RTI penalties and period of grace Under real time information (RTI), employers are required to report pay and deductions information to HMRC ‘at or before’ the time that the payment is made to the employee. This is done by means of the full payment submission (FPS). Penalties are charged if the FPS is filed late or if HMRC did not receive the expected number of FPSs or an Employer Payment Summary in a tax month in which no payments were made to employees. However, a penalty i

Childcare is expensive; however, the tax system can provide a helping hand. In recent years, there has been a shift from tax relief for employer-supported childcare and vouchers to a Government top-up scheme. Government scheme The Government operate a tax-free childcare scheme whereby parents deposit money into an account which can be used to meet childcare costs and the Government provide a tax-free top up. To qualify for the scheme, the parent (and their partner if they hav

Although married couples and civil partners are assessed individually for capital gains tax purposes and each has their own annual exempt amount, a special rule allows them to transfer assets between them at a value that gives rise to neither a loss nor a gain. This can be very useful from a tax planning perspective. The special rule applies only where the spouses or civil partners are living together or, where they separate, until the end of the tax year of separation. Opera

Are you a director or shareholder who has loaned money to their company to help keep it afloat? Where a director borrows money in order to lend it to a close company, tax relief may be available 'Close' Companies Family and personal companies are often ‘close’ companies. Broadly, this is one that is controlled by five or fewer shareholders or any number of shareholders all of whom are directors. In a close company, the directors and shareholders may borrow money from the comp

As furlough comes to an end, you may need to consider letting staff go. If this is the case, you will need to budget for the Class 1A liability, as well as the cost of the termination packages. Taxation of termination payments: Recap Where an employee’s employment is terminated, the employee may receive termination payments, such as pay in lieu of notice and ex-gratia lump sums, in additional to normal wages and salary payments. Normal payments from the employment, such as sa

Good monthly processes and some up front preparation are the formula for successful accounts and tax Is your business year end coming up? Get prepared now with this handy checklist. Dates and deadlines Firstly, check you know when your key dates and deadlines are. If you are a company, the accounting year end is the date shown on the Companies House register. Unless it has been changed, this should fall every year at the end of the month in which the company was first regist

If you became self employed in 2020 or 2021, it’s likely that you weren’t eligible for any government grant, probably realised a loss too. If this is the case, you can offset these losses against future income to reduce your tax. Relief for losses in the early years of a trade It is not uncommon to realise a loss in the early years of a trade. However, traders who commenced their self-employment in 2019 or 2020 may also have suffered as a result of the pandemic. Although the

For personal and family companies, a tax efficient strategy for extracting profits is to take a small salary and to extract any further funds needed outside the company in the form of dividends (see https://www.janesaccounting.co.uk/post/tax-optimal-salary-for-2021-22). However, while there are no restrictions on taking a salary if the company is making a loss, the same is not true of dividends. Do you have retained profits? Dividends can only be paid out of retained profits

What is a valid VAT invoice or reciept? Don't get caught out with the wrong paperwork. HMRC will only accept claims for input VAT when accompanied by a valid VAT invoice or reciept. So what does a valid VAT invoice or reciept look like and what does it have to include? What ISN'T a valid VAT invoice? Sorry - none of the following are acceptable for the reclaim of input VAT on your VAT return: E-mail confirmations Delivery notes Order summary Order confirmation Pro-forma invo

Confused on when VAT can be reclaimed for charging an electric car for business purposes? You're not alone. HMRC have recently tried to clarify.... Revenue and Customer Brief 7 (2021) was issued at the end of May. Here are the key points: Supplies of electric vehicle charging through charging points in public places are charged at the standard rate of VAT. There is no exemption or relief that reduces the rate of VAT charged. If you are a Sole Trader, charge your electric v

What should you do if your business doesn’t have enough profits to pay a #Dividend? There are several options available... If you operate through a limited company, for example as a personal or family company, you will need to extract funds from your company in order to use them to meet your personal bills. There are various ways of doing this. However, a popular and tax efficient strategy is to take a small salary which is at least equal to the lower earnings limit (set at £

Did you know that special rules apply to company directors when it comes to calculating their Class 1 National Insurance liabilities? You can also choose how and when they are paid. Why the rules Directors, particularly of personal and family companies, can control how and when they are paid and, in the absence of special rules, would be able to reduce their Class 1 National Insurance liability by manipulating the earnings period rules. The rules protect against this. Annual

5% extended to 30 September, 12.5% from October until 31 March 2022. Does your business benefit? To help the hospitality and leisure industry recover from the impact of the first national lockdown, a reduced rate of VAT of 5% was introduced for a limited period from 15 July 2020. The reduced rate of VAT was originally to apply until 12 January 2021. However, in September last year, the Chancellor announced that it would remain at 5% until 30 March 2021. By the time of the Sp

Eligibility and how to apply As lockdown restrictions are eased, businesses may need help to re-open and to recover from the impact of the pandemic. Depending on the nature of the business, they may be eligible for a Restart Grant or a Recovery Loan. Restart Grants The Restart Grant Scheme provides support to help business that were required to close to re-open as lockdown restrictions are eased. The grants are available to businesses in non-essential retail and businesses in

Tax allowances for income, capital gains tax, inheritance tax and more have been frozen until April 2026 to help meet some of the cost of borrowing during the pandemic. The financial impact of the Covid-19 pandemic is unprecedented and borrowing levels in 2020/21 of 16.9% of GDP represent the highest level of peacetime borrowing. To meet some of this cost, the Chancellor, Rishi Sunak, announced in the 2021 Budget that various thresholds and allowances would remain at their 20

To encourage companies to invest, enhanced capital allowances are available for expenditure incurred within a limited two-year window. If you’d like your company to benefit from the super-deduction, you’ll need to time your investments carefully. Super-deduction - 130% on new assets The super-deduction will allow companies to claim capital allowances of 130% for expenditure on new assets that would otherwise qualify for main rate (18%) plant and machinery capital allowances w

Take advantage of the enhanced carry back of losses Many businesses have suffered losses as a result of the Covid-19 pandemic, and where a business has made a loss, various options are available to obtain relief for that loss. The challenge is to make the best use of the loss. To help loss-making businesses, legislation will be introduced to increase temporarily the period for which a business can carry back a loss from one year to three years. The extended carry back is avai

Further grants for the self-employed. If you missed out on the first grants, you may now be eligible to claim. The Self-Employment Income Support Scheme (SEISS) has provided support for self-employed individuals whose business has been adversely affected by Covid-19. An extension to the scheme was announced at the time of the 2021 Budget. As a result, it will continue to provide support until September 2021. Three grants have already been made under the scheme. As a result o

As a landlord, the lower the taxable profit from your property rental business, the less tax you will pay. As allowable expenses are deducted from rental income to arrive at the profit figure, it is important that not to overlook any expenses which you have incurred and which can be deducted when working out your taxable profits. What is deductible? The general rule is expenses can be deducted in calculating the profits of your property rental business if they are incurred wh

2021/22 National Insurance Contributions - what you need to know. The 2020/21 tax year starts on 6 April 2021. From that date, new thresholds apply for National Insurance purposes. Self-employed The self-employed pay two classes of contributions – Class 2 and Class 4 – if their profits exceed the relevant thresholds. Class 2 contributions are payable at £3.05 per week for 2021/22 (unchanged from 2020/21) on earnings in excess of the small profits threshold, set at £6,515 for