HMRC interest rate changes

Posted on 10th November 2022 by Solutions Accountancy

Following the recent increase in the Bank of England base rate from 2.25% to 3% HMRC has confirmed there will be changes to the rates of interest they charge.  

The BoE’s Monetary Policy Committee (MPC) voted 7-2 in favour of raising interest rates by 75 basis points to 3% in a move to try and reign in upward pressures on inflation. Inflationary pressures in the United Kingdom has continued to intensify since the MPC’s previous meeting. This is the eighth time in a row that the MPC has increased interest rates.

Accordingly, the HMRC late payment interest rate applied to the main taxes and duties increases by 0.75% to 5.50%.

These changes will come into effect on:

  • 14 November 2022 for quarterly instalment payments; and
  • 22 November 2022 for non-quarterly instalments payments.

The repayment interest rates applied to the main taxes and duties that HMRC pays interest on will increase by 0.75% to 2% from 22 November 2022. The repayment rate is set at the Bank Rate minus 1%, with a 0.5% lower limit.

Tax Diary November/December 2022

Posted on 3rd November 2022 by Solutions Accountancy

1 November 2022 – Due date for Corporation Tax due for the year ended 31 January 2022.

19 November 2022 – PAYE and NIC deductions due for month ended 5 November 2022. (If you pay your tax electronically the due date is 22 November 2022.)

19 November 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 November 2022. 

19 November 2022 – CIS tax deducted for the month ended 5 November 2022 is payable by today.

1 December 2022 – Due date for Corporation Tax payable for the year ended 28 February 2022.

19 December 2022 – PAYE and NIC deductions due for month ended 5 December 2022. (If you pay your tax electronically the due date is 22 December 2022).

19 December 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 December 2022. 

19 December 2022 – CIS tax deducted for the month ended 5 December 2022 is payable by today.

30 December 2022 – Deadline for filing 2021-22 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2023-24.
 

3-months to Self-Assessment filing deadline 2021-22

Posted on 3rd November 2022 by Solutions Accountancy

There are now less than 3-months to file your 2021-22 Self-Assessment tax return electronically. Last year over 12.5 million taxpayers were required to complete a Self-Assessment tax return but over 2.3 million taxpayers missed the 31 January filing deadline.

The deadline for submitting your 2021-22 Self-Assessment tax returns online is 31 January 2023. The deadline for paper returns ended on 31 October 2022. You should also be aware that payment of any tax due should also be made by the 31 January date. This includes the payment of any balance of Self-Assessment liability for the 2021-22 plus the first payment on account due for the current 2022-23 tax year.

If you miss 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 made an arrangement to pay with HMRC.

HMRC is encouraging taxpayers to complete their tax return as early as possible to avoid getting more stressed as the filing date looms. Those who submit their returns early still have until 31 January 2023 to pay any tax due.

If you are filing online for the first time you should ensure you register to use HMRC’s Self-Assessment online service as soon as possible. Once registered an activation code will be sent by mail. This process can take up to 10 working days. 

Gifts to spouse or charity

Posted on 3rd November 2022 by Solutions Accountancy

In most cases, there is no capital gains tax (CGT) to be paid on the transfer of assets to a spouse or civil partner. There is, however, still a disposal that has taken place for CGT purposes effectively at no gain or loss on the date of the transfer. When the asset ultimately comes to be sold, the gain or loss will be calculated from when the original spouse or civil partner first owned the asset..

There are a few exceptions that couples should be aware of where the relief does not apply. This mainly relates to the use of goods which are sold on by the transferee’s business and for couples that were separated and not living together for the entire tax year when the assets were transferred. Spouses or civil partners that lived together at any point in the tax year when the assets were transferred can still benefit from these rules. If a transfer did not qualify then the asset must be retrospectively valued at the date of the transfer and the transferor is liable for any gain or loss.

There are similar rules for assets that are gifted to charities. However, CGT may be due where an asset is sold to a charity for more than was paid for it and less than the market value. The gain in this case would be calculated based on what the charity paid rather than the market value of the asset.

IHT claiming business relief

Posted on 3rd November 2022 by Solutions Accountancy

There are a number of reliefs available that can reduce liability to Inheritance Tax (IHT) if you inherit the estate of someone who had died. 

One of these reliefs is known as IHT Business Relief and is a valuable tax relief for taxpayers with business interests, offering either 50% or 100% relief from IHT on the value of the business assets if certain conditions are met.

  • 100% Business Relief can be claimed on a business or interest in a business or on shares held in an unlisted company.
  • 50% Business Relief can be claimed on:
    • shares controlling more than 50% of the voting rights in a listed company;
    • land, buildings or machinery owned by the deceased and used in a business they were a partner in or controlled; and
    • land, buildings or machinery used in the business and held in a trust that it has the right to benefit from.

Relief is only available if the deceased owned the business or asset for at least 2 years before they died. There are a number of restrictions to the relief, for example if the company in question mainly deals with securities, stocks or shares, land or buildings, or in making or holding investments. In some cases, partial Business Relief may be available.

Paying stamp duty on share transfers

Posted on 3rd November 2022 by Solutions Accountancy

Stamp Duty is paid on shares bought on a stock transfer form. A stock transfer form is the standard form used for transfers of shares from one person to another. If you use a stock transfer to buy stocks and shares for £1,000 or less, you do not normally have to pay any Stamp Duty.

