|01/02||Corporation tax payment for year to 30/4/22 (unless quarterly instalments apply)|
|19/02||PAYE & NIC deductions, and CIS return and tax, for month to 5/02/23 (due 22/02 if you pay electronically)|
|28/02||5% surcharge added to the outstanding balance of tax and national insurance due to be paid on 31 January 2023|
|01/03||Corporation tax payment for year to 31/5/22 (unless quarterly instalments apply)|
|19/03||PAYE & NIC deductions, and CIS return and tax, for month to 5/03/23 (due 22/03 if you pay electronically)|
Archives for February 2023
Changes to the NMW rates – From 1st April 2023 the national minimum wage (NMW) rates are increasing. There are the minimum rates most employees are entitled to. You can use the minimum wage check option to check you are paying your employees the correct rates.
Sage 50 Payroll Year end update will be released shortly
Sage 50 Payroll year end update will be released shortly.
If you would like information on any Sage product and how it can help your business or have any other queries please contact us
Tips of the Month
Disable/Delete customer alerts
If you want to stop a customer alert from popping up in Sage 50cloud Accounts you can either disable it or delete it.
Disable a customer alert
- Open Sage 50Cloud accounts and select Customers.
- Double-click the customer record, or click the customer then click Edit.
- Click Alerts then click then alert you want to disable, then click Edit.
- Select Disable this alert.
- Click Save.
This alert now shows No in in the Active column and no longer appears when processing. If you want to enable the alert again just go into the alert again and clear the Disable this alert check box.
Delete a customer alert
- Open Sage 50Cloud accounts and select Customers.
- Double-click the customer record, or click the customer then click Edit.
- Click Alerts then select then alert you want to delete.
- Select Delete, to delete the alert and click Yes.
- The alert has now been deleted.
Disabling or deleting alerts is the same for Suppliers, Products and Services, just select the relevant records.
If you would like help with setting up, amending, disabling or deleting custom alerts or need any other help with your Sage Accounts please contact us
Correcting Personal Employee information
Now is a good time to check that all the personal information you hold on Sage 50 Payroll for your employees is correct and if needed you can correct anything before the payroll year end.
Correcting Employee Details
If you submit an FPS and an employee’s personal details are incorrect, you must contact HMRC to report this.
- If the employee’s personal details have changed, for example surname or address, then advise your employee to contact HMRC to report the change. You can then enter the correct employee details into their record for submission on your next FPS.
- If the error relates to the date the employees started for you, do not change the start date on your next FPS as this results in duplication of the employee’s record on HMRC systems. If you need to correct an error of this nature, contact HMRC.
Note: If you enter the details into Sage, but don’t report the changes to HMRC, the new details don’t update on the employee’s HMRC record. This may result in a query from HMRC.
Two useful reports you can use are:-
- Employee Details – Personal – which shows personal details for each employee from the employee record including name and address, date of birth and marital status etc.
- Employee Details Verification Letter – which can be sent to your employees to confirm the details you hold are correct.
If you need help checking or updating your employees’ details or need any other help or advice with your payroll please contact us
We can also provide a remote access service where we can directly link into your computer to help you resolve your Sage Accounts or Payroll problems.
If you would like any help or assistance with your Sage or would like to take advantage of any Special offers running this month or about any other Sage products please contact us on:
Email: [email protected]
Telephone 01691 684011/654545
|Those planning to claim the UK state pension should check their national insurance (NI) record before 5 April 2023. Currently, voluntary contributions can be made to plug gaps back to April 2006, but this will be curtailed from April.
National insurance contributions are typically made by employed and self-employed individuals based on their earnings. Individuals may also receive NI credits if they are eligible. These NI contributions or credits make up a person’s NI history, which may affect their entitlement to the state pension as well as other benefits, such as employment and support allowance.
In general, to qualify for the maximum ‘new state pension’ (received by those retiring on or after 6 April 2016) a person must have 35 qualifying years of NI contributions. For part payment of the ‘new state pension’ a person must have contributed for at least 10 years. For those whose NI record started before 6 April 2016, different rules may apply; the number of required years of NI contributions/credits to obtain the full state pension may be higher.
