fpdteam, Author at Bennetts Accountancy

Did you file your tax return on Christmas Day?

30th January 20235th January 2023 by fpdteam

A new press release by HMRC has highlighted the fact that 3,275 taxpayers took the time to file their tax return online on Christmas Day with a further 10,311 taxpayers completing their tax returns on Boxing Day. In total, 22,060 Self-Assessment returns were filed between 24 and 26 December. The total number of submissions for the period were actually less than last year.

HMRC’s Director General for Customer Services, said:

‘We are grateful to those customers who have already filed their tax returns. For anyone who is yet to make a start, help is available on GOV.UK, just search ‘Self-Assessment’ to find out more.’

If you are filing online for the first time you should ensure that 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.

We would encourage our readers to complete their tax return as early as possible to avoid last-minute stress as the 31 January 2023 filing date looms. Last year over 2.3 million taxpayers or 19% of those required to file missed the 31 January deadline.

If you miss the filing deadline then you will be charged a £100 fixed penalty (unless you have a reasonable excuse) which applies even if there is no tax to pay, or if the tax due is paid on time. There are further penalties for late tax returns still outstanding 3 months, 6 months and 12 months after the deadline. There are also additional penalties for late payment amounting to 5% of the tax unpaid at 30 days, 6 months and 12 months.

Source:HM Revenue & Customs| 02-01-2023

Customs Declaration Service deadline extended

30th January 20235th January 2023 by fpdteam

The Customs Declaration Service (CDS) is a customs IT platform designed to modernise the process for completing customs declarations for businesses that import or export goods from the UK. A phased launch of the service started in August 2018 and was due to be completed by 31 March 2023. The CDS covers export declarations of goods sent from the UK. This phase has now been delayed until 30 November 2023, an 8-month delay.

HMRC’s Director of Border Change Delivery commented that:

'We have moved the deadline to enable us to spend more time working with industry in delivering and testing critical functionality as well as the support needed to help declarants move across to the new system. The extra time also allows businesses and stakeholders more time to prepare their customers and software products for the November deadline.'

When the transfer to the CDS is complete, the old Customs Handling of Import and Export Freight (CHIEF) service will close. The first stage of this withdrawal started on 30 September 2022 when the ability to make import declarations on CHIEF closed for the vast majority of users. From 1 December 2023, the ability to make export declarations using CHIEF will also be withdrawn.

HMRC has confirmed that they will provide further information about the exact timeline for CDS exports by the end of January 2023.

Source:HM Revenue & Customs| 02-01-2023

Limits to tax relief for pension contributions

30th January 20235th January 2023 by fpdteam

Under current rules, you can claim tax relief for your private pension contributions. The annual allowance for tax relief on pensions is £40,000 for the current tax year. There is a three year carry forward rule that allows you to carry forward any unused amount of your annual allowance from the last three tax years if you have made pension savings in those years. There is also a lifetime limit for tax relief on pension contributions. The limit is currently £1,073,100 and will remain frozen at that level until at least April 2026.

You can get tax relief on private pension contributions worth up to 100% of your annual earnings, subject to the overriding limits. Tax relief is paid on pension contributions at the highest rate of Income Tax paid.

This means that if you are:

A basic rate taxpayer you get 20% pension tax relief
A higher rate taxpayer you can claim 40% pension tax relief
An additional rate taxpayer you can claim 45% pension tax relief

The first 20% of tax relief is usually automatically applied by your employer with no further action required if you are a basic-rate taxpayer. If you are a higher rate or additional rate taxpayer, you can claim back any further reliefs on your Self-Assessment tax return.

The above applies for claiming tax relief in England, Wales or Northern Ireland. There are regional differences if you are based in Scotland.

Source:HM Revenue & Customs| 02-01-2023

Tax Diary January/February 2023

30th January 202322nd December 2022 by fpdteam

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

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

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

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

31 January 2023 – Last day to file 2021-22 self-assessment tax returns online.

31 January 2023 – Balance of self-assessment tax owing for 2021-22 due to be settled on or before today unless you have elected to extend this deadline by formal agreement with HMRC. Also due is any first payment on account for 2022-23.

1 February 2023 – Due date for corporation tax payable for the year ended 30 April 2022.

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

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

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

Source:HM Revenue & Customs| 21-12-2022

Exempt company cars and fuel benefits

30th January 202322nd December 2022 by fpdteam

Most employers and employees are aware of the additional costs of providing company cars and the tax implications they create. However, for many employees the attraction of having a company car means that in spite of any tax disadvantages, this remains a popular option. There are circumstances where it can be possible to offer employees car benefits that are exempt from tax.

These include:

Cars available for business journeys only

This rule has been the subject of much case law over the years, but it has generally been established that to qualify for VAT recovery the car must not be available for any private use.

This means that the car should only be available to staff during working hours for employment related duties or to travel to a temporary workplace. The business must also clearly tell their employees not to use the vehicle for private journeys and check that they do not.

Cars adapted for an employee with a disability

These cars are exempt if the only private use is for journeys between home and work and for travel to work-related training.

Fuel paid for by employees

The fuel benefit is removed when an employee pays for all their private fuel use or if the employer pays and the employee reimburses the amount (during the tax year).

'Pool' cars

Employers are not required to pay or report on 'pool' cars. These are cars that are shared by employees for business purposes only, and normally kept on the business premises. Employers must ensure the ‘pool’ car rules are observed.

Privately owned cars

Employers do not have to pay anything on cars that directors or employees own privately.

