fpdteam, Author at Bennetts Accountancy

The digital pound

23rd February 2023 by fpdteam

A new consultation has been published jointly by HM Treasury and the Bank of England to consider the launch of a potential digital pound, or central bank digital currency (CBDC). The possible new digital pound has also been referred to as ‘digital sterling’ and ‘Britcoin’.

The digital pound would be a new type of money issued by the Bank of England for individuals and businesses to use for day-to-day spending in-store or online and to make payments. The digital pound would be denominated in sterling and its value would be stable, just like banknotes. £10 in digital pounds would always have the same value as a £10 banknote.

If introduced a digital pound would be interchangeable with cash and bank deposits, complementing (not replacing) cash. The Bank of England has committed to continue to issue cash for as long as people want to keep using it.

The digital pound would not be a cryptocurrency or cryptoasset. As opposed to cryptocurrencies, which are issued privately, the digital pound would be issued by the Bank of England and be backed by the Government.

Whilst no decision has yet been made, other countries around the world are considering similar proposals including the Eurozone and the US and China.

HM Treasury has stated that a decision about implementation of a digital pound will be taken around the middle of the decade and will be based on future developments in money and payments. The earliest stage at which the digital pound could be launched would be the second half of the decade.

Source:Other| 20-02-2023

Balancing your budget

20th February 2023 by fpdteam

Homeowners and landlords will have seen a significant increase in their mortgage payments due to the rise in the Bank of England Base rate over the past 6-months if any fixed rate agreements have expired in this period or if you have a variable rate arrangement.

And mortgage payers who are nearing the end of their fixed deals will likewise see a significant rise in their monthly payments as lenders’ variable rates are currently as high as 7%.

If your variable loan repayments have increased, a visit to your mortgage broker may pay dividends if they can place your loan with a lower interest, fixed rate deal.

A reminder for buy-to-let non-corporate borrowers

Mortgage interest is not allowed as a deduction against your rental income. Income Tax relief is limited to a 20% tax credit (20% of qualifying mortgage interest).

Consequently, taxpayers whose rental profits are taxed at higher Income Tax rates could be paying Income Tax at 40% or 45% and only receiving tax relief on their mortgage interest at 20%.

Regional differences in Income Tax rates may apply in Scotland.

Source:Other| 19-02-2023

Tax Diary March/April 2023

20th February 2023 by fpdteam

1 March 2023 – Due date for Corporation Tax due for the year ended 31 May 2022.

2 March 2023 – Self-Assessment tax for 2021-22 paid after this date will incur a 5% surcharge unless liabilities are cleared by 1 April 2023, or an agreement has been reached with HMRC under their time to pay facility by the same date.

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

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

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

1 April 2023 – Due date for Corporation Tax due for the year ended 30 June 2022.

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

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

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

30 April 2023 – 2021-22 tax returns filed after this date will be subject to an additional £10 per day late filing penalty for a maximum of 90 days.

Source:HM Revenue & Customs| 19-02-2023

Making a claim on an unclaimed estate

16th February 2023 by fpdteam

There are special intestacy rules that govern how assets are divided if you die without making a will. If this happens your assets are passed on to family members in accordance with a set legal formula. This can result in a distribution of assets that would not be in keeping with your final wishes and can be especially problematic for cohabitees (a couple who live together but are not married and have not entered into a civil partnership).

However, if someone dies without a will or any known family their property passes to the Crown as ownerless property. This is known as 'bona vacantia' which literally means vacant goods and by law this property (including money and other personal possessions) passes to the Crown. The bodies that deal with bona vacantia claims vary across the United Kingdom, but they all ultimately represent the Crown.

It is possible to make a claim on the estate but only if you are an 'entitled relative'. The general rules are:

If there is no will, the person’s spouse or civil partner and then any children have first claim to the estate.
If there is no spouse or child, anyone descended from a grandparent of the person is entitled to a share in the estate.
If you are related by marriage, you have no entitlement.

It is also possible for someone who lived together with the deceased (such as a partner) to apply for a grant from the deceased person's estate. The rules are complex and serve as an important reminder to make a will thereby ensuring that your assets are divided amongst family, friends and charities in accordance with your wishes.

