overseas workday relief; london accountant; farringdon accountant; wimbledon accountant

Guide to overseas workday relief in the UK

26/06/202326/06/2023 by , posted in Blogs, Overseas personal tax issues, Overseas tax issues, Personal

Guide to overseas workday relief in the UK

Are you a non-domiciled UK resident working abroad and curious about your tax obligations? If so, you’ve come to the right place. This article provides an in-depth look at a valuable tax relief known as Overseas Workday Relief (OWR) in the UK. We’ll explore what it is, how it works, who’s eligible, and how you can benefit from it.

Please note that this information can be complex, and it’s always a good idea to consult a trusted UK tax specialist when making any decisions. Our CIMA-registered accountants at CIGMA Accounting would be happy to assist with any of your personal or corporate tax needs. Go to our contact page to book a free consultation.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

What is Overseas Workday Relief (OWR)?

Overseas Workday Relief is a tax relief available to UK non-domiciled residents who work abroad during the tax year and utilise the remittance basis of taxation. It allows them to legitimately avoid paying tax on earnings from a UK employment when duties are performed wholly or partly overseas. Usually, any UK tax-resident with UK employment income is required to pay tax on all such income. However, OWR provides an exception to this rule for non-doms who work outside the UK as part of their employment.

Who is Eligible for Overseas Workday Relief?

To claim OWR, you must meet certain criteria. You must:

Be a non-dom (non-domiciled) in the UK and utilise the remittance basis of taxation.
Have been considered a non-resident of the UK for the previous three tax years but be considered a UK tax resident in the year you’re claiming the tax relief.
Perform some or all your work duties outside of the UK.

How Does Overseas Workday Relief Work?

OWR operates on the remittance basis of taxation, which means that you are only taxed on the income you bring into the UK. To benefit from OWR, you must pay your foreign-earned income into a non-UK bank account and not remit the earnings to the UK. This process requires keeping accurate records of your movements and work records to provide evidence you have not remitted any foreign-earned funds into the UK.

To be eligible for tax relief, the account should be held in your name and contain less than £10 at the beginning of the tax year. Ideally, the account should only ever have employment income credited to it so that it qualifies as a special mixed fund.

Once you’ve established your tax residence status and you’re considered a UK tax resident, it’s important to start tracking the number of days you’ve worked outside the UK. The real benefits of OWR are for non-doms earning in the highest tax band (over £125,000 per year) who subsequently work for 10% or more of the tax year outside the UK. If someone meets this basic criteria, £12,500 of their income would be exempt from UK tax, saving them £5,625 (i.e., 45% of £12,500).

Claiming Overseas Workday Relief

To claim OWR, you need to provide proof that you worked outside the UK for a UK employer. This requires keeping records of the days you worked overseas along with supporting evidence, such as travel documents and copies of your work calendar. Remember, this is all done via your UK Self-Assessment Tax Return and may require specialist advice to ensure you’re making disclosures with reference to best practice.

Given the complexities around non-doms, the Remittance Basis of taxation, and OWR, it’s highly recommended that people wishing to make use of these schemes seek advice before making decisions. A UK tax specialist can advise you on the most tax-efficient strategy for working in the UK, help you plan your time, and help you keep suitable records to ensure you can benefit from OWR.

In conclusion, if you’re a non-dom UK resident working abroad, the OWR can offer significant tax savings. With careful planning and expert advice, you can optimise this tax relief and ensure that you’re in compliance with UK tax laws.

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

HMRC’s Self-Assessment line summer closure

22/06/202327/06/2023 by cigma, posted in HMRC notices, Income Tax, Personal

HMRC Self-Assessment Helpline closes for the summer

In a surprising move, the UK’s HM Revenue & Customs (HMRC) announced the summer closure of its Self-Assessment helpline from 12 June to 4 September 2023. This action forms part of a trial to encourage the redirection of Self-Assessment queries to HMRC’s robust digital services including online guidance, a digital assistant, and webchat services.

Scheduled during a quieter period for Self-Assessment inquiries, the helpline will reopen on 4 September 2023, five months before the Self-Assessment deadline on 31 January 2024. Historically, the volume of calls decreases by about 50% during the summer months compared to the period between January and April.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

However, this closure is expected to cause some disruption for taxpayers. The Chair of the Treasury Committee is seeking clarification that HMRC has thoroughly evaluated the costs and benefits of this decision. The short notice of the closure is also a point of concern, emphasising the need for transparency from HMRC in decision-making processes that impact numerous individuals.

In defense of the closure, HMRC highlights that this trial will reallocate 350 advisers (full-time equivalent) to handle urgent calls on other lines and respond to customer correspondence. Furthermore, HMRC points out that a significant 97% of Self-Assessment taxpayers prefer using its online services, with the same percentage filing their assessments online.

Need Assistance from an Accountant?

The change will undoubtedly influence how taxpayers interact with HMRC over the summer. If you are one of the affected individuals with Self-Assessment queries, don’t hesitate to reach out. We remain ready and happy to assist you during this transitional period.

Reach out to us by completing this form and one of our staff members will get in touch within one business day.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

How to claim work from home tax relief in the UK

06/06/202315/08/2023 by , posted in Blogs, FAQ, Income Tax, Personal, Tax credits

How to claim work from home tax relief in the UK

If you work from home, you may be eligible for work from home tax relief on some of your expenses. This will depend on whether working from home is a choice or is required by your work.

The amount of tax relief you can claim depends on how much your tax band and how much you spend on work-related expenses. When using the standard rate of relief, individuals paying the Basic Rate of tax can get up to £62 per year in tax relief, while those paying the Additional Rate of tax can get up to £140 per year.

It is worth noting that the tax relief for working from home is not a special scheme, but simply one of the job expenses you can claim tax relief on if they are not paid for by employers. You can click here to read our post on tax relief for travel expenses.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Who Can Claim Work from Home Tax Relief?

Just like tax relief for other work expenses, you can only claim tax relief on working from home when your employer gives you no alternatives and they do not already reimburse you for those costs.

You can claim tax relief if you work from home and:

Your employer requires you to work from home, or requires you to travel an unreasonable distance every day to reach their office.
Your employer does not have an office, or has no appropriate facilities for you at their office.

You cannot claim tax relief if you work from home and:

Your employment contract allows you to work from home some or all of the time.
You work from home because of the coronavirus pandemic.
You work from home because your employer’s office is full.

What working from home expenses Can You Claim For?

HMRC will only allow you to claim expenses that are necessary, and are used only for work purposes. You can claim tax relief for the following expenses:

Heating and lighting for your work area.
Electricity for your work area.
Phone calls made for work purposes.
Internet access for work purposes.
Stationery and other office supplies.
Equipment used for work purposes, such as a computer or printer.

How Much tax relief Can You Claim when working from home?

You can claim tax relief on the full cost of the expenses listed above. However, you will have to keep accurate records to submit to HMRC. If you do not want to manage receipts, you can claim the standard rate, which assumes you spend £6 per week on the costs of working from home.

Now that you have your total expenses (either the exact amount or £6 per week), you multiply this by your tax rate to determine how much relief you will get. Using the standard £6 per week, this means that those paying the 20% Basic Rate of tax can receive £1.2 per week (£62.4 per year) in tax relief.

How to Claim Work from Home Tax Relief

To claim tax relief for your work-related expenses, you can either:

Claim the flat rate of £6 per week. You do not need to keep evidence of your expenses if you claim the flat rate.
Claim the actual amount of your expenses. You will need to keep evidence of your expenses, such as receipts, bills, or contracts, if you claim the actual amount.

You can work expense-related tax relief using HMRC’s online portal. If you submit a Self Assessment tax return for any reason, you must claim the relief on your tax return rather than through the online portal.

Deadline for Claiming Work expense Tax Relief

You can claim tax relief for your work-related expenses up to four years after the end of the tax year in which you incurred the expenses. For example, you can claim tax relief for expenses you incurred in the 2022/23 tax year until the end of the 2026/27 tax year. You can of course also claim relief for up to four years previous, meaning you can still claim expenses from the 2019/20 tax year in your 2023/24 tax return.

