Budget Roundabout

In the post budget discussion about the extent of what is being given by the government to us all, allegedly, the usual suspects have been asking about where is it coming from.

Has May been growing magic trees in the enchanted garden at Chequers? Is Hammond obeying the Inland Revenue? I did wonder, but then a document including this dropped through the door and the answer is "of course".

Many of those who live in flats depend on a managing agent to do a lot of the jobs that have to be done and it is common to have staff on site to deal with this.

One part of this sector that has been growing in size and numbers is retirement developments which with the decline in the number of residential homes now have a high proportion of the very elderly and therefore disabled.

The document says:

VAT ON EMPLOYMENT OF STAFF

HM Revenue & Customs have issued a briefing and information sheet which requires  Managing Agents to add Value Added Tax at the Standard Rate (20%) to the total employment costs (salary), employers National Insurance Contributions  (pension contributions) of on-site staff. This charge will apply with effect from 1 November 2018.

This instruction applies to all Managing Agents and the additional cost, which will be included within the service charge of all staffed developments, will be paid over to HM Revenue & Customs, there is no benefit to the Managing Agent.

The impact, will, quite simply, increase the salary costs with the service charge account by 20%. Whilst we will not make any changes to the budget for the current service charge, there is likely to be an overspend in areas of the budget that include employed on-site staff, any resultant overall overspend will be recoverable when the accounts for the year are finalised.

We will, in the meantime, continue to monitor the situation in case the ruling is challenged.

Unquote.

In the Budget I do not recall seeing any mention of this or the doubtless many other administrative alterations, updates and revisions which will be in train from one part of government or another.

How typical it is for our government to promise extra for those in need and then to find the money from out of their pockets.

It may be a roundabout, but it ain't magic.