| Date | What’s Due |
| 01/08 | Corporation tax payment for year to 31/10/22 (unless quarterly instalments apply) |
| 19/08 | PAYE & NIC deductions, and CIS return and tax, for month to 5/08/23 (due 22/08/23 if you pay electronically) |
| 01/09 | Corporation tax payment for year to 30/11/22 (unless quarterly instalments apply) |
| 19/09 | PAYE & NIC deductions, and CIS return and tax, for month to 5/9/23 (due 22/09 if you pay electronically) |
Taxpayers could take advantage of four key benefits when filing their tax return early, HM Revenue and Customs (HMRC) has stated.
The Self-Assessment deadline for the 2022 to 2023 tax year is 31 January 2024. Taxpayers who file early will have more control over their financial affairs and beat the January rush.
The four benefits HMRC promote are:
There are rumours circulating in the press of the possible abolition of inheritance tax (IHT) in a bid by the Government to secure the support of wavering Conservative voters. This may cause some individuals to delay IHT planning, but remember these are just rumours, and it may not be actually happen.
It should be noted that under the current IHT rules there are a number of generous reliefs and exemptions that would apply, as opposed to speculation of possible future changes. For example, business property relief is available on the transfer of shares in an unquoted trading company during lifetime or on death, such that no IHT would be payable. However capital gains tax potentially applies to a lifetime transfer of shares, subject to a possible claim to hold over the gain.
So, the current rules allow tax planning to be undertaken with an element of certainty, as opposed to speculating about possible future changes. Please talk to us if you would like to discuss inheritance tax planning.
Employers may meet the cost of certain social events for staff without creating a tax liability. This used to be a concession but is now a statutory exemption provided certain conditions apply.
The exemption applies to an “annual party or similar function” provided it is available to all employees or available generally to those at a particular location. During the Covid-19 pandemic HMRC confirmed that a ‘function’ could include a virtual party, where employers were unable to host a traditional party at which employees would have been physically present.
A key condition is that the cost per head of the party or function must not exceed £150, inclusive of VAT. If an event costs more than £150 then it is taxable in full, not just on the excess over £150.
If you have already held a Christmas Party for staff it may be possible have another event, and for that to also be exempt from tax, provided the combined cost per head is no more than £150 a year. If the combined cost exceeds £150 for the year the employer can designate which ones should be taken into account to make best use of the exemption. If, for example, the cost per head of the Christmas party was £100, and the Summer event was £70 the employer can nominate the Christmas party to be covered by the exemption, but the £70 Summer Event would be taxable (not just the excess £20)
Rather than the employee being taxed on the £70 the employer can deal with the tax and national insurance on the employees’ behalf by way of a PAYE settlement agreement.
Tax-Free Childcare accounts can be used to pay for approved childcare for children aged 11 or under, or 16 if the child has a disability. This can include paying for a summer holiday club or childminder.
The account can also be used to pay nursery fees, or to pay for breakfast or after school clubs in term-time, as well as out of school activities.
Opening a Tax-Free Childcare account is quick and easy and can be done at any time of the year. Families who have not yet signed up should check their eligibility and apply online today.
For every £8 paid into an online account they will receive an additional £2 from the government. This means parents and carers can receive up to £500 every 3 months (£2,000 a year for each child), or £1,000 (£4,000 a year for each child) if their child is disabled.
Money can be deposited at any time to be used straight away, or whenever it is needed. Unused money in the account can be withdrawn at any time.
Eligibility
Families could be eligible for Tax-Free Childcare if they:
The latest Finance Act includes two changes that will affect all R&D claims:
(1) a requirement to provide additional information before an R&D claim is made; and
(2) a requirement for certain companies to make a claim notification within six months after the end of the accounting period for which they want to claim R&D relief.
When a limited company intends to make a claim for research and development (R&D) tax relief, from 8 August 2023 onwards it will need to provide detailed information to HMRC in advance. We can assist you in preparing the notification or prepare it on your behalf.
You will need to set out details of the R&D project(s) undertaken, including, in particular, the scientific or technical uncertainty that the work was seeking to overcome, along with details of the work done to resolve that uncertainty.
For accounting periods beginning on or after 1 April 2023, there is also a new R&D claim notification form which must be submitted within the ‘claim notification period’, which ends six months after the end of the accounting period for which the company wants to claim R&D relief.