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

Guide to tax relief for work expenses in the UK

05/06/202307/06/2023 by , posted in Blogs, FAQ, Income Tax, Personal

Guide to tax relief for work expenses in the UK

If you find yourself paying for job costs out of your own pocket, making the most of available tax reliefs is essential. In the UK, HM Revenue and Customs (HMRC) offers tax relief for certain job-related expenses that are not reimbursed by your employer.

In this blog post, we will provide a comprehensive overview of the tax relief options available to UK taxpayers, including working from home, uniforms and work clothing, personal protective equipment (PPE), vehicles used for work, travel and overnight expenses, and buying other equipment.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Which work expenses qualify for tax relief?

To be eligible for tax relief, expenses must be required for your job, bought with your own money, and only used for work purposes. You cannot claim relief for expenses that are reimbursed by your employer or for which your employer gives you an alternative. For example, you cannot claim tax relief on the cost of buying a work phone when your employer offers to pay for one, but you would rather get a different model.

In the rest of this post we explore the different expenses that are eligible for tax relief, assuming that HMRC’s conditions outlined above are met.

Work from Home tax relief

With the rise of remote work, many individuals find themselves working from home either full-time or part-time. HMRC allows eligible individuals to claim tax relief for additional household costs incurred while working from home.

To be eligible, you must meet certain criteria, such as living far away from your office or your employer not having a physical office. You cannot claim tax relief if you choose to work from home or due to COVID-19.

Allowable expenses include business phone calls and a portion of your gas and electricity bills. You can either claim a flat rate expense of £6 a week (for previous tax years, it was £4 a week) or the exact amount of your extra costs. However, to claim your exact expenses you will have to provide HMRC will receipts.

You can read our full post on claiming work from home tax relief here.

Tax relief for Uniforms, Work Clothing, and Tools

If your job requires you to wear a uniform or specialised work clothing, you may be eligible for tax relief on the cost of repairing, replacing, or cleaning them. A uniform is a set of clothing that identifies you as having a certain occupation, such as a nurse or police officer. Even if the clothing does not identify your occupation but is necessary for your work, such as overalls or safety boots, you may still be able to claim tax relief. Small tools can also qualify for this relief, such as electric drills or cameras.

It is important to clarify that you can only claim relief on the costs of cleaning, repairing, or replacing your specialist clothing or tools. You cannot claim for the initial cost of purchasing these items.

Also important to point out is that you cannot claim tax relief for the cost of buying or cleaning everyday clothing used for work. Similarly, you cannot claim tax relief for personal protective equipment (PPE) as your employer should either provide it free of charge or reimburse you for the costs.

You have the option to claim either the exact amount, which must be backed up by receipts, or you can claim the ‘flat rate expense’ for your job. You can find the list of available flat rates on HMRC’s website.

tax relief on fuel and Vehicles Used for Work

If you use your own vehicle for work purposes, such as cars, vans, motorcycles, or bicycles, you may be eligible to claim tax relief. However, this does not include commuting to and from your regular workplace, unless it is a temporary place of work. The amount you can claim depends on whether you own or lease the vehicle yourself or if it is provided by your employer.

If you use your own vehicle, you can claim tax relief based on approved mileage rates, which cover the cost of owning and running the vehicle. For company cars used for business trips, you can claim tax relief on fuel and electricity expenses, provided you keep records to show the actual cost.

You can click here to read our full post on travel and mileage expense claims.

Travel and Overnight Expenses

If your job requires you to travel for work purposes, you may be eligible to claim tax relief on certain expenses. This includes public transport costs, hotel accommodation for overnight stays, food and drink, congestion charges and tolls, parking fees, business phone calls, and printing costs.

However, it’s important to note that you generally cannot claim for regular commuting expenses unless you’re travelling to a temporary place of work. This means that you cannot claim mileage costs for your daily commute from home to work and vice versa. You can click here to read our full post on travel and mileage expense claims.

Buying Other Equipment

In most cases, you can claim tax relief on the full cost of substantial equipment, such as a computer, that is necessary for your work. This falls under the annual investment allowance (AIA), a type of capital allowance. You can currently claim for expenses up to £1 million under the AIA.

However, you cannot claim capital allowances for cars, motorcycles, or bicycles used for work. You will have to claim business mileage and fuel costs, as described above. For smaller items like uniforms and tools that have a shorter lifespan, you can claim tax relief in a different way.

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

Self Assessment Tax Return for Landlords in the UK

02/06/202303/06/2023 by , posted in Blogs, Income Tax, Personal

If you are earning rental income in the UK, understanding your tax obligations is crucial. Filing a self assessment tax return for landlords can be complex, but with the right knowledge and guidance, you can ensure compliance and maximise your financial benefits. In this blog post, we will provide a quick guide to help private landlords navigate the process of filing a tax return in the UK.

Do I need to file a Self Assessment Tax Return for rental income?

As a private landlord in the UK, filing a tax return is a legal requirement when earning over a certain threshold. Self-employed people and landlords earning over £1000 in a tax year have to file a Self Assessment return with HMRC. This first £1000 is tax-free. Failing to file a tax return can result in penalties, fines, and possible legal consequences.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Key Steps in Filing a Tax Return for Landlords in the UK

1. Registering for self-assessment

To begin the tax return process, you must register for self-assessment with HMRC. This involves obtaining a Unique Taxpayer Reference (UTR) number, which will be used to identify you for tax purposes. Registration can be done online through the HMRC website.

2. Organising your rental income and expenses

Keeping detailed records of your rental income and expenses is essential for accurate tax reporting. Maintain a comprehensive record of all rental income received and associated expenses incurred during the tax year. This includes rent received, property repairs, insurance costs, mortgage interest payments, and other relevant expenses.

3. Understanding allowable expenses

Certain expenses incurred as a landlord are deductible, reducing your overall taxable income. We provide a breakdown of allowable expenses below, such as property repairs, maintenance costs, letting agent fees, landlord insurance premiums, and more. Understanding these deductions will help you optimise your tax position.

4. Keeping accurate records

To support your tax return, it’s important to maintain accurate records. Retain invoices, receipts, and relevant documents for at least six years. These records will serve as evidence of your income and expenses, ensuring transparency during any potential HMRC audits.

Tax-Deductible and allowable Expenses for Landlords

There are two types of tax-deductible rental expenses, allowable expenses and domestic items. These costs can be deducted from your total income as tax relief before calculating your taxable income and final tax owed.

Allowable expenses for rental income

Allowable expenses are the day-to-day running costs for providing a rental property, which can be deducted from your income before calculating tax. These do not include improvements to the property.

Repairs and maintenance
Expenses related to repairs and maintenance of your rental property can be claimed as deductions. This includes fixing structural issues, replacing faulty appliances, and general upkeep of the property.

Insurance premiums
The cost of insuring your rental property is an allowable expense. This includes landlord insurance, public liability insurance, and any other relevant policies.

Letting agent fees
If you engage a letting agent to manage your property, the fees you pay to them are deductible expenses. This includes tenant finding, advertising, and property management fees.

Other allowable expenses
There are various other deductible expenses that landlords may incur, such as legal and accountancy service fees, council tax, utility bills, and cleaning services.

Tax deductible Domestic items

The costs for replacing furnishings in rental property can be deducted from your income before calculating tax. However, to qualify for this tax relief, the old items being replaced must no longer be used at the rental property.

Domestic items include:

Beds.
Curtains.
Fridges.
Crockery and cutlery.
Carpets.
Sofas.

Tax relief for mortgage interest payments

If you have a buy-to-let mortgage, you can receive a tax credit amount equal to 20% (the Basic Rate of income tax) of your mortgage interest payments. This does not reduce your total taxable income, and therefore does not help keep your taxable income in a lower tax bracket.

This means that individuals in the Higher Rate (40%) or Additional Rate (45%) income tax brackets do not receive full tax relief on their mortgage interest payments. Read our guide to Personal Income Tax for more detailed information on income brackets, tax bands, and available income tax relief.

Important Deadlines for landlord tax returns

The self-assessment tax return deadlines in the UK are the same for landlords, self-employed individuals and those looking to claim income tax relief. The tax year runs from April 6th to April 5th the following year, and the tax return must be filed by January 31st following the end of the tax year. It is crucial to adhere to these deadlines to avoid penalties. You can learn more with our post detailing HMRC self assessment penalties for failing to file returns / pay tax on time.

