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Remember to pay your Class 1A NIC

Thursday, July 11th, 2024

Class 1A NICs for 2023-24 are payable if you have provided employees with taxable benefits for that year. You are also required to pay them on payments of more than £30,000 that you make to employees when their employment ends, for example, if they are paid termination or redundancy payments.

When to pay

When you pay Class 1A National Insurance contributions depends on whether they are work benefits or termination awards.

If work benefits, you need to pay contributions by 22 July 2024 (for the tax year 2023-24). You will need to pay by 19 July 2024 if paying by post, for example, sending a cheque.

Class 1A due on termination payments is settled via PAYE.

You can make online payments via your bank software, set up a direct debit – in which case the payment will be collected by HMRC – or pay by debit or a corporate credit card.

 

Be sure to quote the correct tax reference number when making the payment. This will normally be printed on the formal notice to pay Class 1A NIC, sent by HMRC.

 

Other ways to pay contributions on work benefits

Make sure you pay HM Revenue and Customs (HMRC) by the deadline. You may have to pay interest and penalties if your payment is late.

The time you need to allow depends on how you pay.

Same or next day:

  • approve a payment through your online bank account

  • online or telephone banking by Faster payments or CHAPS

  • online by debit or corporate credit card

3 working days

  • Direct Debit (if you have set up one for HMRC before)

  • online or telephone banking by Bacs

  • by cheque through the post

5 working days

  • Direct Debit (if you have not set up one for HMRC before)

If the deadline falls on a weekend or bank holiday, your payment must arrive in HMRC’s bank account on the last working day of the week (unless you are paying by Faster Payments using online or telephone banking).

 

Beware business rates appeals deadlines

Tuesday, July 9th, 2024

The Valuation Office Agency (VOA) has issued the following warning to business rate payers who may have been approached by agencies with false claims about upcoming deadlines to appeal the 2023 rating lists.

According to the VOA these claims are not true, and you should be wary of anyone making these claims.

You are generally able to challenge your property valuation on the 2023 list at any time until March 2026. Any claim of an earlier deadline, for example the end of June or August this year, are false.

The VOA says you should be cautious of any agent who:

  • tries to pressure you to make a decision or sign a contract;
  • makes claims about ‘unclaimed credits’ or similar;
  • says they are acting on behalf of the VOA; and
  • demands large sums of money up front.

Remember – you do not have to use an agent to manage your business rates.

If you want an agent to manage your business rates, use the VOA checklist to choose an agent. Do not let an agent choose you.

VOA agent standards set out clear expectations for agents regarding:

  • their behaviour;
  • their professional practice; and
  • the service they provide to their customers.

The vast majority of agents are reputable and provide a good service, but a small minority act in bad faith.

The VOA collect evidence of poor agent behaviour and practices in the course of their work. This evidence allows the VOA to proactively address issues or concerns.

If you are concerned about potential misrepresentation by agents, send any evidence to ccaservice@voa.gov.uk.

Check your State Pension forecast

Friday, July 5th, 2024

The enhanced Check Your State Pension forecast service is now available online. The service can be found on GOV.UK at the following webpage https://www.gov.uk/check-state-pension.

The new digital service is a joint service by HM Revenue and Customs (HMRC) and the Department for Work and Pensions (DWP). It has been enhanced to include a fully end-to-end digital solution.

The service allows most people under State Pension age to view their pension forecast and identify any gaps in their National Insurance Contributions (NICs) record. This will be helpful for taxpayers looking to make voluntary NIC contributions to increase their entitlement to benefits, including the State or New State Pension.

Usually, HMRC allow you to pay voluntary contributions for the past 6 tax years. The deadline is 5 April each year. However, there is currently an opportunity for people to make up gaps in their NICs for the tax years from April 2006 to April 2017 as part of transitional measures to the new State Pension. The deadline has been extended a number of times and has been most recently extended until 5 April 2025.

The launch of HMRC’s online service will help speed up this process. HMRC’s helplines have been struggling to meet the demands for information and processing claims to pay additional NIC contributions.

HMRC has also confirmed that all relevant voluntary NIC payments will be accepted at the rates applicable in 2022-23 until 5 April 2025.

It is worthwhile checking your State Pension position on a regular basis, this will help to optimise your entitlement. You should also consider what other savings or pensions might be required for a long and comfortable retirement.

Tax relief for training costs

Friday, July 5th, 2024

If you are self-employed it is important to know if an expense is tax allowable. Any allowable costs can be used to reduce your taxable profit.