Source:HM Revenue & Customs| 16-12-2022

Redundancy pay

30th January 202322nd December 2022 by fpdteam

If you have been in the same job for two or more years and are made redundant you will usually be entitled to redundancy pay. The legal minimum that you are entitled to receive is known as ‘statutory redundancy pay’. There are exceptions where you are not entitled to statutory redundancy pay, for example, if your employer offers to keep you on or offers you suitable alternative work which you refuse without good reason.

The amount of statutory redundancy pay you are entitled to is dependent on your age and your length of service.

The payment is calculated based on the following:

Under 22 – half a week’s pay for each full year of service.
Aged 22 to 40 – one week’s pay for each full year of service.
Over 41 – one and half week’s pay for each full year of service.

Weekly pay is capped at £571, and the maximum length of service is capped at 20 years. In addition, the maximum statutory redundancy pay you can receive is capped at £17,130 in 2022-23. There are slightly higher maximums in Northern Ireland.

Of course, an employer can decide to make a higher payment, or you may be entitled to one as a result of your employment contract.

There is an overall £30,000 limit for redundancy pay which is tax free, regardless of whether this is your statutory redundancy pay or a higher pay-out from your employer.

Source:HM Revenue & Customs| 16-12-2022

HMRC interest rate changes

30th January 202322nd December 2022 by fpdteam

The Bank of England’s Monetary Policy Committee (MPC) met on 15 December 2022 and voted 6-3 in favour of raising interest rates by 50 basis points to 3.5% in a move to try and continue to tackle upward pressures on inflation. This is the ninth time in a row that the MPC has increased interest rates with rates now the highest they have been since November 2008.

Consequently, the late payment interest rate applied to the main taxes and duties that HMRC charges increases by 0.5% to 6.00%.

These changes will come into effect on:

26 December 2022 for quarterly instalment payments; and
6 January 2023 for non-quarterly instalments payments.

The repayment interest rates applied to the main taxes and duties that HMRC pays interest will increase by 0.5% to 2.5% from 26 December 2022. The repayment rate is set at the Bank Rate minus 1%, with a 0.5% lower limit.

Source:Other| 16-12-2022

Vehicle benefit charges from April 2023

30th January 202322nd December 2022 by fpdteam

The vehicle benefit charges for 2023-24 have been announced. Where employees are provided with fuel for their own private use by their employers, the car fuel benefit charge is also applicable. The fuel benefit charge is determined by reference to the CO2 rating of the car, applied to a fixed amount. The car fuel benefit charge will increase in 2023-24 to £27,800 (from £25,300). The fuel benefit is not applicable when the employee pays for all their private fuel use.

The standard benefit charge for private use of a company van will increase to £3,960 (from £3,600). A company van is defined as ‘a van made available to an employee by reason of their employment’. There is an additional van fuel benefit charge for a van with significant private use. The limit will increase in 2023-24 to £757 (from £688). If private use of the van is insignificant, then no benefit will apply.

Since 6 April 2021, the van benefit charge has been reduced to zero for vans that produce zero carbon emissions. This measure supports the governments climate change agenda by encouraging the uptake up of vans that emit zero carbon emissions.

Source:HM Revenue & Customs| 16-12-2022

New VAT penalty regime from 2023

30th January 202322nd December 2022 by fpdteam

A new VAT penalty regime will affect all VAT registered businesses from 1 January 2023. The changes will apply to the late submission and / or late payments of VAT returns for VAT return periods beginning on or after 1 January 2023.

Under the new regime, there will be separate penalties for late VAT returns and late payment of VAT as well as a new methodology to the way interest is charged. This will replace the default surcharge regime and for most taxpayers should represent a fairer system.

The new system will be points-based. This means that taxpayers will incur a penalty point for each missed submission deadline. At a certain threshold of points, a financial penalty of £200 will be charged and the taxpayer will be notified. The threshold varies depending on the required submission frequency (monthly, quarterly, annual). For quarterly VAT returns, the penalty points threshold will be 4 points. The penalty points will reset to zero following a period of compliance, for quarterly returns this requires 12 months of compliance. There are also time limits after which a point cannot be levied.

In addition, the new system will see the introduction of two new late payment penalties. A first payment penalty of 2% of the unpaid tax that remains outstanding 16-30 days after the due date. The second payment penalty increases to 4% of any unpaid tax that is 31 or more days overdue.

To help with the introduction of the new system, HMRC has confirmed that it will not be charging a first late payment penalty for the first year of the new regime (1 January – 31 December 2023) once the debt is paid in full within 30 days of your payment due date.

Late payment interest will be charged from the date a payment is overdue, until the date it is paid in full. Late payment interest is calculated as the Bank of England base rate plus 2.5%.

Source:HM Revenue & Customs| 16-12-2022

Budget date 2023 announced

30th January 202321st December 2022 by fpdteam

The Chancellor of the Exchequer, Jeremy Hunt has confirmed, in a written statement, that the next UK Budget will take place on Wednesday, 15 March 2023. This will technically be the Chancellor’s first Budget although his Autumn Statement to the House of Commons on 17 November 2022 included many announcements more typically seen in a traditional Budget.

This means there have already been a raft of changes announced for 2023-24, so it will be interesting to see what further changes are announced as part of the Budget next Spring.

Details of all the Budget announcements will be made on a special section of the GOV.UK website which will be updated following completion of the Chancellor’s speech next March.

The Budget will be published alongside the latest forecasts from the Office for Budget Responsibility (OBR). This forecast will be in addition to that published for the Autumn Statement and fulfil the obligation for the OBR to produce at least two forecasts in a financial year, as is required by legislation.

The OBR has executive responsibility for producing the official UK economic and fiscal forecasts, evaluating the government’s performance against its fiscal targets, assessing the sustainability of and risks to the public finances and scrutinising government tax and welfare spending.

Source:HM Treasury| 18-12-2022