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

Help to Save extended to April 2025

01/06/2023 by cigma, posted in Personal

HMRC has confirmed that plans to extend the Help to Save scheme by 18 months, until April 2025 have been confirmed.

The Help to Save scheme is intended to help those on low incomes to boost their savings. Eligible users of the scheme can save between £1 and £50 every calendar month and receive a 50% government bonus. The 50% bonus is payable at the end of the second and fourth years and is based on how much account holders have saved. The bonus is paid directly into the account holder’s chosen bank account.

This means that account holders on low incomes can receive a maximum bonus of up to £1,200 on savings of £2,400 for 4 years from the date the account is opened. The scheme is open to most working people who receive Working Tax Credits or Universal Credit.

Almost 360,000 people have opened Help to Save accounts since the scheme was launched in September 2018 and an additional 3 million individuals could still benefit from the savings scheme as a result of the extension.

The government also published a consultation on the scheme that is looking at how the scheme can be reformed and simplified.

Source:HM Revenue & Customs| 29-05-2023

top 5 reasons to register trusts with HMRC; london accountant; farringdon accountant

The Top 5 Reasons to Register Trusts for Your Assets

26/05/202326/05/2023 by , posted in Blogs, Inheritance Tax, Personal

If you are looking to protect your assets and minimise your tax liability, you will likely want to register trusts to hold them. In some cases, you may have to register trusts with HMRC. Trusts offer a range of benefits, from shielding your assets from creditors to providing a clear plan for distributing your wealth after you pass away. In this post, we’ll explore the top 5 benefits of registering trusts and why they may be a wise investment for your financial future.

1. Protect Your Assets from Creditors and Lawsuits

One of the biggest benefits of registering trusts for your assets is the protection they offer from creditors and lawsuits. When your assets are held in a trust, they are no longer considered your personal property and are therefore shielded from any legal action taken against you.

This can be especially important for business owners or individuals in high-risk professions, as it provides an added layer of protection for their hard-earned assets. Additionally, trusts can also protect your assets from being seized by the government in the event of a lawsuit or bankruptcy.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

2. Register trusts with HMRC to Minimize Estate Taxes and Probate Costs

Another major benefit of registering trusts for your assets is the potential to minimize estate taxes and probate costs. When assets are transferred through a trust, they are not subject to the same taxes and fees as assets transferred through a will. This can save your beneficiaries a significant amount of money and hassle in the long run.

Additionally, trusts can help ensure that your assets are distributed according to your wishes, without the need for lengthy and costly probate proceedings.

3. Register trusts to Maintain Control Over Your Assets

Registering trusts for your assets allows you to maintain control over them even after you pass away. With a trust, you can specify exactly how and when your assets will be distributed to your beneficiaries. This can be particularly important if you have minor children or beneficiaries with special needs who may not be able to manage their inheritance on their own.

By setting up a trust, you can ensure that your assets are used in the way you intended and that your beneficiaries are taken care of according to your wishes.

4. Ensure Privacy and Confidentiality

Registering trusts for your assets can also provide privacy and confidentiality. Unlike wills, which become public record after your death, trusts are private documents that are not subject to public scrutiny. This means that your personal and financial information will remain confidential and only be shared with your chosen beneficiaries and trustees.

Additionally, trusts can protect your assets from potential creditors or legal disputes, providing an added layer of privacy and security.

5. register trusts to Provide for Your Loved Ones After You're Gone

One of the top reasons to register trusts for your assets is to ensure that your loved ones are provided for after you pass away. By setting up a trust, you can designate specific beneficiaries to receive your assets and ensure that they are distributed according to your wishes. This can be especially important if you have minor children or family members with special needs who may require ongoing financial support.

A trust can provide for their needs and ensure that they are taken care of even after you’re gone.

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

Accountant Near Me or Remote Accountant

24/05/202325/05/2023 by , posted in Blogs, Business, Personal

Should I get an accountant near me or a remote accountant? This is what many small businesses are asking themselves lately. With life handing the whole world lemons (a.k.a COVID19), many industries have moved online just to be able to make it through various waves and lockdowns. While lockdowns are waning, industries seem to be sticking to the online space for convenience. But what would be best for you?

In this post we will be looking at the pro’s and cons of having an accountant near you and having a remote accountant so that you can make an informed decision for yourself and your business.

CIGMA has been operating in Wimbledon and surrounding areas, London for the last 6 years. However, when COVID hit, we, like most other businesses, branched out into online territory in order to meet our client’s needs. We currently serve as in-person accountants and remote accountants in the wider United Kingdom area. That’s why we have hands-on experience in the pro’s and con’s of both options.

Accountant near Me

When we talk about “Accountants Near Me” we refer to an accountant to whom you can conveniently and efficiently reach for in-person meetings and discussions regarding your tax, self-assessments and other accounting related affairs. We’ll be looking at all the pros and cons of having an accountant within driving distance from your business.

Advantages of Accountant Near You

There are two main advantages to having an accountant close to you. Let’s look at them below:

In-Person meetings

Having an accountant that you can meet with face-to-face can be easy, efficient and adds a personal touch to the service. A company where you get to shake the hand of the person handling your personal or small business accounting can give you a sense of comfort and relief. That’s why many people opt for having an accountant near them that they can schedule in-person meetings with.

Region-specific knowledge on taxes and business

The United Kingdom consists of four countries: England, Scotland, Wales and Northern Ireland. Each country in the United Kingdom has varying income tax rates to suit the needs of their population. Therefore, having an accountant in your region/country may benefit you as they will know all the ins and outs of the taxation system within your specific region.

Disadvantages of Accountant Near You

The disadvantages of having an accountant in your region is dependent on where you are based, and which accountants are available in your area. However, some potential disadvantages of looking for an accountant near you are discussed below:

Expertise

It is no secret that an accountant can save you A LOT of money if they are doing their job right. An accountant that has expertise within a specific industry will have the expertise and experience to know what to look out for in order to save you money and make informed recommendations.

However if you are in an area that does not have accountants that have expertise in your industry? That means you may be losing money when you don’t have to be. Sometimes restricting your accountant needs to a specific location may be a great disadvantage to you and your company.

Bad reviews / Turnaround times

Another pitfall to only utilising local accountants is that they might just not be the best accountants. While they are close to you, are they actually doing a good job? Perhaps your area only has accountants or accountancy firms with bad reviews, extended turnaround times and overall just lack the service delivery that you need.

Remote Accountants

Accountants that work with individuals and businesses remotely can work at the same, if not higher efficiency than accountants in your area. Let’s look at some of the advantages and disadvantages of hiring a remote accountant for your business or personal taxes.

Advantages of Remote Accountant

There are many advantages to looking for a remote accountant. Some of these advantages are discussed below:

Find the right fit

Finding an accountant is almost like looking for a business partner. These are people that you will trust with your financial wellbeing. That’s why it’s so important to find the right fit. Expanding your search for an accountant means you have a better chance of finding someone that just feels right for yourself and/or your business.

Flexible Times

Due to the nature of remote accounting firms in the United Kingdom, most accountants offer remote, secure portals to upload business documents. These portals do not rely on human working hours,which means you can upload your documents whenever it suits you. No hand delivering vital documents in person!

Efficiency

With remote accountants there’s no need for lengthy travel trips, copious amounts of small-talk or spending time outside of your home or office. It is efficient and convenient to have online meetings and interactions in the comfort of your own environment.

Competitive pricing

Accountants in your area just are not cutting it (the prices that is). Well, hiring a remote accountant may be your saving grace. When looking outside of your direct area, you can throw a wider net for more affordable services. Furthermore, you can get a company that offers a turnaround service (accounting package deals), with discounts available for handling all tax and registration affairs on your behalf. No need for 3 different service providers if you can have one to do it all!

Nationwide knowledge on taxes in different regions

If you are running a company that has offices in multiple countries of the United Kingdom, having a remote accountant may be the best thing for your company. Having an accountant that is knowledgeable on the tax rates for each region can help you and your business in following current legislation in your region.

