fpdteam, Author at Bennetts Accountancy

Deadlines for making voluntary NIC top-ups

1st June 2022 by fpdteam

In certain circumstances it can be beneficial to make voluntary National Insurance Contributions (NICs) to increase entitlement to future benefits, including the State or New State Pension for self-employed persons.

You might want to consider making voluntary NICs if:

You are close to State Pension age and do not have enough qualifying years to get the full State Pension
You know you will not be able to get the qualifying years you need to get the full State Pension during the remainder of your working life
You are self-employed and do not have to pay Class 2 National Insurance contributions due to a history of low profitability
You live outside the UK but want to qualify for benefits.

If you fall within any of these categories, it may be beneficial to apply for a State Pension forecast and examine whether you should consider making voluntary NICs to make up missing years, known as topping up. Not everyone will benefit from making voluntary NICs and much will depend on how close you are to retirement age and your NIC payments to date.

Usually, HMRC allow you to pay voluntary contributions for the previous six years. The deadline is 5 April each year. This means that you have until 5 April 2023 to make up for gaps for the tax year 2016-17.

There are also transitional measures in place that allow men born after 5 April 1951 and women born after 5 April 1953 to make up for gaps in NICs between tax years April 2006 and April 2016. This opportunity ends on 5 April 2023 when the maximum allowable number of voluntary contributions will be limited to six years as per the previous paragraph.

Source:HM Revenue & Customs| 30-05-2022

Sign in to Childcare Account

1st June 2022 by fpdteam

HMRC’s Childcare account can be used to claim 30 hours free childcare or to pay for your Tax-Free Childcare. HMRC’s sign in page for the account states that in order ‘…to keep getting your 30 hours free childcare or Tax-Free Childcare, you must sign in every 3 months and confirm your details are up to date’. There are various eligibility rules that must be met to claim the 30 hours free childcare through the Childcare Account. As a starting point you must be the parents of a child three to four years old and living in England. There are different schemes in Scotland, Wales and Northern Ireland

The Childcare Account can also be used to claim under the Tax-Free Childcare (TFC) scheme. 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.

Source:HM Revenue & Customs| 30-05-2022

New measures to help with the cost-of-living crisis

26th May 2022 by fpdteam

As expected, the Chancellor, Rishi Sunak has announced a new package of support measures in a statement to the House of Commons on 26 May 2022. The measures will be targeted to the most vulnerable members of society in a total package of measures that we are told will cost £15bn and bring the total cost of living support to £37 billion this year.

This means that, including measures already announced, all of the eight million most vulnerable households in the country will get £1,200 of one-off support in total this year to help with the cost of living.

The main measures announced by the Chancellor on 26 May 2022 are as follows:

Energy Bills Support Scheme doubled to a one-off £400.

Back in February, the Chancellor announced a number of measures to help people cope with fast rising energy costs. This included a £200 universal discount on energy bills for domestic electricity customers, with a clause that the money would need to be paid back in the future. The situation has worsened since then and the Chancellor acknowledged this in his latest statement.

We have already seen record increases in fuel bills from 1 April 2022 affecting some 22 million customers across the UK. This means the average consumer paying by direct debit has seen an annual increase of £693 from £1,277 to £1,971 per year with those paying by prepayment facing even higher costs. The price cap is updated twice a year and the head of OFGEM has suggested that the price cap could increase again to around £2,800 in October 2022.

This has prompted the Chancellor to change tack and announce a doubling of the Energy Bills Support Scheme to £400 and to cancel the repayment schedule. This means that the support will now be provided in the form of a non-repayable grant.

This support will apply directly for households in England, Scotland, and Wales with the government delivering equivalent support to households in Northern Ireland.

£650 one-off Cost of Living Payment for those on means tested benefits

The Chancellor also stressed that he was seeking to provide help to the most vulnerable people across the UK. One of these measures will help the 8 million households in receipt of mean tested benefits. These households will receive a payment of £650 this year. The DWP will make the payment in 2 lump sums. The first payment in July and the second at an as yet unspecified date in the autumn. Payments from HMRC for those on tax credits only will follow shortly after each to avoid duplicate payments.

HMRC and DWP will provide further guidance, and the government will set out the eligibility date for the second instalment, in due course. It has been confirmed that the payment will be tax-free, will not count towards the benefit cap, and will not have any impact on existing benefit awards.

One-off £300 Pensioner Cost of Living Payment

An additional one-off payment of £300 will also go to the over 8 million pensioner households across the UK who receive the Winter Fuel Payment. This amount will be paid in addition to any other one-off support a pensioner household is entitled to.

The Winter Fuel Payment is not taxable and does not affect eligibility for other benefits. The government will make these payments directly to households across the UK. This money will be paid out as top-up to pensioner households annual Winter Fuel Payment in November / December.

