Record number of taxpayers file on time

Posted on 9th February 2023 by Solutions Accountancy

HMRC has confirmed that more than 11.7 million people submitted their 2021-22 Self-Assessment tax returns by the 31 January deadline. This included over 861,000 taxpayers who left their filing until the final day and over 36,000 that filed in the last hour before the deadline.

Whilst this was the highest ever number of filings, there are still an estimated 600,000 taxpayers that have missed the deadline and are yet to file. Are you among those that missed the 31 January 2023 filing deadline for your 2021-22 Self-Assessment returns?

If you have missed the filing deadline then you will usually be charged a £100 fixed penalty if your return is up to 3 months late, regardless of whether you owed tax or not. If you do not file and pay before 1 May 2023 then you will face further penalties unless you have arranged to pay HMRC.

If you are unable to pay your tax bill, there is an option to set up an online time to pay payment plan to spread the cost of tax due on 31 January 2023 for up to 12 months. This option is available for debts up to £30,000 and the payment plan needs to be set up no later than 60 days after the due date of a debt. This should be done sooner rather than later as a 5% late payment penalty will be charged if tax remains outstanding, and a payment plan has not been set up, before 1 April 2022.

If you owe self-assessment tax payments of over £30,000 or need longer than 12-months to pay in full, you can still apply to set up a time to pay arrangement with HMRC, but this cannot be done using the online service.

HMRC’s Director General for Customer Services, said:

‘Thank you to the millions of customers and agents who got their tax returns in on time. Customers who have yet to file, and who are concerned that they will not be able to pay in full, may be able to spread the cost of what they owe with a payment plan.’

Half-term help with childcare costs

Posted on 9th February 2023 by Solutions Accountancy

HMRC is reminding parents that they may be eligible for Tax-Free Childcare (TFC) to help pay for February half-term holiday clubs and wraparound care during the school terms.

The TFC scheme can help parents of children aged up to 11 years old (17 for those with certain disabilities). 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 age of 17) 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.

HMRC’s Director General for Customer Services, said:

‘We want to help working families and by using Tax-Free Childcare, they can use the government top-up to make their money go further. Search ‘Tax-Free Childcare’ on GOV.UK to find out how it could help you.’

Register as a childminder

Posted on 9th February 2023 by Solutions Accountancy

There are fines for not registering as a childminder if you were required to do so.

GOV.UK guidance on the matter states that you must register as a childminder if all of the following apply:

the children are under the age of 8;
you look after them for more than 2 hours a day;
you look after them in your own home; and
you get paid to look after them – including payment in kind.

A registration can be made with Ofsted or through a childminder agency.

In order to register, the childminder will need:

an enhanced check with barred lists for home-based workers from the Disclosure and Barring Service (DBS);
first aid training for the age group they will look after;
childcare training;
a health declaration booklet;
contact details for 2 references; and
a certificate of good character from an embassy – if they lived abroad in the past 5 years.

A person does not need to register (although can choose to do so in certain situations) if they are working as a:

a nanny
a tutor
a babysitter and if they look after the children between 6pm and 2am
a family friend and they look after the children less than 3 hours a day.

There are different rules for someone who provides day-care outside someone’s home – for example, a nursery or creche.

Post valuation transaction checks

Posted on 9th February 2023 by Solutions Accountancy

A Post Transaction Valuation Check (PTVC) can be requested from HMRC for an individual to work out a Capital Gains Tax liability or for companies to calculate Corporation Tax liability on chargeable gains. The request for a PTVC should be made using the CG34 form. HMRC’s guidance says the form must be completed and sent to the address on the form at least 3-months before the relevant tax return filing date.

The PTVC is a service offered by HMRC to check valuations after a disposal has been made, including a deemed disposal following a claim that an asset has become of negligible value, but before the completion of a Self-Assessment return. This service is available to all taxpayers, individuals, trustees and companies.

If HMRC agrees with the valuations set out, they will not question the use of those valuations in the return, unless there are any important facts affecting the valuations that have not been disclosed. Agreement to the valuations does not always mean that HMRC agree the gain or loss. When the return is filed HMRC will consider the other figures used. If an agreement cannot be reached, HMRC will suggest alternatives such as using specialist valuers.

