CHARTERED ACCOUNTANTS (ICAEW)

Back to Blog

Reporting payment to HMRC if you pay your employees early in December

Reporting payment to HMRC if you pay your employees early in DecemberStrict reporting deadlines apply under Real Time Information (RTI). Employers are required to report employees’ pay and deductions to HMRC electronically on the Full Payment Submission (FPS) at or before the time that the payment is made to the employee. Employers who report late for more than one tax month in the tax year are charged penalties. While HMRC do allow a three-day period of grace and will not charge a penalty if ...

Can you benefit from the marriage allowance?

Can you benefit from the marriage allowance?The marriage allowance is not a separate allowance as such – rather, it is a transfer of part of one spouse or civil partner’s personal allowance to their spouse or civil partner. It should not be confused with the married couple’s allowance which is available where at least one spouse or civil partner was born before 6 April 1935.The marriage allowance allows one spouse or civil partner to transfer 10% of their personal allowance (as rounded to ...

Reclaiming section 455 tax paid

Reclaiming section 455 tax paidIn personal and family companies, directors often borrow money from the company as this is a cheaper and easier option than taking out a commercial loan. However, there can be tax consequences for both the director and the company.If the loan balance exceeds £10,000 at any point in the tax year, a tax charge would arise under the benefit in kind rules if the interest paid by the director on the loan, if any, is less than that which would be payable at the official...

Submit your tax return by 30 December to have your tax collected through PAYE

Submit your tax return by 30 December to have your tax collected through PAYEAlthough the deadline for submitting your 2022/23 tax return online is midnight on 31 January 2024, if you owe tax and you want to have it collected through PAYE via an adjustment to your tax code, you will need to file your tax return by the earlier date of 30 December 2023.If the option to pay any tax you owe via PAYE is available to you, it can be attractive. Not only are you saved from having to pay the bill in full...

The Autumn Statement 2023 - Key Points

The Autumn Statement 2023 - Key PointsThe 2023 Autumn Statement was presented against a background of inflation falling from recent peaks. Annual inflation for the last quarter of 2023 is now expected to be 4.8%, against a previously anticipated 2.9%. With recent large price increases now baked in, the government’s 2% target is now forecast to be hit in the first half of 2025, a year later than previously thought.GDP growth is now forecast to be 0.6% for 2023, compared with the projection last...

Plain English guide to profit and loss

Plain English guide to profit and lossHere's our Plain English guide to profit and loss and what this report reveals about your finances.What is profit and loss?Your profit and loss statement is commonly called your ‘P&L’. It’s also sometimes referred to as your income statement or statement of earnings.Your P&L is a breakdown of your company’s revenue (money coming into the company as sales and other income) and your expenditure (direct costs, overheads, expenses and other costs...

Are employee parties tax-free?

Are employee parties tax-free?If the rules around social functions are followed, staff events like your end-of-year party, or your summer barbecue are tax-deductible for you, as the employer, and tax-free for your staff.This means you can claim back some of the expenses you incur when putting on a social event for your team, while also helping to build better team bonds.Whether your party is taking place in the office, at a local restaurant or via Zoom for your remote-working teams, yo...

Company year-end preparations: time to get ready

Company year-end preparations: time to get readyAs your company year-end date gets closer, there are a number of administrative and financial tasks to start planning for – so it’s a good idea to get yourself organised and ready.There are several things to check, either on the year-end date, or before the end of your company’s financial year. Some tasks are simple administrative processes, while others involve a deeper dive into your accounts. But, on the whole, this is about getting on top...

Can directors and employees receive gifts from the company tax free?

Can directors and employees receive gifts from the company tax free?Giving gifts to your employees can be a great way to increase engagement and raise the overall morale of your team. But how much can you give before there are tax implications? And how do the rules differ if you’re giving gifts to your directors?The good news is that you can give gifts that don’t exceed £50 in value to your employees without any tax or National Insurance (NI) charges arising – as long as you follow HMRCâ€...

What home-office expenses are deductible for your business?

What home-office expenses are deductible for your business?With greater use of home-working now the norm for many UK businesses, it’s important to think about the deductible expenses that you may be able to claim when working from a home office.Working from home results in us using more power, more broadband and more heating than when working from an office space, or from a coworking space outside the home. But which elements of your home expenses can you claim back? And how does the process w...

Redundancy –Taxation of payments

Redundancy –Taxation of paymentsMaking any employee redundant is a difficult decision and potentially distressing for all involved. Getting the process wrong could result in one or more employment tribunal claims. Professional advice should always be sought.When an employee is made redundant, various elements may comprise the final payment. Apart from the normal earnings from the employment (salary, accrued holiday pay, accrued bonuses, etc.) to the last deemed working day, payments made speci...

Associated company rules – Implications post-1 April 2023

Associated company rules – Implications post-1 April 2023It is eight years since companies had to deal with two tax rates and marginal relief when calculating their corporation tax liability. That system has now been reinstated and, as of 1 April 2023, the amount of corporation tax will depend on a company’s profits as follows:·         under £50,000 – small profits rate of 19%·         above £250,000 – m...

VAT –Exceeding threshold temporarily – What can be done?