As a general rule you can claim for items that you would normally use for less than 2 years as allowable expenses such as stationery and other office sundries as well as rent, rates, power and insurance costs.

HMRC lists the following office expenses as being allowable:

  • office costs, for example stationery or phone bills
  • travel costs, for example fuel, parking, train or bus fares
  • clothing expenses, for example uniforms
  • staff costs, for example salaries or subcontractor costs
  • things you buy to sell on, for example stock or raw materials
  • financial costs, for example insurance or bank charges
  • costs of your business premises, for example heating, lighting, business rates
  • advertising or marketing, for example website costs
  • training courses related to your business, for example refresher courses

Regarding training costs, you can claim training costs that help you:

  • improve skills and knowledge you currently use for your business;
  • keep up-to-date with technology used in your industry;
  • develop new skills and knowledge related to changes in your industry; or
  • develop new skills and knowledge to support your business – this includes administrative skills.

You cannot claim for training courses that help you:

  • start a new business; or
  • expand into new areas of business that are not related to your current business activities.

Correcting errors in VAT returns

Friday, July 5th, 2024

Where an error on a past VAT return is uncovered businesses have a duty to correct the error as soon as possible. As a general rule, any necessary adjustment can be made on a current VAT return. To do this, the errors must be below the reporting threshold.

Under the reporting threshold rule, businesses can make an adjustment on their next VAT return if the net value of the errors is £10,000 or less. The threshold is further increased if the net value of errors found on previous returns is between £10,000 and £50,000 but does not exceed 1% of the total declare sales value for the return period in which the errors are discovered.

HMRC must be separately notified of errors that exceed either of the limits set out above or if the error was deliberate. VAT errors of a net value that exceed the limits for correction on a current return or that were deliberate should be notified to HMRC by making the correction online or submitting form VAT 652 (or providing the same information in letter format) to HMRC's VAT Error Correction team.

HMRC can also charge penalties of up to 100% of any tax under-stated or over-claimed if you file an inaccurate return.

Filing your tax return early

Friday, July 5th, 2024

The 2023-24 tax year ended on 5 April 2024 and the new 2024-25 tax year started on 6 April 2024. Most taxpayers will be happy to leave dealing with their 2023-24 tax returns until later this year or even until January 2025.

The 31 January 2025 is not just the final date for submission of the 2023-24 self-assessment tax return but also an important date for payment of tax due. This is the final payment deadline for any remaining tax due for the 2023-24 tax year. In addition, the 31 January 2025 is also the usual payment date for any Capital Gains Tax due in relation to the 2023-24 tax year, and please note, any CGT due on the sale of a residential property needs to be paid within 60 days from the completion of the disposal. The 31 January 2025 is also the first payment on account deadline for 2024-25.

We recommend that you consider acting early and calculating what payments you will need to make by 31 January 2025. By preparing your tax return early in the tax year you have not accelerated the payment date, but you will know what your tax bill will be well before the payment deadline of 31 January 2025. Your accountant will also appreciate the extra time to prepare your tax return and you will avoid the eleventh-hour rush. If you are due a tax refund, this will also be processed more quickly.

Remember that calculating how much tax you may owe is different from filing the return. This strategy should also give you time to set aside enough money to pay any tax due by 31 January 2025 and avoid any last-minute surprises. Of course, if you are due a repayment of tax then it is a useful strategy to file your tax return as soon as possible.

Tax Diary July/August 2024

Friday, July 5th, 2024

1 July 2024 – Due date for corporation tax due for the year ended 30 September 2023.

6 July 2024 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2024 – Pay Class 1A NICs (by the 22 July 2024 if paid electronically).

19 July 2024 – PAYE and NIC deductions due for month ended 5 July 2024. (If you pay your tax electronically the due date is 22 July 2024).

19 July 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 July 2024.

19 July 2024 – CIS tax deducted for the month ended 5 July 2024 is payable by today.

1 August 2024 – Due date for corporation tax due for the year ended 31 October 2023.

19 August 2024 – PAYE and NIC deductions due for month ended 5 August 2024. (If you pay your tax electronically the due date is 22 August 2024)

19 August 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 August 2024.

19 August 2024 – CIS tax deducted for the month ended 5 August 2024 is payable by today.

Are you eligible for tax-free childcare

Thursday, July 4th, 2024

You can receive up to £500 every 3 months (up to £2,000 a year) for each of your children to help with the costs of childcare. This increases to £1,000 every 3 months if a child is disabled (up to £4,000 a year).

If you receive Tax-Free Childcare, you will set up an online childcare account for your child. For every £8 you pay into this account, the government will pay in £2 to use to pay your provider.