Register of Overseas Entities

Posted on 9th February 2023 by Solutions Accountancy

The Register of Overseas Entities came into force in the UK on 1 August 2022. The register is held by Companies House and requires overseas entities that own land or property in the UK to declare their beneficial owners and / or managing officers.

Overseas entities that already own UK property were required to register with Companies House and provide details of their registrable beneficial owners and / or managing officers by 31 January 2023.

This applies to overseas entities who bought property or land on or after 1 January 1999 in England and Wales, 8 December 2014 in Scotland and on or after 1 August 2022 in Northern Ireland.

Entities that disposed of property or land after 28 February 2022 will also need to give details of those disposals.

Information on the register will be available to HMRC and will be used to help identify offshore tax non-compliance of:

overseas legal entities
overseas legal arrangements
beneficial owners (including settlors, beneficiaries etc).

After registering, the overseas entity will get a unique Overseas Entity ID to give to the land registry when it buys, sells, transfers, leases or charges UK property or land.

Companies House is currently receiving a high volume through the service, so it may take longer than usual to process applications.

ATED for non-resident companies

Posted on 2nd February 2023 by Solutions Accountancy

The Annual Tax on Enveloped Dwellings (ATED) came into effect from 1 April 2013. The tax applies to certain Non-Natural Persons (NNPs) that own interests in dwellings valued at more than £500,000. These provisions affect most companies, partnerships with company members and collective investment schemes.

For the purposes of the ATED, it is immaterial whether the company, partnership or collective investment scheme is incorporated or resident in the United Kingdom. HMRC’s technical guidance on the subject states that, a company that is not incorporated or resident in the UK, but which owns land in the UK that constitutes a ‘single-dwelling interest’ is subject to ATED provisions and is required to make returns.

There is no ATED or ATED-related Capital Gains Tax payable if an individual owns a property directly, rather than through a company. There are also reliefs available, for example, if a property is in use for the purposes of a property rental business, run commercially, and with a view to profit (subject to certain exceptions) or held by a charity for its charitable purposes, subject to meeting various conditions.

From 1 April 2023, ATED is chargeable on property valued at:

More than £500,000 but not more than £1 million – £4,150
More than £1 million but not more than £2 million – £8,450
More than £2 million but not more than £5 million – £28,650
More than £5 million but not more than £10 million – £67,050
More than £10 million but not more than £20 million – £134,550
More than £20 million – £269,450

If the relevant property was within the scope of ATED on 1 April 2023, both the return and payment are due by 30 April 2023 for the ATED period 1 April 2023 to 31 March 2024.

There can be penalties for late filings, late payment or for an inaccurate return. Taxpayers can appeal a decision of HMRC, for example against a penalty or determination. Appellants have 30-days from the date of the decision to write and tell HMRC the grounds on which they are appealing.

Have you utilised 2022-23 IHT allowances and reliefs?

Posted on 2nd February 2023 by Solutions Accountancy

We wanted to remind you of the Inheritance Tax (IHT) implications of making cash gifts during the current tax 2022-23 tax year that will end on 5 April 2023.

You can give away up to £3,000 worth of gifts each tax year. This is known as your annual exemption. Any unused part of the annual exemption can be carried forward, but only for one year. So, if you didn’t make any cash gifts in 2021-22, you could gift up to £6,000 this tax year.

There are also generous exemptions for normal gifts made out of your income, but you must be able to maintain your standard of living after making the gift. There are also reliefs available for wedding or civil ceremony gifts. You can gift up to £1,000 per person with higher limits of £2,500 for a grandchild or great-grandchild, £5,000 for a child.

You can also give as many small gifts of up to £250 per person as you want during the tax year but only if you haven’t used another exemption on the same person. There is no IHT to pay on lifetime gifts between you and your spouse or civil partner as long as you both live permanently in the UK.

Other gifts, outside these limits, count towards the value of your estate and should be carefully considered.

