If this E-Mail does not display or print correctly click here

Home |  About Us |  Software |  Services |  Resources |  News |  Contact

Welcome… To January’s Business Companion News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman. Struggling to pay your Personal Tax? Once we have submitted the tax return you should be able to set up the Payment Plan with HMRC using your Online tax account. See https://www.gov.uk/difficulties-paying-hmrc/pay-in-instalments . Alternatively you can give HMRC a ring on  0300 200 3835. If you believe your net income will be down in 2022-23 we can ask for these Payments On Account to be set lower. Just Contact Us January 2023 · Alternative Tax Break for Home working · MTD for ITSA Delayed · Self Assessment Tax Due · Late VAT payments and interest · January Questions and Answers · January Key tax dates Alternative Tax Break for Home Working top The tax deductions that HMRC allows for expenses for directors and employees who work from home seem stingy, especially considering the huge hikes in energy costs. How can you obtain a more generous tax deduction?  Homeworking and tax  Directors and employees who work some or all the time from home are entitled to obtain a limited tax and NI-free reimbursement from their employers for their homeworking costs. The tax and NI-free amount is £6 for each week worked at home. If no reimbursement is received they can instead claim a tax deduction. Theoretically, there’s no limit to the tax and NI-free payment or tax deduction other than it cannot exceed the household costs that exclusively relate to business use.  HMRC practice In practice HMRC severely limits tax relief for homeworking expenses. For example, even if part of your home is exclusively devoted to business use, HMRC has not (since 2007) accepted that a corresponding portion of interest paid on your mortgage (or rent) qualifies for tax relief.  Alternative deduction The good news is that there’s an alternative which allows your company to pay you more tax and NI-free expenses. It can be used by any employee with agreement from their employer, but more realistically it’s probably only suitable for directors and very senior staff. Tip. The idea is simple in principle. The director or employee charges their employer rent for the use of the part of their home they use for work purposes.  How does this save tax?  Although the rent you receive from your employer is taxable, you’re entitled to reduce it by deducting household costs you incur relating to the part of your home you let. Because the rules for tax deductions from rental income are less restrictive than those for employment income, e.g. you can claim a proportion of mortgage interest, the arrangement allows your employer to pay you an amount for homeworking tax and NI free.  Example. John, a higher rate taxpayer, is a director of Acom Ltd. He lives in a six-room rented house for which he pays £2,100 per month. He uses one room, which occupies a seventh of his home’s floor area, exclusively for his work for Acom. Under the employment expenses rules HMRC is only likely to accept that Acom can pay John a tax and NI-free amount of up to £6 per week (£26 per month). If instead John lets the room he uses for work to Acom for a rent equal to a seventh of the rent he pays plus, say, £60 per month to cover a proportion of his other homeworking-related overheads, e.g. energy bills, i.e. a total £360 per month. That’s an extra tax saving for John of just over £1,600 per year (£360 – £26) x 12 x 40%).  Tip. Acom can claim a tax deduction for whatever it pays John, whether that’s £26 or £360 per month.  Practical issues. There are a number of hurdles you need to clear before entering into a rental agreement with your company, e.g. obtaining agreement from a landlord or mortgage lender, including for any joint property ownership, reporting the rental income and expenses on your tax return and possible capital gains tax consequences.  Rent the area of your home you use exclusively for work to your employer. The rent is taxable but because the rules for the expenses relating to letting income are more generous than those for job expenses, the tax and NI-free payment you can receive from your employer is potentially much greater. If you would like us to sort out the paperwork so that you can claim rent for you home office from your business just Get In Touch. Reproduced from Indicator: https://www.indicator-flm.co.uk/en/tips-advice-tax   MTD for ITSA Delayed top Self Assessment Tax Due top Last month the government announced that the first phase of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) will not be mandated until April 2026.Prior to this announcement, the mandatory use of software to remain compliant was set for April 2024. The HM Revenue & Customs announcement can be read in full here.  What does this mean for self-employed individuals & unincorporated landlords?  Self-employed individuals and landlords with an income of more than £50,000 will now have an additional two years to prepare for MTD ITSA.  A huge amount of effort has already gone into getting accountants and small businesses compliant by April 2024, and this delay should not deter anyone from starting their digital journey as soon as they can. We’ll be in touch with further updates on how to sign up for MTD ITSA as soon as we get them from HMRC.  