I’ve updated the Quids and Quills website for a new 2019 look, and added many Useful Information sheets.
Let me know if these are useful to *you* and if there’s anything else you may want general information on.
Meanwhile, the tax year end (5 April) approaches us all, so be prepared as best you can!!
ITINs for non-US Authors
Background
In the past, many non-US authors have applied for a US ITIN (Individual Taxpayer Identification Number) ONLY so they can claim tax exemption from US publishers and distributors like Amazon, so they don’t deduct US tax from their royalties at source.
However, an ITIN is also used by US citizens to report their annual taxes, and may expire if it’s not used for that purpose. In a 2014 change to the rules, the IRS agreed to allow ITINs to stay in force but ONLY if they were being used to file tax returns. Other, dormant ITINs would gradually be expired.
Current update
Since 2016, the IRS has started this expiry process, calling in ITINs in a phased manner. Anyone still needing one for tax reporting purposes has to re-apply.
There are some worrying 2018 headlines out there like “2 million ITINs to expire this year” and also ITINs with the middle numbers of “73, 74, 75, 76, 77, 81 or 82” are being called in (for example 9NN-73-NNNN).
What should you do?
For those authors needing it ONLY for their tax exemption, it appears you do not need to re-apply. These sections appear in the IRS FAQs on this issue:
Q7: Do I need to renew my ITIN if I won’t be filing a tax return or claim for refund?
A7: No, however, in the future if you file a U.S. tax return or claim for refund, the ITIN (including for a dependent) will need to be renewed at that time.
Q8: I only use my ITIN on information returns, like Forms 1099. If my ITIN is expiring, do I need to renew it?
A8: No, if your ITIN is only used on information returns and you will not be filing a tax return or claim for refund you do not need to renew your ITIN.
Note re Amazon
Remember that although Amazon requires an annual tax statement from a publisher / self-publisher, if you’re an individual they’ll accept your UK National Insurance number instead of an ITIN, and have done so for many years.
If you’re a limited company, an EIN is needed instead – but that’s much easier to apply for than the arduous and unreliable process of obtaining an ITIN!
The government has announced that Class 2 National Insurance contributions (NIC) will not be abolished in the current parliament. It had been due to be abolished in April 2019.
Class 2 NIC is payable on self-employed profits, currently at the rate of £2.95 per week. There is no liability if profits are below the small profits threshold, currently £6,205 per year. However, in that situation the individual can pay Class 2 NIC voluntarily, in order to maintain their NIC record and entitlement to the state pension and other contributory benefits.
The announcement that Class 2 will not be abolished in the current parliament was made in a written statement on 6 September 2018 by Robert Jenrick MP, the Exchequer Secretary to the Treasury.
The main reason given is concern about the impact the change would have on self-employed people with low profits. Once Class 2 was abolished, such people could still pay NICs voluntarily in order to maintain their NIC record, but this would have to be at the higher Class 3 rate (currently £14.65 per week).
The statement notes that although the abolition of Class 2 NICs was intended to simplify the tax system for the self-employed, the options to avoid the impact on low earners “introduce greater complexity to the tax system, undermining the original objective of the policy”.
The government has been looking at reform of NIC for the self-employed for some time. The proposed abolition had already been postponed from the original planned date of April 2018. The intention was that the abolition of Class 2 would be accompanied by an increase in Class 4 NIC, which is payable on profits over £8,424 per year.
The government says it will keep the issue under review “in the context of the wider tax system and the sustainability of the public finances”.
The government still intends to legislate for reforms to the NIC treatment of termination payments and income from sporting testimonials, set out in the draft NICs Bill published on 5 December 2016, which are intended to ensure the NICs treatment is consistent with the treatment of income tax in previous Finance Acts.
From HMRC this week – and worth remembering at all times:
“Customers are advised to lookout for a new bogus email scam, claiming to be from HMRC.
If you receive an email with a subject that reads “You have received new messages from HMRC”, that also has an attachment, please send it to phishing@hmrc.gsi.gov.uk and then delete it.
HMRC will never ask for any personal, or financial details over emails or text messages.
For more advice on scams, phishing and genuine HMRC contact, please visit GOV.UK
and search ‘phishing’.”
How sad is it that (i) I love nothing better than tapping away on a spreadsheet and (ii) I OWN that mug?!!!
From: Francois Badenhorst, AccountingWEB’s business editor:
It’s difficult to think of another piece of software which has enjoyed the longevity of the electronic spreadsheet. The tool, specifically Excel, has been a steady companion for AccountingWEB members.
The spreadsheet’s enduring popularity hasn’t come without controversy: it has been under sustained PR assault for as long as I can recall. The criticism seems to stem from a reasonable source: the never-ending stream of spreadsheet errors which have caused all manner of calamity.
Excellent summary post from the Authors Guild about GDPR and the effect for authors selling into the EU.
In 2016, the European Union adopted its new General Data Protection Regulation (GDPR), which will take effect on May 25, 2018. The regulation, which aims to strengthen EU citizens’ rights to protect their personal data, may seem inconsequential to anyone outside the EU. However, it will change the face of data privacy and protection around the world and will require almost immediate action from anyone who gathers any personal information, including email or IP addresses, from EU citizens, regardless of where the collector of the personal information is located. Starting May 25, anyone who collect any such information, including through the use of cookies, will have to obtain explicit permission from EU citizens to use the data and explain in clear, unambiguous language exactly how it will be used. Violations of this regulation can be extremely costly and can incur millions in fines.
Many taxpayers have been receiving this email alert from HMRC :
You’ve got a new message from HMRC
Dear XXXXX
You have a new message from HMRC about Self Assessment.
To view it, sign in to your HMRC online account.
For security reasons, we have not included a link with this email.
Why you got this email
National Minimum Wage and National Living Wage ratesThe hourly rate for the minimum wage depends on your age and whether you’re an apprentice.
You must be at least:
From the Institute of Chartered Accountants in England and Wales (ICAEW) – Tax News (my highlights) :
The number of self assessment (SA) tax returns filed by the 31 January 2018 deadline for 2017 returns has once again reached a new high. 10.7 million taxpayers submitted their return on time and 9.9 million of these were filed online. For those interested in statistics, this means that more than 92.5% of total returns were completed online. And of course it does also mean that over half a million tax returns remain unfiled.
Quids and Quills 