Scrutinising The Draft Finance Bill 2019, Before It Affects You

What is the government proposing, exactly, for Making Tax Digital (MTD)? We’ve known for a while that it’s coming, and that it will affect how we declare tax over the coming years. April 2019 is still…

10 Minute Read

Last Updated: 4th February 2022

What is the government proposing, exactly, for Making Tax Digital (MTD)? We’ve known for a while that it’s coming, and that it will affect how we declare tax over the coming years. April 2019 is still the start date for anyone beyond the VAT threshold. And finally, we have a Draft Finance Bill: 226 pages of tax law that reveal the nuts and bolts of the scheme.

To find some answers, GoSimpleTax have looked long and hard at this legislation. Two things in particular stand out: the penalty system and rent-a-room relief…

How MTD penalties will work

A digital tax portal will make it easier for HMRC to process and store your data, but it also asks us to meet a quarterly submission cycle, starting in April 2019 with VAT-registered businesses with a turnover of more than £85,000. Those who miss it are in line for a penalty. According to the Draft Bill, this will be measured using a point system. When you gain too many, a fine and/or investigation will be issued. The exact amount, for now, is unclear. It may change with successive governments as time goes by.

There are, however, exceptions to the rule. Points won’t be given if HMRC’s software crashes minutes before a deadline, for instance, or if the same happens to the taxpayer’s phone, tablet or computer. It’s at HMRC’s discretion, and appeals can also be submitted for consideration. What we don’t know quite yet is whether tax professionals acting on behalf of their clients can make an appeal.

Points won’t last forever either. Users who remedy their activity and fulfil their obligations when they’re due will have them wiped from their online tax profile.

Tax relief for spare room rental will be harder to get

At present, rent-a-room allowance works out like this:

  • You can let out a single space in your home to a tenant, gaining a tax-free income up to the value of £7,500 for single ownership, or £3,750 if you’re a joint owner.
  • Anyone who earns more than the threshold has to complete a tax return for the remaining portion. Being under the £7,500/£3,750 limit puts you into the scheme automatically.
  • There are varying rules for ‘boarders’ and ‘sub-tenants’ – each of which you can find here. Expenses, as a whole, are exempt if you claim rent-a-room relief.

Upon reading the 2019 Draft Finance Bill, it seems that the government are going to crack down on who can benefit, since current definitions are too lax. There’s a misassumption that a property owner can be absent for months at a time (as in, for example, a holiday home) whilst letting out a room and acquiring the tax break.

This isn’t so. Next April will see taxpayers forced to prove they live in the domicile for most or the whole of the year. Thousands of renters will miss out unless they can do this.

Remember that the Bill is still in its infancy. Consultations are taking place until the 31st August. Whatever the outcome – both in April 2019 and the decade to follow – it’s worth getting a handle on your MTD affairs. That’s achievable with GoSimpleTax, the mobile software that monitors what you owe and where the evidence lines up. HMRC has granted its approval. Try GoSimpleTax for 14 days, free of charge, and prepare for the incoming transformation.

Trusted by over 20,000 subscribers

You don't need to be an expert to complete your self assessment tax return.

Find Out More

Blog content is for information purposes and over time may become outdated, although we do strive to keep it current. It's written to help you understand your Tax's and is not to be relied upon as professional accounting, tax and legal advice due to differences in everyone's circumstances. For additional help please contact our support team or HMRC.

5 Excellent Reasons to Choose Us

Discover how to make tax returns a doddle...

Find out more

How to spot a Self Assessment tax scam

30 Nov 2023

The threat of being targeted by scammers seems ever present these days. Many of us are frequently targeted, usually by bogus, fraudulent and indeed…
READ MORE >

Can sole traders claim tax expenses for Christmas nights out and customer gifts?

09 Nov 2023

Come November and many of us start to think about Christmas. When you’re self-employed, a certain panic can arise over whether you’ll manage to…
READ MORE >

How to claim tax expenses for tools, equipment and vehicles if you’re a sole trader

03 Nov 2023

It’s impossible to carry out most trades or professions if you don’t have the necessary tools or equipment. And no matter what type of…
READ MORE >

How GoSimpleTax Works

01.
Register

Simply register for free with your full name and email address.

02.
Select Your Income

Select the income you receive and follow the hints and tips for potential tax savings.

03.
Validate Your Information

Validate your personal information and submit directly to HMRC to get confirmation in just seconds.

ipad

Work Anywhere, With Any Device

Gone are the days of fretting over a calculator surrounded by scraps of paper at the eleventh hour.

GoSimpleTax’s tax return software uses the information you upload in real time to calculate your income and expenditure, working out the tax you owe and sending you helpful notifications when there’s the possibility of a mistake.

Start your free trial

"The software is intuitive and proved very easy to navigate. I found the whole process refreshingly simple. I saved a lot of money too!"

Steve J.

Ordained Presbyter

"Easy to use and value for money. Everything you need to do your tax."

Gordon J.

Self Employed

"It fills in all the forms and sends them to the Inland Revenue. Not expensive either. Takes the stress out of doing your tax return online."

Ross G.

Team Rector

5 reasons to use GoSimpleTax >