Broadly, new claimants or those who haven’t claimed for three years will need to complete this claim notification form for accounting periods beginning on or after 1 April 2023.
| Date | What’s Due |
| 01/07 | Corporation tax payment for year to 30/9/22 (unless quarterly instalments apply). |
| 05/07 | Last date for agreeing PAYE settlement agreements for 2022/23 employee benefits. |
| 05/07 | Deadline for agents and tenants to submit returns of rent paid to non-resident landlords and tax deducted for 2022/23. |
| 06/07 | Deadline for forms P11D and P11D(b) for 2022/23 tax year. Also, deadline for notifying HMRC of shares and options awarded to employees. |
| 19/07 | PAYE & NIC deductions, and CIS return and tax, for month to 5/07/23 (due 22/07/23 if you pay electronically). |
| 31/7 | 50% payment on account of 2023/24 self-assessment tax liability due. |
| 01/08 | Corporation tax payment for year to 31/10/22 (unless quarterly instalments apply). |
| 19/08 | PAYE & NIC deductions, and CIS return and tax, for month to 5/08/23 (due 22/08/23 if you pay electronically). |
HMRC frequently warn taxpayers that when a tax avoidance scheme looks “too good to be true”, it probably is. They publish “Spotlights” on their website to alert taxpayers of schemes being marketed by promoters that are under scrutiny, and, in their opinion, do not work. Tax avoidance schemes need to be notified to HMRC under the Disclosure of Tax Avoidance Schemes (DOTAS) rules, normally by the scheme promoter. HMRC then issue a DOTAS scheme reference number (SRN). This does not mean that the scheme is HMRC approved, although some promoters claim this in their marketing literature.
If taxpayers have used the scheme and received the SRN from a promoter or supplier, they must tell HMRC that they have used the scheme, usually when submitting a tax return.
The school fees plan that HMRC are challenging broadly involves the grandparents of the children investing in the parents’ company at an undervalue, and then transferring those shares to a trust. The company then pays dividends to the trust, which are used to pay the grandchildren’s school or university fees. It is argued that the payments from the trust are the children’s income and takes advantage of their £12,570 personal allowance and lower tax rates. HMRC contend that the arrangements are a “settlement” by the parents and, as such, the payments should be taxed on them at their rates of tax.
Not all school fees plans are tax avoidance schemes. Please contact us if you are approached to implement a scheme similar to that outlined above.
During the COVID pandemic the government relaxed the conditions to enable those working from home to be paid £6 a week tax free by their employer, or, where that was not paid by the employer, they could claim relief for £6 a week against their employment income for a tax refund from HMRC. Those relaxed rules applied for 2020/21 and 2021/22. Many employers and employees may not be aware that from 6 April 2022 the rules reverted to the strict statutory position. Employees can claim tax relief if they have to work from home under a homeworking agreement, for example because:
Tax relief cannot be claimed if the employee choses to work from home.
The VAT Flat Rate scheme was introduced in 2002 to simplify VAT reporting for small traders, reducing the time taken to calculate VAT and prepare returns compared to normal VAT accounting. The thresholds for using (£150,000 pa) and exiting the scheme (£230,000 pa) have not changed since 2003. With the extension of Making Tax Digital to all VAT registered businesses, those traders are now required to keep digital records and, arguably, the time saving benefits have reduced. The decision as to whether or not traders should use the scheme should now be based on the amount of VAT payable and the risk of making errors.
Rather than recording and reporting input VAT on business expenses, and then deducting that input VAT from the output VAT on goods and services supplied, the trader merely has to report and pay VAT based on the flat rate percentage for that category of business multiplied by the VAT inclusive receipts. The percentages currently range from 4% for businesses retailing food, newspapers, or children’s clothing to 14.5% for IT consultants and labour only builders, unless the “limited cost trader” rules apply. There is also a 1% reduction in the first year of business as an incentive to use the scheme.
As well as making VAT simple to administer many businesses paid less VAT by using the scheme. Some service businesses allegedly exploited the tax savings, resulting in the government introducing the “limited cost trader” 16.5% rate from April 2017.
What is a “Limited Cost Trader”?
A business is classed as a ‘limited cost trader’ and should use the 16.5% flat rate percentage if the cost of goods purchased is less than either:
“Goods” excludes expenditure on:
Consequently, many traders supplying services such as IT contractors, management consultants and labour-only builders are likely to be categorised as “limited cost traders” and using normal VAT accounting is likely to mean less VAT is payable.
Potential disadvantages of using a Flat Rate Scheme
The flat rate percentages are calculated in a way that takes into account zero-rated and exempt sales. They also contain an allowance for the VAT you spend on your purchases.
So the VAT Flat Rate Scheme might not be right for your business if:
*Unless the business purchases a capital item where the VAT inclusive price exceeds £2,000.
Please contact us if you are considering whether or not to use the VAT flat rate scheme for your business.