Disadvantages of Remote Accountant

With the world moving online there isn’t much of a disadvantage for hiring a remote accountant to take care of your personal or business tax

Lack of In-person Meetings

In the case that it is a deal-breaker if you cannot meet your accountant in-person on a regular basis, unfortunately the remote option may not be suited for you. As remote accounts can work from anywhere in the United Kingdoms, having regular meetings in person may not be possible.

Cyber Security Concerns

If the company you are working with is not properly secured you may be faced with some cyber security issues. We highly recommend that you inquire regarding threat protection with a remote accounting firm.

How To Choose the Best Accountant for you and your business

As you can see, we are not for or against either options for your accounting needs. It is all about finding what works best for you. However, an accountant is vital to the growth of your business and it’s important that you do not make the decision lightly. We’ve compiled the 6 best tips to help you on your quest to find the best accountant for your business. Check them out here:

Location, location, location…

Does it matter to you whether your accountant is in the same city as you? If so, you have your first clue: You are looking to find someone local which narrows down your search significantly.

However, if you are keen on jumping on the “UK remote accounting services” train, then you have a wide pond to fish from.

Ensure certification

Unfortunately, the term “accountant” is not a protected term in the United Kingdom. What does this mean? That means many individuals and businesses may be making use of services from people that they think are qualified with years of training, when they actually are not qualified. That’s why it’s important that you separate those without certification from the certified and reliable accountants.

How to check Certification?

You can request proof of registration with a regulatory body in the United Kingdom. In the UK, there are four main regulatory bodies currently registering businesses:

A detailed post will follow to check each qualification.

Reviews and Feedback

Check the reviews and feedback from previous customers on their google business profile, social media platforms and third party sites. Do they not have any of those? That should be the first red flag to look into the company a little more closely to ensure that they are a legitimate service provider.

Experience and Expertise

In order to get the best results, you need to find the best accountant for you. Whether that accountant is based in your area or not. This means looking for an accountant that has a track record of experience and expertise. This can be done by asking questions and requesting reference from current or previous clients personally.

Ask basic accounting questions in the vetting process

Asking basic accounting questions will offer you valuable insight into two aspects of the accountant or company that you are working with: Firstly, it will assess whether they have basic accounting knowledge and secondly , it will assess their customer service. Having someone that can explain complicated procedures and ideas with patience can reveal their character. Having an accountant that is not willing to sit down and comb through the details in a way that you, the business owner or individual can understand to make informed decisions, is a clear sign that you do not want to create a professional relationship with the service provider.

Find someone that’s passionate about what they do

Finding someone that is passionate about what they are doing is always a good sign. Generally speaking, an accountant that is excited about possible savings for your company will do a much better job than someone that is just in it for the paycheck at the end of the month. So how do you determine whether or not they are passionate? It’s quite simple, you ask open-ended questions. Ask them to explain what they do. Someone who is passionate will most likely have a lot to say, be enthusiastic and highlight possible opportunities for growth and savings.

In conclusion, choosing an accountant is a very personal journey. Make sure that you know what you are looking for, and do your research to make a decision!

Cost of living payments 2023-24

11/05/2023 by cigma, posted in Personal

The Cost of Living support package has been designed to help over 8 million households in receipt of mean tested benefits. The details for Cost of Living Payments due in the 2023-24 tax year have been published.

Eligible recipients will receive up to 3 Cost of Living Payments of £301, £300 and £299. This includes those receiving pension credit. These payments will be made separately from other benefit payments.

The total payments expected are as follows:

£301 paid between 25 April 2023 and 17 May 2023 for most people on DWP benefits
£301 paid between 2 and 9 May 2023 for most people on tax credits and no other low income benefits
£300 to be paid during autumn 2023 for most people
£299 to be paid during spring 2024 for most people

There are also additional payments that may be made such as a Disability Cost of Living Payment of £150 that is expected to be paid to qualifying individuals during the summer.

An additional one-off payment of £150 or £300 will be paid to pensioners during winter 2023-24. The Winter Fuel Payment is provided by the government to help older people keep warm during winter. The amount a pensioner will receive depends on a number of factors including their age and the age of other people living with them.

HMRC’s guidance on the payments has been updated to clarify that claimants will not get a Cost of Living Payment for a low income benefit if their benefit is reduced to £0 because they received a ‘sanction’. They may still receive a Cost of Living Payment if they had a 'hardship payment' because they received a 'sanction'.

Source:Department for Work & Pensions| 08-05-2023

LONDON accountant; self assessment payment plan; tax deadline

How to Set Up a Self Assessment Payment Plan with HMRC

03/05/202305/05/2023 by , posted in Blogs, Income Tax, Personal

As a UK taxpayer, it is important to ensure that your taxes are paid on time and in full. However, a Self Assessment payment plan can help you stay tax compliant when you are unable to pay your personal taxes in one lump sum. In this blog post, we will explore how UK taxpayers can set up a tax payment plan with HMRC, and the consequences for late payment and tax avoidance.

What is a self assessment payment plan?

A tax payment plan is an agreement between a taxpayer and HMRC that allows the taxpayer to spread their tax payments over a longer period. This can be helpful if you are unable to pay your taxes in one go, as it can provide you with more time to manage your finances. However, it is important to note you will have to contact HMRC and arrange a payment plan before the original payment deadline.

HMRC also has specific schemes in place for disclosing income which should have been taxed but which was not declared. To learn more, you can read our posts on the Let Property Campaign for undeclared rental income and the Worldwide Disclosure Facility for offshore tax liabilities.

How much will I pay on a self assessment payment plan?

The amount you will be asked to pay each month depends on how much you have left after your fixed expenses like food and rent. It is common for HMRC to ask you to repay half of what you still owe each month, leading to decreasing payment amounts each month.

There is no limit on how long a payment plan can last. However, you are incentivised to repay as quickly as possible to reduce the interest being paid on top of the outstanding tax. HMRC charges interest on late payments at base rate plus 2.5%.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Who is eligible for a self assessment payment plan?

Both individuals who owe ta from Self Assessment and employers’ who owe PAYE contributions can set up self assessment payment plans. However, they each have their own set of requirements.

If you owe tax from Self Assessment

You will only be able to set up a payment plan if you:

Have filed your latest tax return.
Owe less than £30,000.
Are within 60 days of the original payment deadline.
Do not have any other payment plans or debts with HMRC.

If you owe employers’ PAYE contributions

You will only be able to set up a payment plan if you:

Owe less than £15,000.
Are within 35 days of the original payment deadline.
Plan to pay off your debt within the next 6 months.
Do not have any other payment plans or debts with HMRC.
Have submitted any employers’ PAYE submissions and Construction Industry Scheme (CIS) returns that are due.

What do you need to set up a tax payment plan?

To set up a tax payment plan with HMRC, you will need to provide certain information. This includes:

Your tax reference number (which can be found on previous tax returns or other correspondence from HMRC).
The amount of tax you owe, including any interest and penalties.
Details of your income and expenses, including any other debts you have.
Your bank details.

You will also need to provide a reason why you are unable to pay your taxes in one lump sum, such as financial difficulties or unexpected expenses.

What are the consequences of not paying tax owed to HMRC?

If you do not pay your taxes owed to HMRC, you may face serious consequences. These can include:

Interest and penalties being added to the amount you owe.
Legal action being taken against you, including the possibility of court action and seizure of assets.
Your credit rating being affected.
Difficulty obtaining credit or loans in the future.

HMRC has several ways they will use to recover outstanding tax, such as:

Ask a debt collection agency to collect the money.
Collect what you owe directly from your wages or any monthly pension payments you get.
Take things you own and sell them (if you live in England, Wales or Northern Ireland).
Take money directly from your bank account or building society savings (if you live in England, Wales or Northern Ireland).
Take you to court.
Make you bankrupt.
Close down your company if the tax is a business tax.

It is therefore important to ensure that you pay your taxes on time and in full. Failing that, it is essential to reach out to HMRC before the payment deadline to arrange a payment plan and avoid unnecessary penalties.

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

The Ultimate Guide to Personal Tax in the UK

02/05/202304/05/2023 by , posted in Blogs, FAQ, Income Tax, National Insurance, Personal

Navigating personal tax in the UK can be overwhelming, but it doesn’t have to be. Our comprehensive guide breaks down the process and provides helpful tips for filing your personal tax return. From understanding tax codes to claiming deductions, we’ve got you covered.