Source:HM Revenue & Customs| 13-02-2023

Newly self-employed taxpayers

16th February 2023 by fpdteam

Newly self-employed taxpayers should notify HMRC as soon as practicable when they begin working for themselves. However, HMRC must be officially notified by the 5 October following the end of the tax year so that a Self-Assessment return can be issued on time and to avoid any unnecessary penalties.

HMRC’s guidance says that you are probably self-employed if you:

run your business for yourself and take responsibility for its success or failure;
have several customers at the same time;
can decide how, where and when you do your work;
can hire other people at your own expense to help you or to do the work for you;
provide the main items of equipment to do your work;
are responsible for finishing any unsatisfactory work in your own time;
charge an agreed fixed price for your work; and
sell goods or services to make a profit (including through websites or apps).

The newly self-employed should also register to pay National Insurance contributions (NICs) and monitor whether a VAT registration is required.

There is a £1,000 tax-free allowance for miscellaneous trading income that has been available to taxpayers since April 2017. This is known as the trading allowance.

The exemption from tax applies to taxpayers who have trading income of up to £1,000 from:

self-employment;
casual services, for example, babysitting or gardening; and
hiring personal equipment, for example, power tools.

Where this £1,000 allowance covers all the individual’s relevant income (before expenses) the income is tax-free and does not have to be declared to HMRC.

Source:HM Revenue & Customs| 13-02-2023

Moving goods to and from Northern Ireland

16th February 2023 by fpdteam

There are special procedures for moving goods in and out of Northern Ireland. Under the Northern Ireland Protocol, all Northern Ireland businesses continue to have access to the whole UK market.

HMRC lists the following six-steps that should be considered before you move goods between Northern Ireland and non-EU countries (including Great Britain):

If you plan to move goods between Northern Ireland and non-EU countries (including Great Britain), you will need an EORI number that starts with XI.
If you plan to move goods between Northern Ireland and Great Britain or bring goods into Northern Ireland from outside the UK, you can sign up for the free Trader Support Service.
If you are not using the Trader Support Service, you can get someone to deal with customs for you, or find a training provider to help you.
If you bring goods into Northern Ireland, you can find out how to make sure the right tariff is applied to the goods you bring from Great Britain (including whether you can claim preferential rates of duty on goods covered in the UK’s deal with the EU) or from countries outside of the EU and the UK.
If you import goods regularly, you can apply for a duty deferment account to delay paying most customs charges.
To understand any duty or other measures that apply to your goods, you need to find the right commodity code to make your declaration when you bring goods in or send goods out of Northern Ireland.

HMRC also lists the following four-steps that should be considered before you move goods between Northern Ireland and the EU:

If you plan to move goods between Northern Ireland and the EU, you will need to tell HMRC so that you are identified as trading under the Northern Ireland Protocol.
You will need to add an ‘XI’ prefix before your UK VAT number on all documentation when communicating with EU customers or suppliers. This is so VAT can be accounted for correctly on transactions between Northern Ireland and the EU using rules on intra-EU movements.
If you make sales of goods from Northern Ireland to consumers in the EU check how to pay VAT using the One Stop Shop (OSS) Union scheme.
If you import eligible low value goods into Northern Ireland and have registered for the VAT Import One Stop Shop (IOSS) in the EU, find out how to tell HMRC your IOSS registration number.

Source:HM Revenue & Customs| 13-02-2023

Scotland’s non-domestic rates reliefs

16th February 2023 by fpdteam

Business rates is the commonly used term for non-domestic property rates. 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 non-domestic property rates relief or business rates relief.

In Scotland, there are a number of reliefs available including Small Business Bonus Scheme, reliefs for empty or newly re-occupied properties and charitable rate relief. Businesses need to apply to their local council for relief.

Business rates relief through the Small Business Bonus Scheme (SBBS) scheme is available if the combined rateable value of all business premises is £35,000 or less, if the rateable value of individual premises is £18,000 or less and the property is actively occupied.

Empty properties in Scotland can receive 50% rates relief for the first 3 months they are empty. They can then claim a further 10% discount.