CGT reliefs much reduced from April 2023

Posted on 2nd February 2023 by Solutions Accountancy

The annual exempt amount applicable to Capital Gains Tax (CGT) is to be more than halved from April 2023. This means that the exempt amount will be reduced from £12,300 to £6,000 from April 2023 before being further reduced to £3,000 from April 2024.

Taxpayers with small gains should consider the benefits of crystalising these gains before 6 April 2023 in order to fully utilise the £12,300 allowance for 2022-23. Married couples and civil partners both qualify for the £12,300 allowance in which case organising joint ownership of these assets before disposal may be beneficial if each individual partner is not fully utilising their annual allowance.

Transfers between spouses and civil partners are exempt from CGT. Making use of the full allowance can, in some circumstances, effectively double the CGT exemption before the end of the current tax year to £24,600.

CGT is normally charged at a simple flat rate of 20% and this applies to most chargeable gains made by individuals. If taxpayers pay basic rate tax on their income and make a small capital gain, they may be subject to a reduced rate of 10%. Once the total of taxable income and gains exceed the higher rate threshold, the excess will be subject to 20% CGT.

A higher rate of CGT applies to gains on the disposal of residential property (apart from a principal private residence). The rates are 18% for basic rate taxpayers and 28% for higher rate taxpayers.

Using the Gift Aid scheme

Posted on 2nd February 2023 by Solutions Accountancy

The Gift Aid scheme is available to all UK taxpayers. The charity or Community Amateur Sports Clubs (CASC) concerned can take your donation and, provided all the qualifying conditions are met, reclaim the basic rate tax allowing for an extra 25p of tax relief on every pound donated to charity.

If you are a higher rate or additional rate taxpayer, you are eligible to claim additional tax relief on the difference between the basic rate and your highest rate of tax.

For example:

If you donated £5,000 to charity, the total value of the donation to the charity is £6,250. You can claim back additional tax of:

£1,250 if you pay tax at the higher rate of 40% (£6,250 × 20%),
£1,562.50 if you pay tax at the additional rate of 45% (£6,250 × 25%).

If you are a higher rate or additional rate taxpayer, you have the option to carry back your charitable donations to the previous tax year. A request to carry back the donation must be made before or at the same time as your previous year’s Self-Assessment return is completed.

This means that if you made a gift to charity in the current 2022-23 tax year – that ends on 5 April 2023 – you can accelerate repayment of any tax associated with your charitable giving. This can be a useful strategy to maximise tax relief if you will not pay higher rate tax in the current tax year but did in the previous tax year. This should be done as part of the Self-Assessment tax return for 2021-22 which must be submitted by 31 January 2023.

You can only claim if your donations qualify for gift aid. This means that your donations from both tax years together must not be more than 4 times what you paid in tax in the previous year. If you do not complete a tax return you need to use a P810 form to make a claim.

Business rates list closing soon

Posted on 2nd February 2023 by Solutions Accountancy

Business rates are charged on most non-domestic premises, including most commercial properties such as shops, offices, pubs, warehouses and factories. Some properties are eligible for discounts from the local council on their business rates. This is called business rates relief. There are a number of reliefs available including small business rate relief, rural rate relief and charitable rate relief.

The non-domestic rating list sets out all rateable values for non-domestic properties in England and Wales. Local authorities use this list to help determine business rates.

A new press release from the Valuation Office Agency (VOA) states the following:

A new non domestic rating list comes into effect on 1 April 2023. You can still let us know if the information about your property on this list isn’t correct. But the closure of the 2017 list means that there are only limited circumstances in which further amendments may be made to it. These are when:

changes need to be made to the list following Checks submitted before 1 April 2023 (and any subsequent challenges and appeals);
the VOA is correcting inaccuracies on the list (this can be done up to 31 March 2024). If the list is changed, then customers for those properties have the right to make a Check within six months of the change; and
a customer wants to challenge the 2017 list on the grounds of a tribunal or court decision. They can do this so long as a Check has been made by 30 September 2023.

This means that you have up until 31 March 2023 to check that the factual information we hold about your property on this list is correct, and to let us know if it isn’t (this is known as making a Check case).