fpdteam, Author at Bennetts Accountancy

When you must register for VAT

12th October 2023 by fpdteam

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).

Source:HM Revenue & Customs| 09-10-2023

Check if you need to pay someone through PAYE

12th October 2023 by fpdteam

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).

Source:HM Revenue & Customs| 09-10-2023

Have you downloaded your HMRC app?

12th October 2023 by fpdteam

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.

Source:HM Revenue & Customs| 09-10-2023

Cost of Living payments 2023-24 support

12th October 2023 by fpdteam

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.

Source:Department for Work & Pensions| 09-10-2023

Bank deposits covered by FSCS

9th October 2023 by fpdteam

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/

Source:Other| 08-10-2023

Reforms to powers of attorney

9th October 2023 by fpdteam

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.

Source:Other| 08-10-2023

CIS contractors monthly tax chores

5th October 2023 by fpdteam

The Construction Industry Scheme (CIS) is a set of special rules for tax and National Insurance for those working in the construction industry. Businesses in the construction industry are known as 'contractors' and 'subcontractors' and should be aware of the tax implications of the scheme.

Under the scheme, contractors are required to deduct money from a subcontractor’s payments and pass it to HMRC. The deductions count as advance payments towards the subcontractor’s tax and National Insurance.

Monthly returns must be submitted online. The monthly return relates to each tax month (i.e., running from the 6th of one month to the 5th of the next). The deadline for submission is 14 days after the end of the tax month. Even if no subcontractors have been paid during a month, contractors still have to make a nil return. All contractors are obliged to file monthly returns even if they are entitled to pay their PAYE quarterly. The returns can be filed using the HMRC CIS online service or approved commercial CIS software. There are penalties for late returns.

Contractors who have not paid subcontractors in a particular month are required to submit a 'CIS nil return' or notify HMRC that no return is due. If this is likely to be a longer term ‘nil return’, the contractor can contact HMRC to make an inactivity request stating they have temporarily stopped using subcontractors. This request lasts for 6 months. You must notify HMRC if you start using subcontractors again during this period.

Contractors are defined as those who pay subcontractors for construction work or who spent more than £3m on construction during a year in the 12 months since they made their first payment.

Source:HM Revenue & Customs| 02-10-2023

Income Tax in Scotland if you have more than one home

5th October 2023 by fpdteam

There is an interesting anomaly that can affect taxpayers with homes in Scotland and other parts of the UK. Where this is the case, the question arises as to whether or not the taxpayer is liable to pay Income Tax in Scotland or elsewhere.

As a general rule, the Scottish rate of Income Tax (SRIT) is payable on the non-savings and non-dividend income of those defined as Scottish taxpayers. The definition of a Scottish taxpayer generally focusses on the question of whether the taxpayer has a 'close connection' with Scotland or elsewhere in the UK. The liability to SRIT is not based on nationalist identity, location of work or the source of a person’s income, e.g., receiving a salary from a Scottish business.

Where a taxpayer has a home in Scotland and also elsewhere in the UK, they need to ascertain which is their main home based on published guidance and the facts of the case.

HMRC’s guidance on the issue states the following:

Your main home is usually where you live and spend most of your time. It does not matter whether you own it, rent it or live in it for free. Your main home may be the home where you spend less time if that’s where:

most of your possessions are;
your family lives if you are married or in a civil partnership;
you are registered for matters such as your bank account, GP or car insurance; or
you are a member of clubs or societies.

It is also possible to change which home counts as your main home if there has been a material change in the underlying facts. Scottish taxpayer status applies for a whole tax year. It is not possible to be a Scottish taxpayer for part of a tax year.

Source:The Scottish Government| 02-10-2023

Paying tax by Certificate of Tax Deposit

5th October 2023 by fpdteam

The Certificate of Tax Deposit scheme allowed users to deposit money with HMRC and use it later to pay tax liabilities. The date that the certificate was purchased was known as the effective date of payment. The scheme closed for new purchases on 23 November 2017.

However, at the time, HMRC had committed to honour existing certificates until 23 November 2023. As this date approaches, it is important that holders of an existing certificate take appropriate action.

There are a number of options, including contacting the Certificate of Tax Deposit team before the scheme closes to tell HMRC how you want to use the certificate. Users who think they will still have certificates open after 23 November 2023, can contact HMRC to arrange a refund.

After 23 November 2023 HMRC will try to repay the balance of any certificate that remain unpaid and unclaimed. If they cannot (for example, because they were unable to contact the current certificate holder after reasonable effort) they will consider the balance as forfeited.

Until 23 November 2023, users can use their deposits to pay liabilities for:

Income Tax (Self-Assessment)
Class 4 National Insurance contributions
Capital Gains Tax — not including Annual Tax on Enveloped Dwellings-related Capital Gains Tax
Corporation Tax — only Series 6 certificates bought in 1993 or earlier can be used
Petroleum Revenue Tax
Inheritance Tax

Source:HM Revenue & Customs| 02-10-2023

When you can and cannot use the Rent-a-Room Scheme

5th October 2023 by fpdteam

The rent-a-room scheme is a set of special rules designed to help homeowners who rent-a-room in their home. If you are using this scheme, you should ensure that rents received from lodgers during the current tax year do not exceed £7,500. The tax exemption is automatic if you earn less than £7,500 ;there are no specific tax reporting requirements. If required, homeowners can opt out of the scheme and record property income and expenses as usual.

You can use the scheme if:

you let a furnished room to a lodger; or
your letting activity amounts to a trade, for example, if you run a guest house or bed and breakfast business, or provide services, such as meals and cleaning.

You cannot use the scheme if the accommodation is:

not part of your main home when you let it;
not furnished;
used as an office or for any business — you can use the scheme if your lodger works in your home in the evening or at weekends or is a student who is provided with study facilities; or
in your UK home and is let while you live abroad.

The relief also simplifies the tax and administrative burden for those with rent-a-room income up to £7,500. The limit is reduced by half if the income from letting accommodation in the same property is shared by a joint owner of the property.

The rent-a-room limit includes any amounts received for meals, goods and services provided, such as cleaning or laundry. If gross receipts are more than the limit taxpayers can choose between paying tax on the actual profit (gross rents minus actual expenses and capital allowances) or the gross receipts (and any balancing charges) minus the allowance – with no deduction for expenses or capital allowances.

Source:HM Revenue & Customs| 02-10-2023