. But by failing to get a majority, and putting the political landscape into chaos she enters the negotiations with diminished authority – and the EU knows it. While there is little appetite for another election at the moment, a fresh vote could be inevitable if she fails to take into account voices on both sides of the Leave-Remain debate.
Whatever happens, Shipleys will be following the twists and turns with a keen eye on the practical implications for business and personal finances.
All shook up
The lack of a clear mandate has meant that a number of manifesto promises were dropped from the Queen’s Speech, including the so-called ‘dementia tax’, along with plans to axe universal free school meals and the winter fuel allowance for wealthier older people. The triple lock on pensions was to be downgraded under Conservative plans, but this too was left out of the speech.
The snap election also meant many previously announced proposals did not appear in the Finance Bill back in March, with a truncated Bill going through Parliament with minimal debate. Philip Hammond has already announced that future budgets will normally occur in the autumn, so we’re expecting another (rather more exciting) Finance Bill later this year.
One of HMRC’s initiatives requires tax advisers to write to clients, highlighting the potential need to pay tax in the UK if any assets are held abroad. So, for example, if you have an overseas holiday home or any other overseas financial interests, this is likely to affect you. The penalties for mistakes can be severe.
Despite a lack of definitive guidance, the Government’s proposals for Making Tax Digital will almost certainly be going ahead from Spring 2018. Please don’t bury your head in the sand, but treat it as an opportunity to review how you keep and use your financial data and business procedures. You can turn this change to your advantage. For example, remember that invoicing clients quickly boosts cashflow. One of my colleagues frequently reminds me how the plumber who repaired his central heating emailed the invoice from his driveway.
Good record-keeping also saves you time and money. Businesses will have to deal with many more financial issues during the year, including quarterly tax returns, rather than filing them months after the year-end. But without a firm grip on record-keeping, it’s difficult to keep abreast of finances and can make good impossible. The latest accounting systems really can streamline matters and help to give you a clear picture of what’s going on – enabling you to work on your business, not just in it.
All together now
This might also be a good time to review how you incentivise staff. The introduction of an employee management incentive scheme or a salary sacrifice scheme (through which pension contributions and other benefits are paid), offers benefits for both staff and employers. Crucially, such schemes can help to motivate your team.
We also look at identifying any areas of conflict within your workplace and how to resolve them. If you sense conflict brewing between staff or even with suppliers, address these issues promptly and constructively. It may be possible for all parties to benefit.
Finally, changes to the tax treatment of mortgages on residential property which is rented out are among the various developments already hitting many of our landlord clients. For some property owners, it may be better to hold the property through a company and this is explored on page 6. Further issues around property ownership, and how you can elect for a home to b be registered as your main residence, are covered.
Enjoy the read.