Understand Your Tax Obligations

Before you can file your personal tax return in the UK, it’s essential to understand your tax obligations. This includes knowing your tax code, which your employer uses to calculate how much tax should be deducted from your pay. You should also be aware of any taxable income you have, such as rental income or self-employment earnings, and any deductions or allowances you may be eligible for. Taking the time to understand your tax obligations can help ensure you file an accurate and complete tax return.

Let’s have a look at what you’re required to pay taxes on as a UK resident: your income, savings, and investments.

Income Tax

Income tax is a tax on your earnings, including wages, salary, and self-employed income. The amount you pay is based on your earnings and tax code. There are a few things to take note of when looking at your income tax, including all your forms of income, your tax-free personal allowance and the different tax bands.

Personal tax Allowance

Everyone has a personal allowance, which is the amount of money you can earn before you start paying tax. As of April 2023, the current personal allowance is £12,570.

It is important to note that the Personal Allowance is reduced by £1 for every £2 earned between £100,000 and £125,140. In essence, this means that those earning over £100,000 in the Higher rate band (explained below) will be paying tax on a larger portion of their income, and those in the Additional rate band have no Personal Allowance and pay a 45% tax on all of their income.

TAX BANDS

The amount of income tax you pay depends on how much you earn. There are different tax bands for different levels of income, which are:

Basic rate: 20% on earnings between £12,570 and £50,270
Higher rate: 40% on earnings between £50,271 and £150,000
Additional rate: 45% on earnings over £150,000

Importantly, as explained above, individuals with taxable incomes over £100,000 lose £1 of their tax-free personal allowance for every £2 of income, and those in the Additional rate band have zero tax-free personal allowance.

PERSONAL Tax Codes

Your tax code is used by your employer or pension provider to calculate how much income tax to deduct from your earnings. It’s based on your personal allowance and any other allowances or deductions you’re entitled to. The most common tax code is 1257L, usually for individuals with one source of income and who are eligible for the full personal allowance.

Where can I find my Tax Code?

You can find your tax code by registering with the HMRC and checking your tax code online. Alternatively, you can also find your tax code on your payslips. Payslip format differs from company to company, but it can usually be found at the top right of your payslip next to your name.

To check whether you are on the correct tax code, or get a better understanding of what your tax code means, you can read our guide on tax codes blog here: Understanding Tax Codes.

National Insurance Contributions

National Insurance contributions (NICs) are payments made by employees, self-employed individuals, and employers to fund state benefits, such as the state pension, unemployment benefits, and healthcare. NICs are calculated on your earnings, and there are different rates depending on your employment status and earning. These contributions are deducted from your earnings and paid to HM Revenue and Customs (HMRC) on a regular basis.

Who Needs to Make National Insurance Contributions?

In the UK, most people who are over 16 and earn over a certain amount of money need to pay National Insurance contributions (NICs). This includes:

Employees earning more than £184 per week
Self-employed people with profits over £6,515 per year
People who earn money from renting out property
People who receive certain benefits or tax credits above a certain level
Some people who live abroad but work in the UK
People who are over 16 and under the State Pension age who have income from savings or investments above a certain level.

There are some exceptions to this, such as people who are over State Pension age (66 years), people who earn less than the minimum threshold, and some people who are self-employed but have low profits.

NIC bands in the uk

In the UK, National Insurance contributions (NICs) are divided into different brackets, depending on how much you earn. The current NICs brackets for the 2022-23 tax year are as follows:

If you earn less than £184 per week, you do not need to pay NICs.
If you earn between £184 and £967 per week, you pay NICs at a rate of 12% on earnings above £184.
If you earn more than £967 per week, you pay NICs at a rate of 2% on earnings above this amount.

For self-employed individuals, the brackets are slightly different, as NICs are based on your profits rather than your earnings. The current NICs brackets for the self-employed for the 2022-23 tax year are:

If your profits are less than £6,515 per year, you do not need to pay NICs.
If your profits are between £6,515 and £9,568 per year, you pay NICs at a rate of 9% on profits above the lower limit.
If your profits are over £9,568 per year, you pay NICs at a rate of 2% on profits above this amount.

Where Can I find my National insurance number?

You can find your National Insurance number:

on your payslip
on your P60
on letters about your tax, pension or benefits
in the National Insurance section of your personal tax account

You can apply for a National Insurance number if you do not have one or find your National Insurance number if you’ve lost it.

Important Documentation and Forms for Personal Tax

Whether you are a sole trader, a PAYE employee or a director, there are a few things you should keep track of during the year to make your personal tax returns effortless and efficient.

PAYE Documentation and Forms

As a PAYE employee, there are a few things to take into account when completing a self-assessment. The “P” range of forms are important for you to keep track of all your expenses and benefits, as well as the codes you need to be aware of. A brief breakdown of these forms:

P800

You may receive a P800 form, also known as a ‘tax calculation letter’, if HMRC believes you have paid the wrong amount of tax – either too much or too little

P45

When you stop working at a job, your employer must supply you with a P45 form. This form details how much tax you have paid on your salary so far for that tax year. Tax years run from 6 April to 5 April the following year.

P60

The P60 form details how much tax you paid on your salary via PAYE. If you have multiple jobs, you will get a P60 from each of them. If you work for an employer on 5 April, that employer must provide you with your P60 by May 31st of that year.

P11D

P11D forms are used to report your ‘Benefits in Kind’ (or simply ‘benefits’) to HMRC. Benefits are anything given to you by an employer that has monetary value and is not wholly necessary for your work.

For a more detailed view of the PAYE forms, please see our guide: What are P800, P45, P60 and, P11D Forms?

Other important things to take note of are expenses that can offer tax relief benefits. You can read more about which expenses you can claim as a PAYE Employee in the following post: Save on Taxes – Tax Exemptions in the UK.

Sole Trader / Sole Proprietor / Entrepreneur

As a sole trader, you are trading as a business which means you may have additional business expenses and income that need to be listed. As a sole trader, there are many expenses that you can claim. See our guide here: What Expenses can I Claim for As Self Employed?

At CIGMA we love working with small businesses and helping them in the most tax-efficient way. We also want to make it easy for entrepreneurs to manage their taxes which is why we’ve created a bookkeeping spreadsheet to assist you in keeping your information in an orderly manner:

Download Our Free Bookkeeping Spreadsheet:

When Do You Need To Submit Personal Tax Returns to the HMRC?

There are clear guidelines as to who needs to submit a personal tax return and who should not. We’ve created an in-depth guide that you can read here: Do I Need To Submit a Self-Assessment?

However, in short, anyone meeting one or more of the following criteria is required by law to submit a tax return:

Taxable income was over £100,000.
Have a rental income of over £1,000.
Received untaxed income over £2,500 (example: tips or commission).
Savings or Investment income over £10,000.
State pension as your only source of income and was over your personal allowance of £12,750 .
Sole proprietor earning over £1,000.
Earning any type of foreign income.
Claiming child benefit and your or your partner’s income exceeds £50,000.
You are a trustee of a trust or registered pension scheme.

How Do I Pay Taxes in the UK?

In the United Kingdom, individuals who meet the above-mentioned criteria must complete and submit a self-assessment to the HMRC. Never filed a self-assessment before? Not a problem. We’ve created a detailed guide to submitting your self-assessment here: Complete your Self Assessment Like A Pro.

A self-assessment takes into account your tax code, NIC, expenses and income to see whether you are eligible for a tax rebate. Tax rebates are usually paid within 5 days of your self-assessment being approved by the HMRC.

To have the best chance of receiving a tax rebate, it is advised to make use of a tax return specialist. At CIGMA we specialise in tax returns so we complete our client’s self-assessments by taking everything into consideration so that you have the best possible chance to get a tax rebate.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

tax code in uk; london accountant; tax code 1257l; tax code br

Understanding the tax code in UK: 1257L, BR, 0t, and more

25/04/202325/04/2023 by , posted in Blogs, FAQ, Income Tax, Personal

Taxes can be a complicated subject, and your UK tax code can be particularly tricky. However, it’s important to have a basic understanding of your tax code and what it means, as they can significantly impact the amount of tax you pay. In this blog post, we’ll provide a comprehensive guide to the tax code in UK including common categories such as the tax code 1257L, the tax code BR, and the tax code 0T.