If individuals have not contributed enough prior to reaching state pension age, they may not be able to claim state pension, or receive the full state pension amount. To protect state pension and other benefits it may be beneficial for people to make voluntary NI contributions to top up their contribution history, potentially increasing the amount of state pension they will receive. Specific financial advice is recommended when making that decision as it requires predicting, to an extent, what contributions will be made before state retirement age and the risk of future changes in the rules.
Normally, it is only possible to make voluntary contributions for the past six tax years. Currently there is an extension in place. Individuals can fill gaps in their NIC history from 6 April 2006 to the present date by making voluntary contributions.
However, from 6 April 2023, the timeframe for making voluntary contributions will revert to the normal six years. This means that in the 2023/24 tax year, it will be possible to make contributions going back to the 2017/18 tax year only.
Individuals should therefore take the opportunity to check their NI record to identify any shortfalls in their NI history.
Taxpayers should also check that their record includes NI contributions paid through PAYE or self assessment, and NI credits earned. They should contact HMRC to have any errors corrected.
Actions for taxpayers to take before 5 April 2023:
|A new penalty regime has been introduced for VAT return periods commencing on or after 1 January 2023, replacing the Default Surcharge Regime. Legislation was introduced in Finance Act 2021, and HMRC published detailed guidance on 4 January 2023. The changes cover penalties for late returns and late payment, in addition to the abolition of the Repayment Supplement. It is expected that the same penalty regime will eventually apply to mandatory MTD filings for income tax.
Penalties for late VAT returns
The new points-based system aims to target more persistent offenders, and it’s fair to say that under the new regime, a taxpayer who rarely files late will be better off. Those who frequently file their VAT returns late may see their penalties stack up quickly and may find it harder to get out of the so-called “penalty zone”.
For each late VAT Return the taxpayer will receive one late submission point. Once a points threshold is reached, the taxpayer will receive a £200 penalty. A taxpayer’s points threshold is determined by the filing frequency of the return: 2 points for annual returns, 4 for quarterly, and 5 for monthly returns.
Example 1: Agnes files quarterly VAT returns. She submits late returns for 3 consecutive VAT return periods. Her points counter will show three points, but she will not receive a penalty. If she files her next VAT return late she will have reached the points threshold and will receive a £200 penalty.
As well as generating a penalty, reaching the points threshold will trigger the start of a “compliance period” for the taxpayer. Any subsequent late returns during the compliance period will generate further £200 penalties. The compliance period length is also determined by the filing frequency of the return: 24 months for annual returns, 12 for quarterly, and 6 for monthly returns. If the taxpayer files all returns on time during the compliance period, and submits any outstanding returns for the past two years, their points counter will be reset to zero and their compliance period will come to an end. If, however, any returns are filed late during the compliance period, the end date of the compliance period will be revised so as to be determined by reference to the most recent late return.
The compliance periods given above will start on the first day of the month following the due date for the return, so for a return due date of 7 May 2024, the compliance period would start on 1 June 2024.
Example 2: Continuing the Agnes example above, let’s assume that her fourth late VAT return was for the quarter ended 31 March 2024, due for filing by 7 May 2024. This most recent late return would mean her compliance period runs for twelve months from 1 June 2024 until 31 May 2025. She has reached her points threshold, so any further late returns during this period will give rise to a further £200 penalty.
If she were to file all returns due, on time, during the twelve months to 31 May 2025, and she ensured that all outstanding returns are filed for the past 24 months, her points counter would be reset to zero.
Let’s say, however, that she files her next three VAT returns (for the quarters ending 30 June 2024, 30 September 2024 and 31 December 2024) on time, but she is unable to file her return for the 31 March 2025 quarter by its due date of 7 May 2025. As she is still in her twelve-month compliance period, she will receive another £200 penalty and her compliance period will be extended to 31 May 2026!
If a taxpayer has received a point but has not reached their points threshold, the individual point will expire after 24 months. This 24 month period will begin on the first day of the month following the due date of the late return that gave rise to the point.
Example 3: Let’s revisit Agnes, who has filed four consecutive late quarterly returns and is at the start of a twelve-month compliance period. As she has reached her points threshold, individual points will not expire and the only way she can get out of the so-called penalty zone is by filing all returns on time during the compliance period and filing any outstanding VAT returns for the past 24 months.
