Tax Diary November/December 2023

Posted on 13th October 2023 by Solutions Accountancy

1 November 2023 – Due date for Corporation Tax due for the year ended 31 January 2023.

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

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

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

1 December 2023 – Due date for Corporation Tax payable for the year ended 28 February 2023.

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

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

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

30 December 2023 – Deadline for filing 2022-23 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2024-25.

Cost of Living payments 2023-24 support

Posted on 12th October 2023 by Solutions Accountancy

The Cost of Living support package has been designed to help over 8 million households in receipt of means tested benefits. The details for Cost of Living Payments due in the 2023-24 tax year were published earlier this year and have recently been updated.

Eligible recipients will receive up to 3 Cost of Living Payments of £301, £300 and £299 during the course of the current tax-year. This includes those receiving pension credit, and these payments will be made separately from other benefit payments. The first payment of £301 was made between April-May 2023 and the second payment of £300 was paid during August-September 2023. The third payment of £299 is due to be paid in spring 2024.

An additional one-off payment of £150 or £300 will be paid to pensioners during winter 2023-24. The Winter Fuel Payment is provided by the government to help older people keep warm during winter. The amount a pensioner will receive depends on a number of factors including their age and the age of other people living with them. You can get a Winter Fuel Payment for winter 2023-24 if you were born before 25 September 1957. HMRC is in the process of writing to eligible recipients telling them how much to expect.

Have you downloaded your HMRC app?

Posted on 12th October 2023 by Solutions Accountancy

HMRC’s free tax app is available to download from the App Store for iOS and from the Google Play Store for Android. The latest version of the app includes updated functionality to check your Child Benefit and State Pension, set a reminder to make a Self-Assessment payment and the option to be contacted by HMRC electronically instead of by paper.

The APP can be used to see:

your tax code and National Insurance number;
your income and benefits;
your income from work in the previous 5 years;
how much you will receive in tax credits and when they will be paid;
your Unique Taxpayer Reference (UTR) self-assessment;
how much Self-Assessment tax you owe;
your Child Benefit; and
your State Pension.

The app can also be used to complete a number of tasks that usually require the user to be logged on to a computer. This includes to:

get an estimate of the tax you need to pay;
make a Self-Assessment payment;
set a reminder to make a Self-Assessment payment;
report tax credits changes and complete your renewal;
access your Help to Save account;
use our tax calculator to work out your take home pay after Income Tax and National Insurance deductions;
track forms and letters you have sent to us;
claim a refund if you have paid too much tax;
update your postal address; and
choose to be contacted by HMRC electronically, instead of by letter.

Check if you need to pay someone through PAYE

Posted on 12th October 2023 by Solutions Accountancy

Employers usually have to pay employees through PAYE if they earn £123 or more a week (£533 a month or £6,396 a year). There is no requirement to pay self-employed workers through PAYE.

HMRC’s guidance states that:

As a general rule, someone is:

employed if they work for you and do not have any of the risks associated with running a business; and
self-employed if they run their own business and are responsible for its success or failure.

There are specific rules for temporary or agency workers. Employers need to operate PAYE on temporary workers that they pay directly, as long as they’re classed as an employee. There is not usually a requirement to operate PAYE if a worker is paid by an agency, unless the agency is based abroad and does not have either a trading address or a representative in the UK.

Employers that take on a new employee need to work out which tax code and starter declaration to use in their payroll software. Incorrect tax codes can lead to the new employee paying more tax than is due.

The necessary information can be collected from the employee’s P45 or by asking the new employee to complete HMRC's starter checklist (if they do not have a recent P45 – this checklist replaced the P46).

When you must register for VAT

Posted on 12th October 2023 by Solutions Accountancy

The taxable turnover threshold, which determines whether businesses should be registered for VAT, is currently £85,000. The taxable turnover threshold that determines whether businesses can apply for deregistration is £83,000.

Businesses are required to register for VAT if they meet either of the following two conditions:

At the end of any month, the value of the taxable supplies made in the past 12 months or less has exceeded £85,000; or
At any time, there are reasonable grounds for believing that the value of taxable supplies to be made in the next 30 days alone will exceed £85,000.

The registration threshold for relevant acquisitions from other EU Member States into Northern Ireland is also £85,000.

Businesses with no physical presence in the UK may also have a liability to be VAT registered in the UK if they supply any goods or services to the UK (or expect to in the next 30 days).

Deadlines 2022-23 Self-Assessment tax return

Posted on 12th October 2023 by Solutions Accountancy

The 2022-23 tax return filing deadline for taxpayers who continue to submit paper Self-Assessment returns is 31 October 2023. Late submission of a Self-Assessment return will incur a £100 late filing penalty. The penalty usually applies even if there is no liability or if any tax due is paid in full by 31 January 2024.

We would recommend that anyone still submitting paper tax returns consider the benefits of submitting the returns electronically, and therefore benefit from an additional three months (until 31 January 2024) in which to submit a return.

Taxpayers with certain underpayments in the 2022-23 tax year can elect to have this amount collected via their tax code (in 2024-25) provided they are in employment or in receipt of a UK-based pension. The coding applies to certain debts and the amount of debt that can be coded out ranges from £3,000 to £17,000 based on a graduated scale. The maximum coding out allowance only applies to taxpayers with earnings exceeding £90,000.