What are tax codes and what is a common tax code in UK?

A tax code is a combination of letters and numbers that HM Revenue and Customs (HMRC) use to calculate how much income tax should be deducted from your salary or pension. Tax codes are based on your personal allowance, which is the amount of money you can earn each year before you start paying income tax.

Tax codes affect how much tax you pay, so it’s important to make sure they’re correct. If your tax code is wrong, you may end up paying too much or too little tax. If you’re paying too much tax, you may be able to claim a refund, but if you’re paying too little tax, you’ll need to pay the extra amount.

The most common tax code in the UK is 1257L.

What is the tax code 1257L?

This is the most common tax code in UK. The first part of the code, 1257, represents your tax-free personal allowance, which is currently £12,570. The letter at the end of the code, L, represents your tax status, and means that you have a tax-free personal allowance and income above that is taxed at the basic rate of 20%.

This is used for most individuals, who have only one job or pension as their form of income.

What is the tax code BR?

BR is a tax code which means that you pay tax on all of your income from that particular job. You will usually encounter this code when you have more than one job or pension.

Another common tax code is D0. This tax code means that you’re a higher rate taxpayer, and all of your income is taxed at the higher rate of 40%. You don’t get a tax-free personal allowance with this tax code.

What does a tax code with T mean?

A tax code with T in it usually means that other calculations are needed to work out your tax-free personal allowance. It may also mean that you have used up your personal allowance, such as in the codes S0T or C0T.

What is the tax code 0t?

This code means that your tax-free personal allowance has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code.

In the first case, your income will now be taxed as you have gone over your tax-free allowance. For most people seeing this code, the tax will be at the basic rate of 20%.

In the second case, you will have to give your employer the P45 form from your previous job, or fill out a starter checklist. The starter checklist is a standard form made available by HMRC for employers to work out your correct tax code.

What are the current tax codes in the UK?

Below is the full list of tax codes and their meanings:

L	You’re entitled to the standard tax-free Personal Allowance.
M	Marriage Allowance : you’ve received a transfer of 10% of your partner’s Personal Allowance.
N	Marriage Allowance : you’ve transferred 10% of your Personal Allowance to your partner.
T	Your tax code includes other calculations to work out your Personal Allowance.
0T	Your Personal Allowance has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code.
BR	All your income from this job or pension is taxed at the basic rate (usually used if you’ve got more than one job or pension).
D0	All your income from this job or pension is taxed at the higher rate (usually used if you’ve got more than one job or pension).
D1	All your income from this job or pension is taxed at the additional rate (usually used if you’ve got more than one job or pension).
NT	You’re not paying any tax on this income.
S	Your income or pension is taxed using the rates in Scotland.
S0T	Your Personal Allowance (Scotland) has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code.
SBR	All your income from this job or pension is taxed at the basic rate in Scotland (usually used if you’ve got more than one job or pension).
SD0	All your income from this job or pension is taxed at the intermediate rate in Scotland (usually used if you’ve got more than one job or pension).
SD1	All your income from this job or pension is taxed at the higher rate in Scotland (usually used if you’ve got more than one job or pension).
SD2	All your income from this job or pension is taxed at the top rate in Scotland (usually used if you’ve got more than one job or pension).
C	Your income or pension is taxed using the rates in Wales.
C0T	Your Personal Allowance (Wales) has been used up, or you’ve started a new job and your employer does not have the details they need to give you a tax code.
CBR	All your income from this job or pension is taxed at the basic rate in Wales (usually used if you’ve got more than one job or pension).
CD0	All your income from this job or pension is taxed at the higher rate in Wales (usually used if you’ve got more than one job or pension).
CD1	All your income from this job or pension is taxed at the additional rate in Wales (usually used if you’ve got more than one job or pension).

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

What if my tax code starts with ‘k’?

Tax codes with ‘K’ at the beginning mean you have income that is not being taxed another way and it’s worth more than your tax-free allowance.

For most people, this happens when you’re:

Paying tax you owe from a previous year through your wages or pension.
Getting benefits you need to pay tax on – these can be state benefits or company benefits, which you may declare using a P11D form.
Your employer or pension provider takes the tax due on the income that has not been taxed from your wages or pension – even if another organisation is paying the untaxed income to you.

Note that employers and pension providers cannot take more than half your pre-tax wages or pension when using a K tax code.

Emergency Tax Codes

‘W1’, ‘M1’ and ‘X’ are known as emergency tax codes. They mean that you’ll pay tax on all your income above the basic Personal Allowance.

You may be put on an emergency tax code if HMRC does not get your income details in time after a change in circumstances such as:

a new job
working for an employer after being self-employed
getting company benefits or the State Pension

Emergency tax codes are temporary. HMRC will usually update your tax code when you or your employer give them your correct details. If your change in circumstances means you have not paid the right amount of tax, you’ll stay on the emergency tax code until you’ve paid the correct tax for the year.

Where Do I Find My Tax Code?

You can find your tax code on your payslip, your P45 if you’ve left your job, or your P60 at the end of the tax year. You can also check your tax code online using HMRC’s online services. If you’re unsure about your tax code or think it might be wrong, you should contact HMRC to check.

When Does My Tax Code Change?

Your tax code can change for several reasons, including changes to your personal circumstances, such as getting married or starting a new job. It can also change if you receive benefits in kind from your employer, such as a company car or private healthcare. HMRC will notify you of any changes to your tax code, and you should check that it’s correct.

What if your tax code is wrong?

If your tax code is wrong, you may end up paying too much or too little tax. If you suspect that your tax code is incorrect, you should check it against your most recent payslip or P60 to see if the correct code has been applied. You can also check your tax code online using HMRC’s online services.

If you find that your tax code is wrong, you should contact HMRC as soon as possible to correct it. You can do this by calling the tax helpline or using the online services. You may need to provide additional information or evidence to support your claim, such as a P45 or P60.

Get help from a professional!

Our CIMA-registered accountants at CIGMA Accounting be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

Pensioner Cost of Living Payment 2023-24

30/03/2023 by cigma, posted in Personal

The Cost of Living support package has been designed to help over 8 million households in receipt of means tested benefits. The details for Cost of Living payments due in the 2023-24 tax year have been published.

Eligible recipients will receive up to three Cost of Living Payments of £301, £300 and £299. This includes those receiving pension credit and these payments will be made separately from other benefit payments.

The payments are expected to be made as follows:

£301 paid between 25 April 2023 and 17 May 2023 for most people on DWP benefits
£300 paid during autumn 2023 for most people
£299 paid during spring 2024 for most people

HMRC’s guidance will be updated with the qualifying dates for the payment when they are published. Pensioners will be sent a letter in October or November telling them how much Winter Fuel Payment they will get if they are eligible. Any money pensioners receive for the Winter Fuel Payment is tax-free and will not affect any other benefits they may receive. The payment is not means-tested.

Source:Department for Work & Pensions| 27-03-2023

Spring Budget 2023 – Childcare changes

16/03/2023 by cigma, posted in Personal

One of the main areas targeted by the Spring Budget was changes to childcare. Billed as a revolution in childcare, the Chancellor, Jeremy Hunt, said that he wanted to reform the childcare system to help more than a million women come back to work.

The 30-hours per week of funded childcare for eligible 3 to 4-year-olds in England will be extended to children from 9-months of age. This reform will be introduced in stages starting with the addition of 15-hours of free care for 2-year-olds from April 2024. The 15-hours will be extended to all children from 9-months from September 2024 before increasing to 30-hours from September 2025.

All schools will also be expected to offer breakfast and 'wraparound' clubs by September 2026 so all school-age parents can drop-off and collect their children between 8 am and 6 pm.

Universal credit provision on childcare is also being improved. This includes the government paying the upfront payment necessary to access subsidised childcare for any parents who are moving into work or want to increase their hours.

There will also be an increase in the maximum they can claim to £951 for one child and £1,630 for two children, an increase of almost 50%.

