Help with childcare costs

Posted on 8th June 2023 by Solutions Accountancy

HMRC is reminding parents that they may be eligible for Tax-Free Childcare (TFC) to help pay for childcare costs. The scheme was used by almost 650,000 families during the 2022-23 tax year. This represented a significant increase over the previous year.

The TFC scheme can help parents of children aged up to 11 years old. The TFC scheme helps support working families with their childcare costs. There are many registered childcare providers including childminders, breakfast and after school clubs and approved play schemes signed up across the UK. Parents can pay into their account regularly and save up their TFC allowance to use during school holidays.

The TFC scheme provides for a government top-up on parental contributions. For every £8 contributed by parents an additional £2 top up payment will be funded by Government up to a maximum total of £10,000 per child per year. This will give parents an annual savings of up to £2,000 per child (and up to £4,000 for disabled children until the 1 September following their 16th birthday) in childcare costs.

The TFC scheme is open to all qualifying parents including the self-employed and those on a minimum wage. The scheme is also available to parents on paid sick leave as well as those on paid and unpaid statutory maternity, paternity and adoption leave. In order to be eligible to use the scheme parents will have to be in work at least 16 hours per week and earn at least the National Minimum Wage or Living Wage. If either parent earns more than £100,000, both parents are unable to use the scheme. The scheme is also not available if the parents or carers are in receipt of tax credits, Universal Credit or childcare vouchers.

Check text messages from HMRC

Posted on 8th June 2023 by Solutions Accountancy

HMRC has issued an updated version of their online guidance entitled ‘Check if a text message you've received from HMRC is genuine’. The guidance provides a current list of genuine text messages issued by HMRC.

The list has been updated to include details of a text message HMRC is sending to some taxpayers about a Self-Assessment tax check. From 22 May 2023, up to and including 30 June 2023, HMRC may send you a text message that contains information relating to making a voluntary disclosure.

HMRC is also sending certain taxpayers a text message if they call an HMRC helpline from a mobile phone. These messages might include a link to relevant GOV.UK information or webchat.

Although these communications are genuine, taxpayers should still be wary of receiving phishing texts, emails and phone calls that are purported to come from HMRC. Messages from HRMC will never ask for personal or financial information.

Fake messages can appear to be genuine but clicking on a link from within the message or email can result in personal information being compromised and the possibility of computer viruses affecting your computer or smartphone. If you are unsure as to the validity of any message it should not be opened until the sender can be verified. Any suspicious text messages can be sent to 60599 or by email to phishing@hmrc.gov.uk.

Overview of IHT agricultural relief

Posted on 8th June 2023 by Solutions Accountancy

There are a number of reliefs available that can reduce liability to IHT. Of most interest to farmers is the Agricultural Property Relief (APR). Relief is available at a rate of 100% or 50% depending on who farms the land and how long the land has been owned.

The APR can be claimed on assets including farming land or pasture that is used to grow crops or to rear animals intensively, working farmhouses, farm workers’ cottages, barns and stud farms. There is no agricultural relief for farm equipment but the equipment itself may qualify for another relief known as business relief.

The APR is available for working farms in the UK, Channel Islands, the Isle of Man or the European Economic area. It is important to note that the relief is based on the agricultural value if the land. For example, a farmhouse is valued as if it could only be used for agricultural purposes rather than open market value. The valuations of farmhouses in particular is often the subject of debate.

It is important to ensure that any claim for APR is realistic as HMRC’s refusal to accept an APR claim could result in a significant amount of IHT being due together with the possibility of penalties being levied. There can also be issues where the faming business has diversified into non-farming activities such as wind farms, holiday lettings and farm shops.

There are special conditions to prevent exploitation of the relief by a person switching their assets into agricultural property shortly before death or making a transfer.

Using Capital Gains Tax losses

Posted on 8th June 2023 by Solutions Accountancy

If you sell an asset for less than you paid for it, you would make a capital loss. As a general rule if the asset would have been liable to CGT had a gain taken place, then the loss should be an allowable deduction.

These allowable losses are deducted automatically from gains in the same tax year. It is not necessary to make a claim for set-off of losses. However, it is possible to claim that losses are allowable, and preference be given to such losses.

If a taxpayer’s total taxable gain is still above the tax-free allowance, they can deduct unused losses from previous tax years. When unused losses remain and that cannot be set against gains of the same year, then these losses are carried forward to be set against future gains. It is only possible to use losses brought forward if net gains exceed the annual CGT exempt amount for the year.

In most circumstances, allowable losses and the annual exempt amount can be deducted in the way that is most beneficial to the individual. This will usually be against gains that are charged at the highest rate. A claim for losses does not have to be made straight away and can be made up to 4 years after the end of the tax year that the relevant asset was disposed.

What you must tell HMRC

Posted on 8th June 2023 by Solutions Accountancy

If your personal details change you may be required to notify HMRC as this can affect your entitlement to certain tax breaks and or benefits.

For example, you need to tell HMRC if:

you get married or form a civil partnership; or
you divorce, separate or stop living with your husband, wife or partner.

The sooner you advise HMRC the better as the change could result in you paying too much tax or paying too little and owing HMRC more money.

If you receive tax credits or Child Benefit you also need to tell HMRC separately about changes to your relationship or family.

In the sad event that your spouse or civil partner dies, it is also a requirement to report the death to HMRC as well as notifying of changes to your income. For example, the death of a spouse would mean that the surviving spouse was no longer entitled to claim the Married Couple's Allowance.

If you move home, it is advisable to let HMRC know as soon as possible so they can update your contact details. HMRC should also be informed if you change gender although the process is usually automatic when you change gender legally by applying for a Gender Recognition Certificate.