The 300-year-old process used to manually stamp documents to show the duty has been paid, came to an end on 19 July 2021. A new electronic process was introduced during the pandemic as traditional physical stamping could not function under COVID-19 restrictions. As this process has worked well, HMRC has decided to retain the new approach. This requires 

The stamp duty must be paid and HMRC notified within 30 days of the document being dated and signed. If the deadline is missed, you may have to pay penalties and / or interest.

Once the Stamp Duty has been paid, HMRC should be notified by email. The email should be sent to stampdutymailbox@hmrc.gov.uk.

The email should include:

  • the payment reference;
  • the payment amount;
  • the date of payment;
  • an electronic copy (for example, a scanned PDF) of either the signed and dated stock transfer form, instrument of transfer or form SH03 for return of purchase of own shares.

Note Stamp Duty is not the same as paying Stamp Duty Reserve Tax, which is paid on the paperless purchase of shares.

Directors and National Minimum Wage

Posted on 3rd November 2022 by Solutions Accountancy

Company directors or any other person who has been appointed to a position by a company or organisation but doesn’t have a contract or receive regular payment as office holders are neither employees nor workers.

Company directors who also have an employment or worker's contract can be both an office holder and an employee at the same time. If this is the case, the director would need to be paid the relevant National Minimum Wage (NMW) or National Living Wage (NLW).

If there is no employment contract or other evidence of an intention to create an employer/worker relationship for a company director, then the NMW / NLW minimum rates will not apply. A contract of employment can be written, expressed orally or implied.

The directors would only be covered by the NMW / NLW if they were also defined as a worker in the relevant Act.

A worker is defined in the National Minimum Wage Act 1998, section 54(3) as someone who has entered into or works under (or, where the employment has ceased, worked under):

  • a contract of employment; and
  • any other contract by which the individual undertakes to perform work or services personally for someone else (unless the individual is working on a genuinely self-employed basis for a client or customer).

Careful consideration needs to be given especially to directors of personal service companies to ensure the correct tax treatment is in place whilst at the same time complying with employment law and minimum wage legislation.

What qualifies for First Year Allowances

Posted on 3rd November 2022 by Solutions Accountancy

Businesses can claim a 100% first-year allowance (FYA) on the purchase of certain qualifying Plant and Machinery (P&M). The cash-flow benefit of accelerated tax relief is designed to encourage businesses to invest in capital items which help reduce their carbon footprint by being energy and water efficient. The list of qualifying items includes expenditure on new unused electric vehicles and other cars with zero CO2 emissions.

The list also includes:

  • plant and machinery for gas refuelling stations, for example storage tanks, pumps;
  • gas, biogas and hydrogen refuelling equipment;
  • zero-emission goods vehicles;
  • equipment for electric vehicle charging points;
  • plant and machinery for use in a freeport tax site, only for companies.

The use of the FYA allows businesses to set the full cost of qualifying P&M against their tax bills in the year of purchase. The FYA is only available on the purchase of new cars with zero emissions. Second-hand cars do not qualify for FYAs (but can be eligible for writing down allowances). If claiming the full amount of FYA would create a loss, it is also possible to claim less than the full 100% FYA and claim the balance using writing down allowances.

SA taxpayers target for fraudsters

Posted on 27th October 2022 by Solutions Accountancy

Fraudsters are continuing to target taxpayers with scam emails in advance of the deadline for submission of Self-Assessment returns for the 2021-22 tax year. In fact, in the 12 months to August 2022, HMRC received more than 180,000 reports of suspicious contact from the public, of which almost 81,000 related to bogus tax rebate referrals. 

A number of these scams purport to tell taxpayers they are due a rebate / refund of tax from HMRC and ask for bank or credit card details in order to send the fake tax refund. The fraudsters use various means to try and scam people including making contact by phone calls, texts or emails. In fact, fraudsters have been known to threaten victims with arrest or imprisonment if a bogus tax bill is not paid immediately.

HMRC operates a dedicated Customer Protection team to identify and close down scams but continues to advise taxpayers to identify fraud and avoid becoming victims themselves. For example, HMRC will only contact taxpayers due a refund by post and never use emails, text messages or external companies for this activity. Genuine organisations like HMRC and banks will never contact customers asking for their PIN, password or bank details.

If you think you have received a suspicious call or email claiming to be from HMRC you are asked to forward the details to phishing@hmrc.gov.uk and texts to 60599. If you have suffered an actual financial loss, you should contact Action Fraud on 0300 123 2040 or use their online fraud reporting tool.

Flexible subsidies for businesses from 2023

Posted on 27th October 2022 by Solutions Accountancy

The Department for Business, Energy and Industrial Strategy has announced that the new UK subsidy regime will come fully into force from 4 January 2023 when the Subsidy Control Act 2022 takes effect.

The new subsidy regime enables public authorities to deliver subsidies that are tailored to local needs and to drive economic growth. These new rules represent a major shift away from the old EU state aid rules and was made possible after Brexit. It should be noted that EU state aid rules will continue to apply to subsidies covered by the Northern Ireland Protocol.

It is hoped that the new opportunities to deliver flexible subsidies will provide a big boost for businesses and further impetus behind the government’s plans to supercharge economic growth.

This will allow the devolved administrations and local authorities to deliver subsidies that are tailored to local needs in a speedy manner. Under the EU system, all subsidies except those under a ‘Block Exemption Regulation’ had to undergo a lengthy bureaucratic process of being notified to and approved by the European Commission in advance, delaying vital funds from reaching viable businesses in good time.