Financial and tax planning is a main staple in most household’s calendars. Every year, millions of people set out their spending and their projected income. With a cost-of-living crisis and recession to contend with, the importance of this is even more imperative than usual.
In a 2018 survey by Fincap.org, 39% of adults in the UK (20.3 million) aren’t confident managing their money. This highlights the need for wider-reaching education to teach people of all ages how to look after their money better. As well as the clear gap in public consciousness around efficient and meaningful saving, new policy and legislation changes regularly crop up without appropriate communication to inform the public. This leads to many taxpayers not knowing exactly what they’re entitled to, or even being branded as non-compliant. This can incur hefty penalty fines or even criminal prosecution.
We thought it may be useful to highlight some of the things that you may have missed recently. These could have potentially a huge impact on your financial planning, your business, as well as the ability to avoid any penalty fines for non-compliance. Announcements aren’t always easy to spot. It’s easy however to gloss-over the small yet meaningful additions to personal finances and tax. Here are a few things that should be on your radar….
Changes To Landlord Regulations
Being a landlord throws up constant conundrums in this day and age. There are many changes which landlords should be aware of including changes to EPC ratings. An EPC includes information about a property’s energy use and typical energy costs. It also contains recommendations about how to reduce energy usage and save money. It assigns the property an energy efficiency rating from A (most efficient) to G (least efficient). The minimum EPC rating is to be raised from E to C, enforced from 1st April 2025 for new tenancies. For exisiting tenancies this will be from 1st April 2028.
As well as this, landlords are no longer able to deduct all of their finance costs from their property income to arrive at their property profits. As of February 2017, they’ll instead receive a basic rate reduction from their income tax liability for their finance costs. Furthermore, to benefit from business rate relief from April 2023, second home owners will need to prove that they have let their properties out for a minimum of 70 days, and be “available” to let out for a minimum of 140 days. The government also confirmed that it will grant councils the power to double the standard council tax rate on any home left empty for longer than a year, rather than two years as it currently stands.
There are also potential major changes eviction regulations as the government plans to outlaw section 21. In normal circumstances, when extended notice periods are not in place, landlords can evict their tenants under section 21. Should they be provided with two months’ notice once their fixed-term contract has come to an end. One of the proposed changes set out in the Renters’ Reform Bill is to abolish section 21 eviction notices. Landlords will then always need to provide their tenants with a reason for ending a tenancy. For example, breaching of contract or wishing to sell the property. Tenants will be able to choose to end the tenancy at any time. This is as long as they provide two months’ notice to the landlord.
The abolition of section 21 would put an end to ‘no-fault evictions’. Instead, there will be a transition of all tenancies to periodic, as part of the on-going project to create longer tenancies. The transition is already underway with Section 21 notices said to be outlawed by 2022 to 2023. However, the transition will be divided into two stages. Firstly, stage one will transition all new tenancies to being periodic tenancies. Next, stage two will move all existing tenancies to the new system.
HMO Licencing Reform
As of 1st October 2018, mandatory licensing of houses in multiple occupation (HMOs) was extended. Smaller properties used as HMOs in England which house 5 people or more in 2 or more separate households will in many cases require a licence. Children of any age contribute to the number of occupants.
New mandatory conditions to be included in licences have also been introduced, prescribing national minimum sizes for rooms used as sleeping accommodation and requiring landlords to adhere to council refuse schemes.
Pension Regulator Penalties
If you are an employer, you must offer a workplace pension scheme by law. Should employers fail to comply, The Pension Regulator has various powers available such as issuing a compliance or penalty notice. If you knowingly supply false information in a declaration of compliance you will be committing a criminal offence. Should you face prosecution, the maximum punishment is two years in prison or a fine.
The regulator can issue penalty notices if you fail to comply with a statutory notice, or to address particular kinds of breach. Fixed penalty notices are fixed at £400, escalating penalty notices begin at £50 and increase to £10,000, whilst a prohibited recruitment conduct penalty notice has a prescribed rate of £1,000 to £5,000, depending on the number of staff you have.
Mandation of Making Tax Digital (MTD) for ITSA will not be extended to general partnerships in 2025 as previously announced. That means the next scheduled phase of the MTD scheme is for income tax self-assessment (ITSA), which will now happen in April 2026 and will apply to taxpayers who file Income Tax Self Assessments for business or property income equating to £50,000 or more a year. For landlords and self-employed individuals with incomes between £30,000-£50,000, MTD will become requirement from April 2027.
Despite many individuals and businesses not needing to register for MTD until the near future, it’s highly recommended to get your affairs in order and register now. The importance extends beyond the fact that soon it will be legal requirement for every business, partnership and sole trader, in that everyone should be embracing the technology on offer.
By transitioning to MTD, businesses and individuals will have access to Real Time Information (RTI). This can be of huge value in terms of better decisions being made to execute growth and increased profitability. From a forecasting and logistics angle, being exposed to this data is a huge benefit to business owners and when used right can seriously take the business to the next level.
Data Protection Insurance
The General Data Protection Regulation (GDPR) became enforced in UK law on 25th May 2018. It set out new requirements for insurers, provided enhanced rights for consumers, strengthens data authorities’ powers and establishes high upper limits for fines in cases of non-compliance. Under these regulations, this means that a company/organisation needs to appoint a Data Protection Officer (DPO). This includes whether it’s a controller or a processor, if its core activities involve processing of sensitive data on a large scale or involve large scale, regular and systematic monitoring of individuals.
Under GDPR, should you have a data breach then having data protection insurance will offer a huge lifeline. In fact, data protection insurance, otherwise known as cyber insurance, could be the difference in avoiding or mitigating subsequent fines. Having an insurance policy will enable a detailed investigation of the problem, the ramifications and who has been impacted. This will then help thoroughly inform the Information Commissioners Office, data subjects and other parties. It will also offer public relations support and incident response procedures in alignment with the requirements of the regulations.
GRDP is expected to be scrutinised over the coming years, especially with the increase in new technology forever emerging. If you need support with this, now is the right time to get it sorted so please get into contact and we’ll help safeguard your data.
Annual Environmental Report Obligation
Since 1st October 2013 the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 has required all UK quoted companies to report on their greenhouse gas emissions as part of their annual Directors’ Report. From 1st April 2019, quoted companies are required to report on their global energy use. Large businesses must also disclose their UK annual energy use and greenhouse gas emissions. This is required by the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018.
Environmental reports should include information on the impact of your business’ activities on the environment – both positive and negative. You should look at areas where your business makes a significant environmental impact, for example:
- carbon emissions
- waste generation and recycling
- energy use
- water use
- use of transport
It is widely expected in the years to come that these obligations will soon stretch to every business and sole trader. This is as more and more green policies become the mainstream. We highly advise all businesses to begin to look at this. This is not just to get ahead of the curve in terms of incoming legislation, but to also help your business become as sustainable as possible.
We hope this has outlined to you some of the recent announcements which may have been missed, that could have a serious impact on you and your business. If you’d like to know any further information on anything mentioned, or anything accounting related for that matter, please do not hesitate to get in contact with us at Nordens, where one of our trusted advisors would be happy talking you through your query.