The Chancellor also announced an increase in the funding paid to nurseries providing free childcare by £204m from this September rising to £288m next year. The government will also change the minimum staff-to-child ratios from 1:4 to 1:5 for two-year-olds in England (the same as Scotland). The new ratios will remain optional.

Source:HM Treasury| 15-03-2023

do i need to submit a self assessment tax return; london accountant

Do I need to file a Self Assessment tax return?

15/03/202324/03/2023 by , posted in Blogs, FAQ, Income Tax, Personal

Income taxes and National Insurance contributions accounted for 43% of the UK government’s funding in 2021/22, totaling £230 billion and £161 billion respectively.

Much of this is collected from employees via PAYE.

However, many individuals will need to submit Self Assessment tax returns if they have more complex sources of income.

Why do I need to submit a Self Assessment tax return?

Most individuals pay income tax via Pay As You Earn (PAYE). This means that the income tax they owe is automatically deducted from their pay before they receive it.

Since many people only have one job and source of income, making sure their PAYE deductions are correct is all they have to do to be tax compliant.

However, if you are getting income from untaxed sources, such as investment income or being self-employed, you will have to declare this to HMRC and pay tax on it. Aside from income tax, you will also need to pay National Insurance contributions on this income.

Self Assessment tax returns are the way you declare your untaxed income to HMRC and calculate what you owe.

Importantly though, Self Assessment is also how you claim Income Tax relief for job expenses that come out of your own pocket, or for pension contributions and charity donations.

The easiest way to do this is online.

How do I know if I must submit a Self Assessment tax return?

You must submit a Self Assessment tax return if any of the following applies:

You were self-employed and earned more than £1000 before tax deductions.
You were a partner in a business partnership.
You earned £100,000 or more during the tax year.
You earned untaxed income such as from rentals or investments.
You want to claim income tax relief.

When can I claim income tax relief?

You can claim income tax relief when you have to use your own money to buy things necessary for your work.

You cannot claim relief if your employer gives you all the money back or gives you an alternative (for example, you were given a phone but wanted a different one).

The amount of relief depends on the rate at which you pay tax, and the value of the expense. If you are taxed at 20%, you can deduct 20% of the expenses’ value from your taxable income.

For example, if you pay 20% income tax and you had to spend £100 on fuel for work trips, you could deduct £20 from your total taxable income.

You can claim tax relief on the following work expenses:

Costs involved in working from home.
Cleaning, repairing, or replacing a uniform or specialist clothing or tools.
Using your car for work. For cars, you receive tax relief at a rate of 45p per mile for the first 10,000 miles and at 25p thereafter.
Professional membership fees.
Business trip costs, which does not include travelling to and from your home and your regular place of work.
Substantial equipment such as computers or machinery. You can usually get tax relief equal to the full value of these items as they qualify as a capital allowance.

Pension contributions and charity donations

You get tax relief on private pension contributions worth up to 100% of your annual earnings. This usually happens automatically when your employer takes your pension out of your salary before deducting income tax, or if your pension provider claims it as a tax relief and adds it to your pension pot.

If this tax relief is not done automatically, or if you pay income tax at rates higher than 20%, you can claim this relief on your Self Assessment tax return.

You can also claim tax relief through Self Assessment for charity donations made through Gift Aid or Payroll Giving.

What income counts as untaxed?

You will have to declare any income through Self Assessment that is not tax-free, such as the first £1000 of self-employment income or rental income, and which has not already been taxed.

This includes:

Money from renting out property.
Tips and commission.
Income from savings, investments and dividends.
Foreign income.
Some COVID-19 grants.

How do I submit my Self Assessment tax return?

You can have a look at our tips for submitting your Self Assessment, the 2023 submission due dates, the potential penalties, and HMRC’s plans to completely digitise the process.

If you need the help with filing your Self Assessment tax return, our CIMA-registered chartered accountants would be happy to assist you.

Fill in the form below to get a free quote.

What are PAYE forms; P800; P11D; london accountant

What are P800, P45, P60, and P11D forms?

09/03/202315/03/2023 by , posted in Blogs, FAQ, Income Tax, Payroll, Personal, Uncategorised

The P800, P45, P60, and P11D forms are used for the PAYE scheme.

Pay As You Earn, or PAYE, is the process whereby the taxes you owe on your income are taken off your pay before you receive it. This is done by your employer, who pays that money to HMRC.

If you pay taxes via PAYE and your only income is a single salary, it is unlikely that you will have to submit a Self Assessment tax return. However, you will still encounter several forms which are important for you to keep track of and understand to make sure you, or your employer on your behalf, are paying the right amount of tax.

P45

P45 forms are important for your new employer to work out how much tax should be deducted from your salary.

The P45 has four parts:

Part 1, which your employer sends to HMRC.
Part 1A, which you should keep in your own records.
Part 2 and 3, which you give to your new employer (or Jobcentre Plus if you are not working).

what if i cannot get a p45 from my employer?

If you cannot get a P45 from your previous job, or if you are taking on a second job, your new employer will have to determine how much tax you should be paying.

Employers have to get information from you about any other jobs you work, any student loans you have outstanding, and any benefits that you receive. They may ask you to fill in HMRC’s own ‘starter checklist’ that asks for all the details needed for PAYE.

P60

You’ll need your P60 to prove how much tax you’ve paid on your salary, for things like:

Claiming back overpaid tax.
Applying for tax credits.
As proof of your income if you apply for a loan or a mortgage.

What if I do not get a P60 from my employer?

If you are not able to get a P60 form from your employer, you can also use HMRC’s online ‘personal tax account’ system to get the details that would be on the P60. You can also use this service to check your State Pension, manage your tax credits, and claim a tax refund.

P11D

Using the company car to travel from the office to a work site is a necessary business expense not a benefit for you, the employee. Free meals at work are not strictly necessary, and count as a benefit.

Why must I declare my work benefits?

It is important to tax employee benefits, as they would otherwise just become a way to get around income tax. However, there are many company benefits which are considered tax-free, including meals, a mobile phone, or workplace parking.

You will need to pay tax on benefits like accommodation, medical insurance, and private pensions. The P11D form is what you will need to fill out to tell HMRC about the benefits you receive.

Paying tax on benefits involves working out how much a benefit is worth in cash. Your employer must do this and give those details to you. You may not need to fill in a P11D if your employer already takes the tax owed from benefits out of your salary.

P800

You will receive a P800 form, also known as a ‘tax calculation letter’, if HMRC believes you have paid the wrong amount of tax – either too much or too little.

If you are due a refund, you must claim it online within 21 days or you will be sent a cheque in the mail.

If you owe tax, HMRC will automatically collect this over the course of the next year, usually through your employer and the PAYE amounts taken off your salary.

What if I receive a simple assessment letter?

If you owe more than £3,000, have to pay tax on your State Pension, or owe tax that cannot be taken off your salary, you will receive a Simple Assessment Letter instead of the P800.

You will have to pay this amount by 31 January, or within 3 months if you received the letter after 31 October.

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day.

Tax-Free Childcare scheme supports UK parents

08/03/202309/11/2023 by , posted in General, HMRC notices, Personal

Tax-Free Childcare scheme supports UK parents

HMRC has released a reminder to parents about the Tax-Free Childcare (TFC) scheme intended to help pay for February half-term holiday clubs and wraparound care during school terms.

The TFC scheme provides an account which parents can pay into regularly to later use to pay registered childcare providers. For every £8 contributed by parents an additional £2 top up payment will be funded by the Government up to a maximum total of £10,000 per child per year.

This will give parents an annual savings of up to £2,000 per child (and up to £4,000 for disabled children until the age of 17) in childcare costs.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Who is eligible for the scheme?

The TFC scheme is open to all parents with children aged up to 11 (17 for those with certain disabilities), including those who are self-employed or on minimum wage. In order to be eligible, parents will have to be in work at least 16 hours per week. If either parent earns more than £100,000 neither parent can use the scheme.

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day.

Should you buy a car through your company?

03/03/202308/03/2023 by cigma, posted in Blogs, FAQ, General, Personal

Wondering whether you should buy a car through your company or buy it personally? Lets look at the options and what their benefits and cons are.

