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Self Assessment Tax Returns – What information will my accountant need?

As the January 31st deadline approaches for tax returns we thought it might be helpful to list a few key pieces of information that your accountant is likely to need from you in order to make the whole process as easy as possible.

Information your accountant may need:

• If you’re employed;
          o Your P60 along with any other P45s (if you have had a second job for example). 
          o Your P11D if you have one. 
• If you are self-employed - your accounts and record of expenses 
• If you have savings – records of any interest received

Please get in touch if you need your Self Assessment Tax Return filing. We are here to make the process that bit easier.

Call 0191 491 1125 or email info@teamaccountancy.co.uk.

 

Improved Online Payment Service From HMRC

Late last year HMRC introduced a new payment system and have since abolished the use of BillPay.

The new system is simple and straightforward and can be accessed by following steps through the GOV.uk site.

To pay Self Assessment tax click here.

To pay PAYE click here.

To pay VAT click here.

To pay Corporation Tax click here.

 

Do you know about the high income Child Benefit tax charge?

In January 2013 the rules around Child Benefit were changed. A tax charge was introduced for individuals with an income of over £50,000 per year. Prior to this the individual’s income was not taken into account.

The www.Gov.uk website has provided a Child Benefit tax calculator to help high earners work out how much they may need to pay.

If you do fall into this category you will need to submit a self-assessment tax return to inform HMRC. It can then be paid in one go or through your tax code on payroll if you are employed.

What’s the benefit?
The extra tax you pay may cancel out some or all of your child benefit, so it may be worth considering whether or not to stop the benefit all together. If you do decide to go with this option you should still fill in the claim form as this will help you to get National Insurance credits towards your state pension.

Perhaps there is potential for you to avoid the charge? For example you may be able to reduce your taxable income. There are various ways that this could be achieved so it may be worth taking financial advice to see what your options are.

 

Auto Enrolment – Are You Ready?

Auto Enrolment was brought in by the government in October 2012 to ensure employees save into a pension. It began with larger companies and has gradually been phased in so that all employers, regardless of size, will be included. 2016 and 2017 will see a huge wave of over a million SMEs reach their staging date, so it’s vital that you’re prepared.

All employers will be required to assess their workforce and set up a compliant pension scheme. 

Workers must be automatically enrolled if:
• They are between 22 and State Pension age.
• They earn at least £10,000 a year.
• They work in the UK.

Workers who meet the criteria will need to have their contributions calculated through payroll software, then submitted to the pension provider. Employee and employer contributions will be set at 1% each initially, and will gradually increase over the next few years.

Workers who have been enrolled can opt out and those who do not comply can opt in, so these facilities need to be in place.

NB: If you use HMRC’s Basic PAYE Tools please note that HMRC have not yet developed any add-on feature to deal with assessment, although this link suggests it is in the pipeline. It may be worth considering your options in the meantime, so feel free to speak to us for more info.

When do I need to act?

To find out when your staging date is for Auto Enrolment go to The Pension's Regulator's staging calculator. You will need to enter your PAYE reference.

It is advised that you start putting things in place around 6-12 months prior to staging to ensure everything is set up in time. The Pensions Regulator will issue fines for non-compliance so it’s worth making sure that you have ticked all the necessary boxes. See this link for what you need to do and when.

It’s worth noting that you can look into pensions and set everything up yourself – it’s not a legal requirement for you to seek financial advice first.  However, this can be a complicated and time-consuming area, so even though it may prove more costly, it may save you an awful lot of time if you seek advice/pay for someone to set everything up for you.

The Pensions Regulator provides a lot of advice on choosing a scheme and setting it up yourself and there are numerous companies offering Auto Enrolment solutions on the web.

 

Alert to Landlords: Relief for Interest

Currently individual landlords receive tax relief at their highest rate of income tax on all of the interest they pay to finance their letting business. From April 2017 the amount of interest that will be eligible for tax relief at the marginal rate will be restricted to the following:

• 75% of the interest paid in 2017/18

• 50% of the interest paid in 2018/19

• 25% of the interest paid in 2019/20

The balance of the interest will be eligible for 20% tax relief in each case. From April 2020, only basic rate tax relief will be available for interest.

Tip: Review the funding structure for your buy-to-let business.

From Tait Walker’s ‘Summer Budget 2015’

 

HMRC benchmarking project widens

The HMRC benchmarking team is targeting more trade sectors and extending it to VAT returns.

There’s nothing new about benchmarking. In looking at taxpayers’ accounts, HMRC staff have always used a variety of business ratios to identify businesses falling outside of expected norms – as explained in HMRC Enquiry Manual. What’s new is that HMRC’s use of technology for risk analysis is becoming ever more sophisticated, and the threat of HMRC enquiries on client records is becoming more real.

 

PRR – what evidence is needed

A case of private residence relief illustrates the kind of evidence needed to support a main residence exemption. What should clients be compiling ?

Helpfully a court tribunal has made a few suggestions of the kind of documentary evidence that clients could retain to support a claim for PRR. These include:

  • letters received when living at the premises
  • photos of clients in occupation
  • witness statements
  • TV licence
  • utility bills
  • car registration address
  • address for any refurbishments
  • council tax correspondence
  • insurance documents.

Whilst none of these factors determine a main residence in its own right, each piece of the jigsaw contributes to the overall picture.

 

Certifying income for mortgages

According to HMRC, agents can now print off a client’s tax calculation from its website to support mortgage applications. But is this really the case ?

The problem is that the SA 302s are difficult to get hold of, as HMRC will only automatically issue them when a paper tax return has been submitted. As most agents submit TR’s on-line no SA302s will be issued automatically. The agent has to ring HMRC – and we all know how long that can take !
There have been some impractical attempts at a solution but the best one remains for the client has to call HMRC, sorry but we are really still no further forward. However, in some cases if you state that you need the form urgently they will be able to fax it over to you the same day.

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