You can receive Tax-Free Childcare at the same time as 15 or 30 hours free childcare if you are eligible for both.

You can use it to pay for approved childcare, for example, childminders, nurseries and nannies and after school clubs and play schemes.

Your childcare provider must be signed up to the scheme before you can pay them and benefit from Tax-Free Childcare. Check with your provider to see if they are signed up.

Eligibility

According to the GOV.UK website your eligibility depends on:

  • whether you are working (employed, self-employed, or a director);
  • your income (and your partner’s income if you have one);
  • your child’s age and circumstances; and
  • your immigration status.

 

If you are not currently working you may still be eligible if your partner is working and you receive any of the following:

  • Incapacity Benefit
  • Severe Disablement Allowance
  • Carer’s Allowance or (in Scotland only) Carer Support Payment
  • Contribution-based Employment and Support Allowance

You can apply if you are starting or re-starting work within the next 31 days.

Your income

Over the next 3 months you and your partner (if you have one) must each expect to earn at least:

  • £2,379 if you’re aged 21 or over
  • £1,788 if you’re aged 18 to 20
  • £1,331 if you’re under 18 or an apprentice

This is the National Minimum Wage or Living Wage for 16 hours a week on average.

Refunds – the legal obligations

Tuesday, July 2nd, 2024

If a customer complains that an item you sold them is faulty, is not as described or does not do what it is supposed to do, then you must offer a refund.

You do not have to make a refund if the customer:

  • knew an item was faulty when they bought it;
  • damaged an item by trying to repair it themselves or getting someone else to do it (though they may still have the right to a repair, replacement or partial refund); or
  • no longer want an item (for example because it’s the wrong size or colour) unless they bought it without seeing it.

Other considerations

  • You have to offer a refund for certain items if they are faulty. Foe example, personalised items, perishable goods, newspapers and magazines and unwrapped CDs, DVDs and computer software.
  • Online or telephone sales customers have the right to cancel their order. They must tell you of their intention to cancel within 14 days of receiving the goods and another 14 days to return the goods once they have told you.
  • Customers have up to 6 years to make a claim for an item they’ve bought from you (5 years in Scotland).
  • A customer has the same right to free repairs or a replacement regardless of whether they have a warranty or guarantee or not. You may still have to repair or replace goods if a customer’s warranty or guarantee has run out.
  • You can ask the customer for proof that they bought an item from you. This could be a sales receipt or other evidence such as a bank statement or packaging.
  • You only have to accept returns from the person who bought the goods returned.

And finally, it’s illegal to display any notice that deliberately misleads consumers or deceives them about their rights, for example a sign that says you do not accept returns or offer refunds.

6th July 2024 – a potential deadline for company car drivers

Thursday, June 27th, 2024

Our new government will be in place by the 4th of July 2024, two days old on the 6th of July, unless there is an unexpected draw, and a re-run is required.

But the 6th is a deadline that company car drivers would be wise to note.

Does your employer pay for private fuel?

If the answer is yes then you are potentially liable to be taxed for the use of the company car and for the benefit of your employer paying for your private fuel. The way the taxable benefit is calculated is set out below.

How is the Car Fuel Benefit Charge calculated?

For the tax year 2023-24, the Car Fuel Benefit Charge is based on the figure £27,800 multiplied by the benefit in kind banding for your car.

For example: A BMW 330e has a BiK band of 12%. So, £27,800 x 12% = £3,336. If you are a 20% taxpayer, multiply £3,336 by 20% to get the annual tax amount of £667. A 40% taxpayer would pay £1,334 per year (£3,336 x 40%).

The problem with this calculation is that the tax charge is unrelated to the actual private mileage you cover in a year.

How to reduce your tax liability

HMRC are willing to cancel any liability for private fuel provided by your employer if you repay your employer for the cost of the private fuel.

To achieve this, you will need to:

  • Calculate your private mileage for the year to 5 April 2024; and
  • Multiply this mileage by the advisory car fuel rate for your company vehicle.

The BMW 330e has a 2.0 litre petrol engine. For 2023-24 the average advisory car fuel rate for that sized petrol car was approximately 13p per mile. Let’s say the private mileage for the year was 2,000 miles. To repay the private fuel to their employer would cost the driver £260 (2,000 x 13p).

The £260 payment is much lower than the tax charges – £667 for a standard rate taxpayer or £1,334 for a higher rate taxpayer.

Crunch the numbers

The key is to make the calculations and see if a repayment of private fuel is lower than the tax charge.

And we can help. But don’t forget, any repayment must be made by 6th July 2024.