Going into 2018, it is important for all accountants to be aware of the changes and potential issues that they may face at some point during the year. Most changes to the way in which some things may work are likely to come in the first few months of the year, and the new General Data Protection Regulation (GDPR) is no different in that sense.
What is the GDPR?
The General Data Protection Regulation, of which is set to begin in May 2018, focuses particularly on the personal data that businesses use as part of their operations. Under the new regulations, there will be tougher scrutiny on the security of personal data of clients, and therefore any payroll and personal data used by the businesses will be kept completely secure and compliant with the new GDPR regulations.
Taking payroll as an example, the process consists of working with and storing very sensitive information, such as banking details, addresses and pay information, proving why tougher regulations on the storage of this data is being welcomed by most across the country.
Complying with the Regulations
Businesses are fully entitled to store data that they use and need for their day to day operations, yet under the new regulations, it is extremely important for the data that is not needed by the business to be deleted from their records. The keeper of the businesses books should go through each of their data records, sifting through all of the information and deciding whether or not the data is needed by the business. For certain pieces of information that isn’t thought to be needed for something such as payroll but may still be needed, the employer is able to retain it, particularly where bookkeeping is outsourced.
Under the new regulations, it is also important to consider the security of the information that you store, taking the appropriate measures to protect it. The Information Commissioner’s Office (ICO) website contains fantastic advice for the steps that you should take for data protection, ranging from passwords, confidential document shredding, software updates and many other security measures. As part of this, the ICO suggest that you should implement the pseudonymisation procedure, of which protects the identity and data of individuals. This process identifies certain fields containing information, putting a system in place to only allow the sender and receiver to view the data, using a key to unlock it, and this key is advised to be kept on a completely different server to the information it is protecting.
Regulations as part of the GDPR also now prohibit the use of popular data transfer methods, such as memory sticks, paper based transfers and emails, as all of these possess their own individual problems. With the ability of data getting into the wrong hands, data being damaged and things being lost, businesses can no longer use these methods.
Other Points to be Aware of
As well as the introduction of the GDPR, the financial industry is to see further changes, meaning that accountants and financial teams may need to adjust the way in which they operate. As it is important for accountants to be aware of all areas of the industry, we have put together a short list of incoming changes to help you keep up to speed in 2018.
Self-Assessment Deadline – As is always the case going into a new year, those that need to be are looking to ensure that they meet the first deadline of the year – 31st January 2018. This date signals a strict deadline for the submission of self-assessments, of which if not met would see the individual face a £100 penalty, although HMRC are currently reviewing how this penalty system works.
Reduction to Tax Relief for Finance Costs – Set to be introduced in 2018, individual landlords will see their tax relief for finance costs fall to 50%, meaning that landlords will only be able to claim a basic tax relief on incurred finance costs.
New Threshold for Dividends – As a new coming policy for 2018, there is to be a reduction to tax-free allowance for dividend income, as of April 2018. The policy will see the band that incurs a 0% tax charge fall to just £2,000 from £5,000.
Javeed Baig is a Senior Chartered Accountant at Gower Accountancy, experienced accountants in Leicester.