£150 Disability Cost of Living Payment

The Chancellor also announced a non-means tested one off disability payment of £150 to some six million people across the UK who receive the following disability benefits:

Disability Living Allowance
Personal Independence Payment
Attendance Allowance
Scottish Disability Benefits
Armed Forces Independence Payment
Constant Attendance Allowance
War Pension Mobility Supplement

Many of these recipients also receive means tested benefits which means this £150 of assistance will be on top of the £650 payment for those receiving means tested benefits.

£500m increase and extension of Household Support Fund

The Chancellor also announced an extra £500 million of local support via the Household Support Fund for vulnerable households that might not receive some of the other support measures. The Household Support Fund will be used to help those most in need with discretionary support. This could include using small grants to meet daily needs such as food, clothing, and utilities. The extra support will see the Fund extended from this October to March 2023.

Energy Profits Levy

The cost of these measures will be in part paid for by the introduction of a new temporary Energy Profits Levy on oil and gas firms. Whilst the Chancellor was at pains not to refer to this Levy as a windfall tax, this is basically what is being introduced. This Levy will target firms in the sector making enormous profits because of the spike in commodity prices.

This new Levy is expected to raise around £5 billion over the next year and will be charged at a rate of 25%. The Energy Profits Levy will apply to profits arising on or after 26 May 2022. This will increase the headline rate of tax on oil and gas firm profits from 40% (made up of a 30% Ring Fence Corporation Tax and 10% Supplementary Charge) to 65%.

To help offset some of the impact on these firms, the Chancellor also announced the introduction of a new Investment Allowance to encourage firms to invest in oil and gas extraction in the UK. The Chancellor also referred to the introduction of the Levy as temporary and said that if oil and gas prices return to historically more normal levels, the Levy will be phased out. In addition, the legislation will also include a sunset clause, which will remove the tax after 31 December 2025.

The new Investment Allowance is similar in style to the super-deduction and will nearly double the tax relief available for firms on their investments. The new allowance will mean businesses will receive an overall 91p tax saving for every £1 they invest.

Source:HM Treasury| 25-05-2022

Domicile and IHT

26th May 2022 by fpdteam

Domicile is a general legal concept which in basic terms is taken to mean the country where you permanently belong. But actually, determining domicile status can be complex. HMRC guidance states that domicile cannot be defined precisely, but the concept rests on various basic principles.

Although domicile can change, there is generally a presumption in favour of the continuation of an existing domicile. To change a domicile, lots of factors are considered for example, the location family, property and business interests.

There is also a further UK concept of deemed domicile, whereby under rules introduced from April 2017, any person who has been resident in the UK for more than 15 of the previous 20 years are deemed to be domiciled in the UK for tax purposes. This makes them liable to Inheritance Tax (IHT) on their worldwide assets.

IHT is generally chargeable to people domiciled (or deemed domiciled) in the UK or with assets sited in the UK. For example, HMRC’s manuals states that if someone creates a settlement with assets outside the UK, when they are not domiciled in the UK, the settlement could be excluded from the charge to IHT. There are also double tax agreements that can, depending on the circumstances, change a person’s liability to IHT.

Source:HM Revenue & Customs| 23-05-2022

Agent authorisation re SEISS grants

26th May 2022 by fpdteam

Self-employed individuals (including partnerships) who have overclaimed the Self-Employed Income Support Scheme (SEISS) must pay back the overpayment to HMRC. The rules for repayment state that you must tell HMRC if you were not eligible to have claimed the grant. There can also be penalties for not informing HMRC.

However, there are complications with the agent authorisation process for SEISS grants. This is because HMRC’s existing process – the 64-8 agent authorisation – was not designed to cover the support provided in response to coronavirus, such as SEISS grants, in which case the usual taxpayer confidentiality rules apply. For this reason, additional authorisation is required.

HMRC’s advice to agents states as follows, if you plan to contact us regarding your client’s SEISS grants, please speak to them and make sure relevant consent is in place where necessary and allow time for required authorisation to be processed by us.

The fifth and final SEISS grant was available for the period between 1 May 2021 and 30 September 2021. The last date for making a claim was 30 September 2021.

Source:HM Revenue & Customs| 23-05-2022

HMRC wins disguised remuneration case

26th May 2022 by fpdteam

HMRC has welcomed a recent Court of Appeal decision concerning a disguised remuneration case. These types of schemes provide employees with the bulk of their earnings in the form of loans that are used to try and avoid paying Income Tax and National Insurance contributions (NICs).

In the case in question, an IT contractor used a disguised remuneration tax avoidance scheme, entering into an arrangement whereby he worked through an umbrella company based outside the UK to provide his services to UK-based financial service companies.

He received most of his earnings in the form of loans, organised by the umbrella company, which were initially claimed not to be taxable. The taxpayer eventually accepted that he had received taxable income, but he claimed he should not have to pay anything because he was entitled to a notional PAYE credit.

