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Business Companion News – December 2024
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Welcome to our Business Companion Newsletter for December 2024.

Christmas Payroll Deadlines
Please email details of your December payroll to payroll@simpleaccounting.co.uk by Thursday 19th December.  We will then return your payslips and reports to you by Monday 23rd December to allow everyone time to be paid before Christmas. If there are any late changes they will be processed after 28th December.

Wishing you a Happy Christmas and a successful New Year!
Jennifer, Lorraine & Mark

December 2024

VAT on Private Schools

VAT Annual Accounting Instalments

Taxing your State Pension




 

VAT on Private Schools


From 1 January 2025 education and vocational training supplied by a private school will become subject to VAT at 20%. This includes boarding and connected individuals such as teachers.

The announcements include an anti-forestalling measure meaning that any fees paid after 29 July 2024 that relate to terms starting from January 2025 onwards, will be subject to VAT.

Some children with Special Educational Needs (SEN) attend a private school because their needs cannot be met by the state sector. Where places are funded by the Local Authority, the funder will be compensated for the VAT incurred.  Children with SEN whose needs can be met in the state sector but whose parents/carers nevertheless choose to send them into private education will be charged VAT. The government recognises the potential impact on SEN pupils and is considering how to address this where private school provision has been specified for pupils through an Education, Health and Care Plan (EHCP). Nursery education remains exempt from VAT, whether it is taught in a private school or a standalone nursery

Private schools that are not currently VAT-registered will need to register with HMRC under the normal VAT rules from 1 January 2025.  

Potentially even more damaging will be the removal business rates charitable rates relief private schools in England from April 2025. 

VAT Annual Accounting Instalments


With the VAT Annual Accounting Scheme you make advance VAT payments towards your VAT bill – based on your last return and you submit only one VAT Return a year (rather than quarterly).

Businesses on the VAT Annual Accounting Scheme usually pay their VAT in nine monthly instalments (‘interim payments’) of 10% of the previous year’s liability. The instalments are payable at the end of months 4-12 of the current annual accounting period. For example, for an Annual Accounting year-end of August 2025, interim payments will be due from the end of December 2024 to the end of August 2025 inclusive.  Any VAT balance will be due by the end of October 2025.  

Alternatively businesses may choose to pay their VAT in three quarterly instalments of 25% of the previous year’s liability.

HMRC should write to businesses to confirm the amount of your interim payments before they are due.  If you don’t hear from them we can check this for our clients online. Please just contact us.  Do not fail to make a payment – we have several cases of the HMRC being keen to kick clients out of Annual Accounting for very modest breaches in the payment regulations. If you think the instalments are set too high (because, for instance your turnover has fallen) we can ring the VAT Annual Accounting Team to reduce them for you.  Their telephone number is 0300 3227873.

When you set up your standing order allow for the lag in the HMRC’s clearance of payments to clear.  They expect the payments before the end of the month so we recommend you set up for no later than 28th of each month.



 

Taxing your State Pension


As the standard Personal Allowance remains at £12,570 and the state pension increases, more people who previously didn’t pay tax (as their state pension was their only income) will be drawn into the tax system.

The Department for Work and Pensions (DWP) does not operate PAYE on your state pension, so you receive it gross, without any tax collected at source before it is paid to you.If your state pension is more than your tax-free allowances, or if you have other income sources that take your total income above your allowances, you will need to pay personal tax.

There are three ways that tax might be collected on your state pension, depending on your circumstances:
•    under the PAYE system, if you have a source of PAYE income (for example, a private pension or employment); or
•    under the self assessment system (if you complete a tax return); or
•    by HMRC issuing a simple assessment calculation after the tax year end.

Collection of tax through simple assessment (PA302)
If it is not possible for HMRC to collect the tax on your state pension through the PAYE system, and you are not otherwise required to complete a self assessment tax return, HMRC may instead send you a Simple Assessment letter after the end of the tax year. This is sometimes called a PA302 and they will either send it by post or to your personal tax account, if you have one.

Your letter will show
•    your taxable income (for example, income from pay, pensions or state benefits)
•    any Income Tax you’ve paid
•    the tax you owe
Do check the amounts in your letter match those in your records, for example in your P60, bank statements or letters from the Department for Work and Pensions (DWP). If you need help with this please contact us.
 

Need Help?


Please contact us if we can help you with these or any other tax or accounts matters.

In addition, if there’s anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list.

New Clients Welcome


If you are not already a client and are interested in becoming one, we would love to discuss how we can help and provide you with a competitive quote for our services.

See details of our Business Companion Service.

About Us


Simple Accounting Limited offers a cost effective Business Companion service to business owners who use MYOB, Acclivity, Mamut, Solar Accounts, Quickbooks or Xero.

‘All clients using these software packages can benefit from our support. Visit our website www.simpleaccounting.co.uk for a look at the resources on offer.’
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