If you have submitted a personal tax return any balance on your 2021-22 tax is due by 31st January 2023. If your tax bill was over £1000 HMRC will also ask you to pay Payments on Account towards your 2022-23 tax.  The first Payment On Account is also due by 31st January. The second Payment On Account is due by 31st July 2023.  HMRC Bank account details: Sort Code: 08 32 10 Account number: 12001039 Account Name: HMRC Cumbernauld Payment Reference: Use your 10 digit Self Assessment number (UTR), followed by the letter K for example: 1234567890K.   Late VAT payments and interest top HMRC say that their new penalty regime for late payment of VAT is fairer to those who miss the VAT payment deadline by a few days. However we are concerned following several recent cases where HMRC have failed to record client’s VAT payments correctly. We will always follow up instances where HMRC’s records do not agree with those of our clients. For Vat due in relation to periods beginning on and after 1 January 2023 you will have up to 15 days to pay, or arrange a time to pay agreement, without incurring a penalty. For the first year of this new system, you will have 30 days to pay the VAT liability in full instead of 15 days. Read More   January Questions and Answers top January Key tax dates top Q. We hire casual labour to work alongside our permanent staff over busy periods such as Christmas. If an individual works only one shift and earns say £90, do we need to add that person to the payroll to process their pay? Answer Q. I let out a room in my home to a lodger, and I also run my self-employed business from another room in the same property. When I sell the property, will I be taxed on a portion of the gain that relates to the rooms that have been used for my business and by the lodger? Answer Q. While I was unemployed, I trained to be an HGV driver. I have now been employed as an HGV driver. Can I claim the cost of the training course and the HGV licence against my wages to reduce the tax due on that income? Answer 1 -Two new VAT penalty regimes, for late payment and late filing, come into effect for VAT periods beginning on and after this date. 31 – Last day to file self-assessment tax returns for 2021/22 without penalty. The balancing payment of income tax and NIC due for 2021/22 must be paid. Any capital gains tax due from gains made in 2021/22 must be paid if it was not already paid on account within 60 days of the disposal of residential property. The first payment on account of income tax due for 2022/23 must be paid. Where notice to file was issued after 31 October 2022, the tax payable date is extended to three months after the date on which the notice to file was issued. Where HMRC has issued a determination to assess tax for 2018/19 this is the last day to file the outstanding 2018/19 tax return to displace that determination. The balancing payment of income tax and NIC due for 2021/22 must be paid. Any capital gains tax due from gains made in 2021/22 must be paid if it was not already paid on account within 60 days of the disposal of residential property. The first payment on account of income tax due for 2022/23 must be paid. Where notice to file was issued after 31 October 2022, the tax payable date is extended to three months after the date on which the notice to file was issued. Where HMRC has issued a determination to assess tax for 2018/19 this is the last day to file the outstanding 2018/19 tax return to displace that determination. Deadline to amend the 2020/21 self-assessment tax return, or file the late 2021/22 return to avoid a tax-geared penalty. Last day to notify liability to class 2 NIC where the self-employment commenced in 2021/22. Where taxpayer was subject to IR35 in 2021/22 this is the last day to correct the 2021/22 RTi return and pay the outstanding class 1 NIC with no penalties due. Deadline for updating HMRC‘s trust registration service (TRS) for trusts that became liable to tax for first time in 2021/22 and for any notifiable changes in 2021/22. Tax credit claims for 2021/22 can be amended up to this date to correct estimated figures submitted as part of claim renewal before 31 July 2022. If July deadline was missed tax credit claim can be renewed by this date if claimant can show ‘good cause‘ for delay. Corporation tax returns for periods to 31 January 2022 must reach HMRC.   Need Help? top New Clients Welcome top 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. 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 top Simple Accounting Limited offers a cost effective Business Companion service to business owners who use MYOB, Acclivity, Mamut, Freeagent, Quickbooks or Xero. ‘All clients using these software packages can benefit from our support. Visit our website https://www.simpleaccounting.co.uk for a look at the resource on offer.’   If the images do not show. If the images contained within this email do not show correctly please add this email to your safe senders list.

Unsubscribe  To unsubscribe from this email please click here Legal Disclaimer

Copyright © Simple Accounting All rights reserved.
95 Bridge Lanes, Hebden Bridge, Yorkshire, HX7 6AT
Simple Accounting is a trading name of Simple Accounting Limited
Company Reg No. 5164026. Registered in England and Wales
VAT No. 911341075