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October 2023

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To October’s Business Companion News.

Please note that all our articles are written with our clients in mind.  If you would like to find out more about our comprehensive Business Companion service have a look at our website and hear what our clients say about us.

October 2023
· Extra Corporation Tax on your Business Profits
· Paying HMRC
· Deferring your State Pension
· Check a UK VAT number
· October Questions and Answers
· October Key Dates
Extra Corporation Tax on your Business Profits
There is a 19% CT rate up to £50,000.  If your profits are exactly £50,000 then your CT is £9,500. But what if you are doing well and making a bigger profit?

So let’s say your profits are above £50,000.  Now the extra profit is subject to the marginal corporation tax of 26.5p in the pound.  This is a serious hurdle.  Advice: don’t incur these sorts of profits.

Profits between £50,000 and £250,000 are taxed at the 26.5% marginal CT rate.  This is much higher than 19%.  And this is before the dividend is taken to you … which attracts yet more tax – income tax on you for receiving the income.  You remember when you were told that the EU was worried that Britain leaving would create a low-tax zone and a drain on their social market.  That hasn’t happened.

There is some mitigation available – for eaxample R&D Tax credits, but HMRC have made claiming much more difficult (see our update from September).  You could also consider use of the company for expenses/rental, careful VAT claims, more dividends/less salary and higher pension contributions. But please talk about this to us now if it is an issue for you.

For more details look at our earlier story on Corporation Tax rates.
Paying HMRC
Deferring your State Pension
Whichever tax you are paying, make sure you use the correct payment reference. This makes sure that your payment is allocated to the correct tax for the correct period. If you use the wrong payment reference, or even worse no reference at all, HMRC may lose your payment or allocate it in a way you were not expecting.  And it may be very difficult to correct later.
Payment references to use –
VAT – 9 digit VAT reg No. .
PAYE – use reference given on your employers payslip (P30) – this is your accounts office reference (13 digits) + an extra 4 digits which relate to the period..
Self Assessment – use your 10 digit personal UTR + letter K
Corporation tax – use the code given on your corporation tax payslip (17 digits!) – or ask us.  .

See this helpful section on paying taxes from our website. 
Normally, you start to receive your state pension when you reach state pension age. But you can defer until a time that suits you and receive an increased pension. For example, if you are still working you could delay claiming the state pension until you stop working, so that you pay no tax (or a lower rate of tax) on an increased state pension.
Your State Pension increases by the equivalent of one per cent for every nine weeks you defer. This works out as just under 5.8 per cent for every 52 weeks. For example: if you are entitled to the  full new State Pension of £203.85 a week, by deferring for one year, you’ll get an extra £11.82 a week (just under 5.8 per cent of £203.85). But bear in mind that if you defer for any amount of time, you’d need to live for around 20 years after taking your state pension to even out the amounts. So you do need to consider whether you are in good health and will live to enjoy the benefits.

You don’t have to do anything to delay claiming your State Pension. If you don’t claim it, it won’t be paid to you. When you decide you want your State Pension to begin, you can apply online or to claim by post, phone the Pension Service to get a State Pension claim form sent to you. Telephone: 0800 731 7898
Check a UK VAT number
HMRC offer an online service where you can check to see if a supplier’s VAT number is valid. You can use this service to check
– if a VAT registration number is valid
– the name and address of the business the number is registered to.

HMRC seem to expect businesses to make sure that VAT invoices received are valid otherwise they may disallow a deduction for VAT charged.  This seems an unreasonable extra task for VAT registered businesses to complete.

Reporting VAT fraud
Annoyingly you can’t use the VAT check service to check whether a business is VAT registered using the Business name as a search term.

If you suspect that a company is charging VAT when it isn’t registered you can report the business using this service

October Questions and Answers top
October Key Dates top
Q: We have started reimbursing London’s extended Ultra Low Emission Zone charges when an employee must pay them whilst on business for us. Can we reimburse them free of tax? Answer

Q: Our accountant has asked we complete a paper 64-8 authorising them to act as their agent for the Construction Industry Scheme. Can they include a scanned picture of my signature on the form or do I have to physically sign it? Answer

Q: We are considering outsourcing our accounts and payroll function, even though they have worked OK in-house ever since we set the business up. We are a small employer with about 30 staff. Can you give me a few key pointers so I can prepare a business case for this? Answer

– Deadline for sending the Employer Payment Summary (EPS) for tax month ending 05 October 2023
– Deadline for paying HMRC all PAYE, NICs, Student Loans and CIS deductions (less child-related statutory payments) if paying by a non-electronic method


– Deadline for paying HMRC all PAYE, NICs, Student Loans and CIS deductions (less child-related statutory payments) if paying electronically. 22 October 2023 is a Sunday and HMRC must have cleared funds on or before this date so ensure you submit by Friday the 20th


– The filing deadline for paper Self-Assessment tax returns (individuals, trusts and partnerships

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, AccountEdge, Quickbooks, Xero or Clearbooks.

‘All clients using these software packages can benefit from our support. Visit our website for a look at the resource on offer.’

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