Daily penalties of £10 per day will also take effect if the tax return is still outstanding three months after the filing date up to a maximum of £900. If the return still remains outstanding further higher penalties will be charged when a return is six months and twelve months late.

Taxpayers that received a letter informing them that they have to submit a paper return after 30 July 2023 have an extended deadline which runs for three months from the date they received the letter to submit a paper return.

Re-starting a dormant company

Posted on 12th October 2023 by Solutions Accountancy

HMRC must be informed when a non-trading or dormant company starts trading again and thus becomes active for Corporation Tax purposes. Companies can use HMRC Online Services to supply the relevant information.

When a company has previously traded and then ceases to trade it would normally be considered as dormant. A company can stay dormant indefinitely, however, there are costs associated with doing this and certain filings must still be made to Companies House. The costs of restarting a dormant company are typically less than forming a new company.

The following steps are required:

Tell HMRC that your business has restarted trading by re-registering for Corporation Tax.
Send accounts to Companies House within 9 months of your company’s year-end.
Pay any Corporation Tax due within 9 months and 1 day of your company’s year-end.
Send a Company Tax Return – including full statutory accounts – to HMRC within 12 months of your company’s year-end.

Whilst reporting dates for annual returns and accounts should remain the same. The Corporation Tax accounting period is different and is set by reference to the date when the company restarts business activities.

Reforms to powers of attorney

Posted on 9th October 2023 by Solutions Accountancy

These legal agreements enable a person to grant decision making powers about their care, treatment or financial affairs to another person if they lose mental capacity.

The Powers of Attorney Act fires the starting gun on bringing the existing paper-based process online for the first time. The changes, when introduced, will make the system quicker, easier to access and more secure for the thousands of people who make and rely on a lasting power of attorney every year.

The legislation, which was introduced by Stephen Metcalfe MP and supported by the government, will also strengthen existing fraud protection by allowing checks on the identity of those applying for a lasting power of attorney.

The new online system and the additional safeguards are now being developed by the Office of the Public Guardian. Extensive testing will need to be conducted to ensure the process is simple to use, works as intended and is secure. More information on when it will be available will be published in the coming months.

The number of registered lasting power of attorneys has increased drastically in recent years to more than 6 million but the process of making one retains many paper-based features that are over 30 years old. Every year, the Office of the Public Guardian handles more than 19 million pieces of paper as a result of their offline system.

The digitalisation will speed up registration time by picking up errors earlier and allowing them to be fixed online rather than having to wait for documents to be posted back and forth between the applicant and the Office of the Public Guardian as currently happens.

Bank deposits covered by FSCS

Posted on 9th October 2023 by Solutions Accountancy

Your eligible deposits with all High Street bank are covered by the Financial Services Compensation Scheme (FSCS).

The present limit of this FSCS guarantee is £85,000 and this applies to total deposits held at a bank, not per account with a bank.

This will be of interest to Metro Bank account holders as they witness the current difficulties and dramatic drop in share price.

On their website, Metro Bank underline the FSCS guarantee, they say:

“Your eligible deposits with Metro Bank PLC are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit guarantee scheme. Any deposits you hold above the limit are unlikely to be covered. Please visit www.fscs.org.uk for further information.”

The FSCS do extend this guarantee to £1m in certain circumstances. The published details on the FSCS site say:

“If you hold money with a UK-authorised bank, building society or credit union that fails, we will automatically compensate you.

up to £85,000 per eligible person, per bank, building society or credit union.
up to £170,000 for joint accounts.

We protect certain qualifying temporary high balances up to £1 million for 6 months from when the amount was first deposited.”

If you are concerned about deposits you feel may be at risk, you can check your money is protected using the bank and savings protection checker at https://www.fscs.org.uk/check/check-your-money-is-protected/

Reporting self-employed profits 2023-24

Posted on 5th October 2023 by Solutions Accountancy

The basis of assessment reforms will change the way trading income is allocated to tax years. The changes will affect sole traders and partnerships that use an accounting date between 6 April and 30 March. There is no change to the rule for companies.

The reforms will change the basis period from a ‘current year basis’ to a ‘tax year basis’.

Under the current rules there can be overlapping basis periods. When this occurs, tax may be charged on profits twice and generate ‘overlap relief’. This overlap relief can be used on the cessation of a business or when an accounting date is changed. The new method of using a ‘tax year basis’ will remove the basis period rules and prevents the creation of further overlap relief.

The new rules will come into effect in the 2024-25 tax year and the current 2023-24 tax year is known as the ‘transition year’. During the transitional year, all businesses’ basis periods will be aligned to the tax year and all outstanding overlap relief can be used against profits for that tax year.

Affected businesses in 2023-24 will be assessed on the tax for profits for the:

12 month accounting period they have previously been using; and
for the rest of the 2023-24 tax year.

Any excess profit covering more than 12 months, is known as ‘transition profit’. This can be reduced by overlap relief and the remaining profit will be spread over the next 5 tax years until 2027-28.

The changes do not affect sole traders and partnerships who draw up annual accounts to a date between 31 March and 5 April. These businesses will continue to file as usual for the 2023-24 accounting year.