You must also notify HMRC about certain changes to your income such as when you start or stop receiving:

income from a new source, such as money from self-employment or rent from property;
taxable benefits, such as State Pension, Jobseeker’s Allowance and Carer’s Allowance;
benefits from your job, such as a company car;
income above your Personal Allowance;
money over £85,000 from self-employment (you must register for VAT over this amount);
lump sums from selling things you pay Capital Gains Tax on, such as shares or property that’s not your main home; and
income from property, money or shares you inherit, such as dividends from shares or rent from property.

Tax Diary July/August 2023

Posted on 8th June 2023 by Solutions Accountancy

1 July 2023 – Due date for corporation tax due for the year ended 30 September 2022.

6 July 2023 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2023 – Pay Class 1A NICs (by the 22 July 2023 if paid electronically).

19 July 2023 – PAYE and NIC deductions due for month ended 5 July 2023. (If you pay your tax electronically the due date is 22 July 2023).

19 July 2023 – Filing deadline for the CIS300 monthly return for the month ended 5 July 2023.

19 July 2023 – CIS tax deducted for the month ended 5 July 2023 is payable by today.

1 August 2023 – Due date for corporation tax due for the year ended 31 October 2022.

19 August 2023 – PAYE and NIC deductions due for month ended 5 August 2023. (If you pay your tax electronically the due date is 22 August 2023)

19 August 2023 – Filing deadline for the CIS300 monthly return for the month ended 5 August 2023.

19 August 2023 – CIS tax deducted for the month ended 5 August 2023 is payable by today.

Voluntary “give-aways”

Posted on 6th June 2023 by Solutions Accountancy

In a recent post we warned of the likely loss of billing opportunities if you give away service advice just to demonstrate how informed you are.

In this post we outline when it may be appropriate to volunteer information or other free offers in order to secure additional sales.

For example, when you deliver goods to your customers, do you insert information about other goods or services that they might find of interest? A car dealership may be the place where you go to purchase or lease a car, but once you have chosen your vehicle you will likely be offered insurance or service plans as add-on sales.

Fishermen will “give-away” bait by broadcasting it in areas of water where it expects fish to reside. This process is an invitation. Invite your customers to sample more of your goods and services, don’t be shy.

Don’t assume that customers will know what is on offer, tell them.

You have done the hard work and converted business prospects into business customers. Be sure that each sales point is also a business development opportunity.

HMRC strike causes CIS delays

Posted on 1st June 2023 by Solutions Accountancy

Some 400 HMRC helpline service advisers who are members of the Public and Commercial Services (PCS) Union have been on strike intermittingly since 10 May 2023. These strikes are by staff working in HMRC’s East Kilbride and Newcastle offices. The striking workers are with the department of Personal Taxation Operations on Employer Service.

The following are the strike dates that were announced:

10-12 May
15-19 May
22-26 May
29-31 May
1 and 2 June

These dates exclude weekends and effectively mean that employer services are affected until 5 June 2023.

It has been widely acknowledged that these strikes are having a serious impact on HMRC’s helplines which were already struggling to cope with demand.

Specifically, there have been many reports of long delays to those trying to contact the Construction Industry Scheme (CIS) helpline. The CIS helpline is widely used to help those registering for the CIS and to resolve issues that arise with CIS deduction rates. This means that affected subcontractors may be paying more tax than necessary, with a long wait to recover the overpaid amounts.

The strikes are also having a significant impact on other helplines including the employer helpline, student loans unit, PAYE registrations, maternity, paternity and sick pay.

Help to Save extended to April 2025

Posted on 1st June 2023 by Solutions Accountancy

HMRC has confirmed that plans to extend the Help to Save scheme by 18 months, until April 2025 have been confirmed.

The Help to Save scheme is intended to help those on low incomes to boost their savings. Eligible users of the scheme can save between £1 and £50 every calendar month and receive a 50% government bonus. The 50% bonus is payable at the end of the second and fourth years and is based on how much account holders have saved. The bonus is paid directly into the account holder’s chosen bank account.

This means that account holders on low incomes can receive a maximum bonus of up to £1,200 on savings of £2,400 for 4 years from the date the account is opened. The scheme is open to most working people who receive Working Tax Credits or Universal Credit.

Almost 360,000 people have opened Help to Save accounts since the scheme was launched in September 2018 and an additional 3 million individuals could still benefit from the savings scheme as a result of the extension.

The government also published a consultation on the scheme that is looking at how the scheme can be reformed and simplified.

New employment rights for parents and carers

Posted on 1st June 2023 by Solutions Accountancy

Three new pieces of legislation that received cross party support were granted Royal Assent on 24 May 2023.

The Neonatal Care (Leave and Pay) Act 2023: This new Act will allow for up to 12 weeks of paid neonatal care leave. This will be made available to employed parents if their new-born is admitted to neonatal care so they can spend more time with their child. These parents will continue to be entitled to normal maternity, paternity, and/or shared parental leave.
Protection from Redundancy (Pregnancy and Family Leave) Act 2023: This Ace will extend existing redundancy protections. This will allow for existing protections whilst on Maternity Leave, Adoption Leave or Shared Parental Leave to be extended to cover pregnancy and a period of time after a new parent has returned to work.
The Carer’s Leave Act 2023: This Act will introduce a new entitlement of one week of flexible unpaid leave per year for employees who are caring for a dependant with a long-term care need.

The implementation dates of these new employment rights have not yet been announced as the government will need to lay down secondary legislation in due course to implement these new entitlements. This is likely to occur at some time after April 2024.