Empty industrial properties can qualify for 100% relief from non-domestic rates for the first 6 months that they are empty. They can then claim a further 10% discount. It is also possible, under certain circumstances, to receive 100% relief for the time a property is unoccupied, for example, if it is a listed building.

Registered charities in Scotland can apply for 80% rates relief. This only applies if their property is mostly used for charitable purposes. Certain councils may also offer up to 20% additional relief on top of the 80%, meaning that no rates would be payable. There are similar provisions for registered Community Amateur Sports Clubs.

Rates reliefs are handled differently in England, Wales and Northern Ireland.

Source:The Scottish Government| 13-02-2023

Gaps in your National Insurance record

16th February 2023 by fpdteam

National Insurance credits can help qualifying applicants to fill gaps in their National Insurance record. This can assist taxpayers to build up the number of qualifying years of National Insurance contributions which can increase the amount of benefits a person is entitled to, such as the State Pension.

This could happen if someone was:

employed but had low earnings;
unemployed and were not claiming benefits;
self-employed but did not pay contributions because of small profits; or
living or working outside the UK.

National Insurance credits are available in certain situations where people are not working and therefore, not paying National Insurance credits. For example, credits may be available to those looking for work, who are ill, disabled or on sick pay, on maternity or paternity leave, caring for someone or on jury service.

Depending on the circumstances, National Insurance credits may be applied automatically or an application for credits may be required. There are two types of National Insurance credits available, either Class 1 or Class 3. Class 3 credits count towards the State Pension and certain bereavement benefits whilst Class 1 covers these as well as other benefits such as Jobseeker’s Allowance.

Taxpayers may be able to pay voluntary contributions to fill any gaps if they are eligible.

Source:HM Revenue & Customs| 13-02-2023

Closing a limited company

16th February 2023 by fpdteam

There are a number of reasons why you may look to close your limited company. This could be because the limited company structure no longer suits your needs, your business is no longer active, or the company is insolvent. You will usually need the agreement of all the company’s directors and shareholders to close down the company.

The method for closing down a limited company depends on whether it is solvent or insolvent. If the company is solvent, you can apply to get the company struck off the Register of Companies or start a members’ voluntary liquidation. The former method is usually the cheapest.

It is the responsibility of the company directors to ensure that all of a company’s assets and liabilities are dealt with before it is dissolved. For example, you have settled any outstanding bills and collected all debts owed to the business. Any assets or rights (but not liabilities) remaining in the company at the date of dissolution can pass to the Crown as ownerless property.

Where a company is insolvent, the creditors’ voluntary liquidation process must be used. There are also special rules where the company has no director, for example if the sole director has passed away.

A company can also elect to become dormant. A company can stay dormant indefinitely, however there are costs associated with this option. This might be done if for example a company is restructuring its operations or wants to retain a company name, brand or trademark. The costs of restarting a dormant company are typically less than starting with a new formation.

Source:Companies House| 13-02-2023

Passport fee increase

14th February 2023 by fpdteam

The government introduced new passport fees for all applications from 2 February 2023, the first time in 5 years that the cost of applying for a passport has increased.

The new fees include the following changes:

the fee for a standard online application made from within the UK increased from £75.50 to £82.50 for adults and £49 to £53.50 for children;
postal applications increased from £85 to £93 for adults and £58.50 to £64 for children;
priority service fees have been aligned so all customers now pay the same;
the fee for a standard online application when applying from overseas for a UK passport increased from £86.00 to £94.00 for adults and £56 to £61.00 for children; and
overseas standard paper applications increased from £95.50 to £104.50 for adults and £65.50 to £71.50 for children.

The new fees will help the Home Office move towards a system that meets its costs through those who use it, reducing reliance on funding from general taxation. The government does not make any profit from the cost of passport applications.

The fees will also contribute to the cost of processing passport applications, consular support overseas, including for lost or stolen passports, and the cost of processing British citizens at UK borders. The increase will also help enable the government to continue improving its services.

The new fees apply to those newly applying or renewing their passport.

Since January last year, over 95% of standard applications have been processed within 10 weeks and customers are advised that they should apply in good time before travelling.

Source:Other| 13-02-2023