Example 4: Another taxpayer, Beatrice, files late VAT returns for the quarters ending 31 July 2023 and 31 October 2023, triggering two points.
Let’s say she receives a further point when she files a late return for the quarter ended 31 October 2024. She would then have three points in total and she is dangerously close to triggering a penalty. However, as she has not reached her points threshold, the point she received in respect of the 31 July 2023 return will expire on 30 September 2025 and she will be left with two points.
It is worth noting that when the penalty regime applies to MTD income tax filings, a taxpayer will have separate points counters for different taxes. For example, a VAT registered sole trader would receive a point for a late VAT return and a point for a late MTD ITSA submission, but these points would be within separate counters and would not trigger a penalty.
Penalties and interest for late payment of VAT
As a familiarisation measure from 1 January to 31 December 2023, HMRC will not charge a late payment penalty if VAT is paid within 30 days of the due date.
From 1 January 2024, this period of grace will reduce to 15 days. Any VAT outstanding 15 days after its due date will attract a penalty of 2%. Any VAT outstanding 30 days after its due date will attract a further 2% penalty. This effectively means that if a VAT return is fully paid 16 days after its due date it will attract a penalty of 2%; if a VAT return is fully paid 31 days after its due date it will attract a penalty of 4%.
For VAT that is outstanding 30 days after its due date, an additional penalty will be issued. This penalty will be at 4% per annum, charged on a daily basis from day 31 until the outstanding balance is paid in full.
For these purposes, VAT is considered outstanding if it has not been paid or a time to pay agreement has not been arranged and adhered to.
For VAT return periods starting on or after 1 January 2023, late payment interest will be calculated from when the payment becomes overdue to the day it is made in full. The rate will be the Bank of England base rate plus 2.5%.
|Although the start of MTD for ITSA has been delayed to 2026 at the earliest, the start date of the new regime for taxing the profits of unincorporated businesses on a tax year basis has not been delayed and the transition will still take effect in the tax year to 5 April 2024.
This will be a major change for those unincorporated businesses that prepare their accounts to a date other than 5 April or 31 March. From 6 April 2024 such businesses will need to compute their taxable profits from 6 April to 5 April each year, regardless of their accounting end date.
So, for a sole trader or partnership making up accounts to 31 December each year, their 2024/25 profits would be calculated as 9/12ths of their profits for the year ended 31 December 2024 plus 3/12ths of their profits for the year ended 31 December 2025.
This will invariably require the inclusion of an estimate of the profits of the later period with subsequent amendment once the final figures are known. For this reason many businesses may wish to consider changing their accounting date and we can of course advise you of the tax consequences.
More imminent is the change in the way that profits are to be taxed for the 2023/24 tax year. The upcoming tax year is scheduled to be a “transitional year” with complicated rules for calculating business profits. For many businesses the change will result in a higher tax bill and, if you can supply us with estimated figures, we can work with you to calculate the impact on your cash flow.
Please note that although MTD for ITSA will only apply to the self-employed and landlords initially, these tax year basis changes apply to all unincorporated businesses, including partnerships and LLPs, and those with profits of less than £50,000.
As mentioned before, those already preparing accounts to 31 March or 5 April are not affected.
Making tax digital (MTD) for income tax self-assessment (ITSA) was originally scheduled to start in 2018 and was then put back to 2023 and then 2024. It was announced just before Christmas that the new system of submitting digital information quarterly to HMRC has been delayed yet again! The start date will now depend upon the gross business receipts of the individual.
Self-employed individuals and landlords with annual gross receipts above £50,000 will need to follow the rules for MTD for ITSA from 6 April 2026. Those with annual gross receipts between £30,000 and £50,000 will be mandated into the regime from 6 April 2027.
Whether MTD for ITSA will apply to those with gross receipts under £30,000 is under review but it would appear that the government have finally increased the starting threshold from £10,000, which they have resisted up until now.
Despite the delay in the mandatory start date for MTD for ITSA, businesses should nevertheless consider whether or not it would be beneficial to keep their business records digitally anyway.
The date when partnerships will be required to join MTD for ITSA has not been set and may be clarified in the March 2023 Budget.