The Court of Appeal’s agreed with HMRC’s assertion that the taxpayer was not entitled to a PAYE credit. The taxpayers appeal (and cross-appeals) was rejected and HMRC’s right to collect unpaid Income Tax was allowed, without any setoff for a notional PAYE credit.

HMRC is reminding other taxpayers with similar arrangements that they can still make a settlement under the Disguised remuneration settlement terms 2020. This includes individuals who received loans before 9 December 2010, where HMRC still has open enquiries or assessments.

Source:Court of Appeal| 23-05-2022

VAT Flat Rate Scheme – are you a limited cost trader?

26th May 2022 by fpdteam

The VAT Flat Rate Scheme has been designed to simplify the way a business accounts for VAT and in so doing reduce the administration costs of complying with the VAT legislation. The scheme is open to businesses that expect their annual taxable turnover in the next 12 months to be no more than £150,000.

A limited cost trader check was introduced in April 2017 and can increase the VAT flat rate percentage used by VAT registered businesses that use the Flat Rate scheme. If you meet the definition of a 'limited cost trader' you are required to use a fixed rate of 16.5%. The highest 'regular' rate is 14.5%.

A limited cost trader is defined as one whose VAT inclusive expenditure on goods is either:

less than 2% of their VAT inclusive turnover in a prescribed accounting period;
greater than 2% of their VAT inclusive turnover but less than £1,000 per annum if the prescribed accounting period is one year (if it is not one year, the figure is the relevant proportion of £1,000).

For some businesses – for example, those who purchase no goods, or who make significant purchases of goods – the outcome of the test will be self-evident. Other businesses need to complete a simple test, using information they already hold, to work out whether they need to use the higher 16.5% rate. If so, the use of the flat rate scheme will probably not be beneficial.

Source:HM Revenue & Customs| 23-05-2022

Completing P11D forms to report benefits in kind

26th May 2022 by fpdteam

The deadline for submitting the 2021-22 forms P11D, P11D(b) and P9D is 6 July 2022. The forms can be submitted using commercial software or via HMRC’s PAYE online service. Employees must also be provided with a copy of the information relating to them on these forms by the same date. P11D forms are used to provide information to HMRC on all Benefits in Kind (BiKs), including those under the Optional Remuneration Arrangements (OpRAs) unless the employer has registered to payroll benefits.

This is known as payrolling and removes the requirement to complete a P11D for the selected benefits. However, a P11D(b) is still required for Class 1A National Insurance payments regardless of whether the benefits are being reported via P11D or payrolled. The deadline for paying Class 1A NICs is 22 July 2022 (or 19 July if paying by cheque).

Where no benefits were provided from 6 April 2021 to 5 April 2022 and a form P11D(b) or P11D(b) reminder is received, employers can either submit a 'nil' return or notify HMRC online that no return is required. Employers should ensure that they complete their P11D accurately, including all the details of cars and loans provided. There are penalties of £100 per 50 employees for each month or part month a P11D(b) is late. There are also penalties and interest for late payments.

Any tax or National Insurance due for 2021-22 under a PAYE Settlement Agreement (PSA) needs to be paid electronically to clear into HMRC’s bank account by 22 October 2022 (19 October 2022 for payments by cheque). This does not need to be reported on a P11D.

Source:HM Revenue & Customs| 23-05-2022

HMRC advice to counter spoof emails or texts

26th May 2022 by fpdteam

HMRC continues to warn of the ever-present problem of fraudulent phishing emails, suspicious phone calls and texts. These unwanted emails, phone calls and texts are being sent from all around the world and the fraudsters are continuing to find new ways to target unsuspecting taxpayers.

These messages typically look to obtain taxpayers personal and or financial information such as passwords, credit card or bank account details. The phishing emails and texts often include a link to a bogus website encouraging the recipient to enter their personal details.

HMRC recommends that if you have the slightest doubt that an email or text is fake:

do not open attachments, they could contain a virus
do not click on links, they could take you to a fake HMRC site
do not disclose personal/confidential information
forward suspicious HMRC text messages to 60599 (charged at your network rate)
forward suspicious emails to the HMRC phishing team at, phishing@hmrc.gsi.gov.uk
check our security guidance: Dealing with HMRC Phishing and scams.

If you have suffered financial loss should contact Action Fraud on 0300 123 2040 or use their online fraud reporting tool.

Source:HM Revenue & Customs| 23-05-2022

Tax Diary June/July 2022

19th May 2022 by fpdteam

1 June 2022 – Due date for corporation tax due for the year ended 31 August 2021.

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

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

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

1 July 2022 – Due date for corporation tax due for the year ended 30 September 2021.

6 July 2022 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2022 – Pay Class 1A NICs (by the 22 July 2022 if paid electronically).

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

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

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

Source:HM Revenue & Customs| 18-05-2022