VAT –Exceeding threshold temporarily –What can be done?Most business owners know that VAT registration is a legal requirement should total taxable turnover for the previous 12 months exceed £85,000 or turnover is expected to exceed £85,000 in the next 30 days.Once a business becomes liable, that liability ceases should HMRC be satisfied that the business is not expected to exceed the deregistration limit in the following 12 months. This limit is usually set at £2,000 below the registratio...

Is a derelict property still a residential property for SDLT purposes?

Is a derelict property still a residential property for SDLT purposes?The issue of whether a derelict a residential property and liable to stamp duty land tax (SDLT) at the residential rates was considered by the First-tier Tribunal.The appellants, Mr and Mrs Mudan, purchased a property in London for £1,755,000. As they already had another residential property, they paid SDLT at the residential rates inclusive of the 3% supplement. They subsequently filed an amended return on the basis that the...

Letting the FHL for longer periods during the off-season

Letting the FHL for longer periods during the off-seasonLetting holiday properties, particularly in coastal resorts, may have a strong seasonal bias, and when business is slow during the off-season, it can be tempting to let the property on a longer let. For example, a property could be let on short-term holiday lets over the summer months and on a six-month residential let during the winter. However, adopting this approach may have tax implications and prevent the property from accessing the ta...

Can I deduct the higher interest costs of my new fixed rate mortgage?

Can I deduct the higher interest costs of my new fixed rate mortgage?Landlords coming to the end of their fixed rate mortgage deal are likely to be paying considerably more in interest when they remortgage. The extent to which tax relief is available for interest payments depends on the type of let, the type of property and whether the business is an unincorporated property business or operated through a company.Scenario 1: unincorporated landlord and residential letsUnincorporated landlords let...

Relief for pre-trading expenses

Relief for pre-trading expensesIn setting up a trade it is inevitable that expenses will be incurred before the trade actually commences. Expenses may be incurred on acquiring premises and kitting them out, on buying stock, on office supplies, on professional advice, on marketing, on software, on setting up a website, on legal fees and suchlike. These can mount up, so it is important to secure tax relief where possible. Relief for pre-trading expenses is available to both unincorporated business...

Get your overlap relief figure

Get your overlap relief figureIf you have unrelieved overlap profits, you will not be able to claim relief for those profits after 2023/24. Overlap profits are profits that have been assessed twice – either in the early years of a business or on a change of accounting date.From 2024/25, unincorporated businesses will be taxed on the profits for the tax year regardless of the date to which they prepare their accounts. Where the accounting period does not correspond with the tax year, the profit...

Dealing with gift hold-over relief ‘nudge’ letters

Dealing with gift hold-over relief ‘nudge’ lettersHMRC are sending one-to-many ‘nudge’ letters to taxpayers who included an invalid claim for gift hold-over relief in their 2021/22 tax return. This may be because a separate claim form was not included with the return, or the claim form was included but not signed. If you receive such a letter, it is important that you do not ignore it – without a valid claim, HMRC will require any capital gains tax due to be paid now rather than deferr...

Common NMW errors to avoid

Common NMW errors to avoidWorkers are entitled to be paid the National Living Wage (NLW) or Minimum Wage (NMW) for their age. Employers who fail to do this run the risk of financial penalties and of being ‘named and shamed’. To help employers avoid mistakes, HMRC have produced a checklist of 18 common errors. These are listed below.Common error 1Making deductions or taking payments from workers for items or expenses connected with their job which reduce the worker’s pay below the statutory...

Separating couples – Importance of checking your child benefit claim

Separating couples – Importance of checking your child benefit claimThe High-Income Child Benefit Charge (HICBC) is a tax charge that claws back child benefit where the claimant or his or her partner have adjusted net income of at least £50,000. Where both parties have income in excess of this, the charge is levied on the partner with the highest income.The charge is equal to 1% of the child benefit paid for the tax year for every £100 by which adjusted net income exceeds £50,000. Once adju...

Interest rates are high – Benefit from short-term loans from your company

Interest rates are high – Benefit from short-term loans from your companyThe Bank of England has warned businesses and households that the cost of borrowing will remain high for at least the next two years and although taking out a bank loan is cheaper than a credit card, the interest rate on unsecured loans is at an all-time high of 5.7%. However, there is a source of finance from which a director or participator of a private limited company can borrow at 0% interest and that is from their co...

Voluntary disclosure

Voluntary disclosureVoluntary disclosure involves individuals or businesses coming forward to inform HMRC of any errors or omissions in their tax returns, unpaid taxes or any other irregularities, before HMRC discovers them through its own investigations. In recent years HMRC has used a series of campaigns and settlement/disclosure opportunities aimed at particular sections of the taxpaying public to encourage taxpayers to come forward and declare any missing information by offering favourable p...

Capital allowances on leased assets – Options for tax relief

Capital allowances on leased assets – Options for tax reliefThe decision to acquire a business asset, be it a van or any other type of machine, will generally depend on how it is intended to finance the purchase. If the business has a healthy bank account, the purchase may be outright but, if not, other methods may be considered including hire purchase or leasing contract. Different tax implications depend on the type of asset, the type of contract entered into and whether the profits are calc...

Extracting profits from a property company

Extracting profits from a property companyRecent tax changes, in particular the interest restriction for unincorporated property businesses with residential lets, have resulted in more landlords operating via a property company. Running a property business through a company has a number of advantages – the rate of corporation tax paid on the profits will usually be less than the rate of income tax that would be paid by an unincorporated landlord and interest and finance costs in relation to re...