Buying a car personally

The vehicle cost is non-deductible from tax.

Business trip fuel paid for by the company is tax-free as long as it remains under 45p/mile for the first 10,000 miles annually, then 25p/mile thereafter. A company paying for private fuel use creates a Benefit in Kind, described below, and is often not tax efficient.

Buying a car through a company

The company can deduct a portion of the car’s value from their taxable profit as a kind of Capital Allowance.

However, this only applies if the vehicle is used ONLY for business trips. This does NOT include commuting to and from work, which is considered private use. Company ‘pool’ cars are a valid business use. In these cases, the car is kept on site and used by multiple employees.

The amount deductible depends on the CO2 emissions for the vehicle. For electric vehicles (or any vehicle with CO2 emissions under 96g/km) you can claim 100% of the vehicle’s value immediately in the first year.

For other vehicles, you can claim either 8% (for cars with CO2 emissions above above 130g/km) or 18% (for cars with CO2 emissions between between 96g/km and 130g/km) of the vehicle’s value every year the company still owns the vehicle.

This means that you can eventually deduct the full value of the vehicle from the company’s taxable income, but it would take either 6 or 12 full years to eventually do so.

Company cars for personal use

However, if the car is used for ANY non-business reasons, this will create a taxable benefit for the employee (which may be you, in this case). This is called a Benefit in Kind, and like other employee benefits, are added to your total income when considering how much Income Tax must be paid.

This BiK is calculated by taking the car’s value (its full list price, this does not change even if you bought second hand), and multiplying it by the “appropriate percentage”, which depends on the car’s CO2 emissions. You can find the full table here. Then reduce this amount by your income tax percentage (usually either 20% or 40%) to find how much extra tax you will have to pay.

Another factor to take into consideration, is what percentage of time the vehicle is used for business purposes, and what percentage is used for personal use. This information can be supplied by the company as you will only pay additional tax on the percentage of time you used the vehicle for personal use.

If you buy a car through a company and use it for personal use 100% of the time the following example applies:
If your BIK percentage was 26%, as your petrol vehicle falls into the 105-109 CO2 bracket, then you’d multiply 26% by the list price of your car. For this example, we’ll use £20,000. This comes to a BiK value of £5,200. Assuming your income tax bracket is 20%, this would mean paying an extra £1,040 per year.

However, if this use was split 40% (personal use) and 60% (business use), that means that you will only be paying an additional £416 (40% of the total £1,040) tax.

In addition, just as a company must pay National Insurance according to an employee’s income, the company will now also have to pay 13.8% of this new BiK value in Employers Class 1A National Insurance.

Fuel costs for personal use

If the company pays for private fuel expenses, this will create a separate Fuel BiK. This is calculated by taking the fixed amount of £24,500 and multiplying it by the “appropriate percentage”. Just like Car BiK, this depends on the vehicle’s C02 emissions. You can find the full tables below or view it on the HMRC website here. This Fuel BiK is then also added to your personal taxable income.

Petrol powered and hybrid powered cars for the tax year 2022 to 2023

CO2 emissions (grams per km)	Electric mileage range	NEDC %	WLTP %
0	—	2	2
1 to 50	130 and above	2	2
1 to 50	70 to 129	5	5
1 to 50	40 to 69	8	8
1 to 50	30 to 39	12	12
1 to 50	less than 30	14	14
51 to 54	—	15	15
55 to 59	—	16	16
60 to 64	—	17	17
65 to 69	—	18	18
70 to 74	—	19	19
75 to 79	—	20	20
80 to 84	—	21	21
85 to 89	—	22	22
90 to 94	—	23	23
95 to 99	—	24	24
100 to 104	—	25	25
105 to 109	—	26	26
110 to 114	—	27	27
115 to 119	—	28	28
120 to 124	—	29	29
125 to 129	—	30	30
130 to 134	—	31	31
135 to 139	—	32	32
140 to 144	—	33	33
145 to 149	—	34	34
150 to 154	—	35	35
155 to 159	—	36	36
160 to 164	—	37	37
165 to 169	—	37	37
170 and above	—	37	37

Petrol powered and hybrid powered cars for the tax year 2021 to 2022

CO2 emissions (grams per km)	Electric mileage range	NEDC %	WLTP %
0	—	1	1
1 to 50	130 and above	2	1
1 to 50	70 to 129	5	4
1 to 50	40 to 69	8	7
1 to 50	30 to 39	12	11
1 to 50	less than 30	14	13
51 to 54	—	15	14
55 to 59	—	16	15
60 to 64	—	17	16
65 to 69	—	18	17
70 to 74	—	19	18
75 to 79	—	20	19
80 to 84	—	21	20
85 to 89	—	22	21
90 to 94	—	23	22
95 to 99	—	24	23
100 to 104	—	25	24
105 to 109	—	26	25
110 to 114	—	27	26
115 to 119	—	28	27
120 to 124	—	29	28
125 to 129	—	30	29
130 to 134	—	31	30
135 to 139	—	32	31
140 to 144	—	33	32
145 to 149	—	34	33
150 to 154	—	35	34
155 to 159	—	36	35
160 to 164	—	37	36
165 to 169	—	37	37
170 and above	—	37	37

Petrol powered and hybrid powered cars for the tax year 2020 to 2021

CO2 emissions (grams per km)	Electric mileage range	NEDC %	WLTP %
0 to 0	—	0	0
1 to 50	130 and above	2	0
1 to 50	70 to 129	5	3
1 to 50	40 to 69	8	6
1 to 50	30 to 39	12	10
1 to 50	less than 30	14	12
51 to 54	—	15	13
55 to 59	—	16	14
60 to 64	—	17	15
65 to 69	—	18	16
70 to 74	—	19	17
75 to 79	—	20	18
80 to 84	—	21	19
85 to 89	—	22	20
90 to 94	—	23	21
95	—	24	22
100	—	25	23
105	—	26	24
110	—	27	25
115	—	28	26
120	—	29	27
125	—	30	28
130	—	31	29
135	—	32	30
140	—	33	31
145	—	34	32
150	—	35	33
155	—	36	34
160	—	37	35
165	—	37	36
170 and above	—	37	37

Petrol powered cars from 6 April 2017 to 5 April 2020

CO2 emissions (grams per km)	2017 to 2018	2018 to 2019	2019 to 2020
Zero	9%	13%	16%
1 to 50	9%	13%	16%
51 to 75	13%	16%	19%
76 to 94	17%	19%	22%
95	18%	20%	23%
100	19%	21%	24%
105	20%	22%	25%
110	21%	23%	26%
115	22%	24%	27%
120	23%	25%	28%
125	24%	26%	29%
130	25%	27%	30%
135	26%	28%	31%
140	27%	29%	32%
145	28%	30%	33%
150	29%	31%	34%
155	30%	32%	35%
160	31%	33%	36%
165	32%	34%	37%
170	33%	35%	37%
175	34%	36%	37%
180	35%	37%	37%
185	36%	37%	37%
190	37%	37%	37%
195	37%	37%	37%
200	37%	37%	37%
205	37%	37%	37%
210	37%	37%	37%
215	37%	37%	37%
220 and above	37%	37%	37%

If your BIK percentage was 26%, as your petrol vehicle falls into the 105-109 CO2 bracket, then you’d multiply 26% by 24,500 to reach £6,370.

Reduce the £6,370 figure by multiplying it by your tax margin, which is typically either 20% or 40%.

£6,370 x 20% = £1274 tax payable.

If you are spending under £1170 a year on fuel then the car fuel benefit is not worth it, as you’d still have to pay the calculated amount. This is even worse if you are also the company owner, as you have to pay for this fuel, and it is not tax deductible. It also means that the company cannot reclaim the full VAT amount on this fuel either.

Buying a van through a company

Vans purchased by a limited company are considered the same as equipment and machinery. This means the company can deduct the full value of the van from its taxable income in the year it was purchased.

In addition, vans have fixed BiK amounts, for both the vans themselves and the fuel they use. These amounts are £3,600 for the van BiK, and £688 for the fuel BiK. These can be reduced further if you can prove that the employee cannot use the van for 30 days in a row, and if more than one employee uses the van.

Do we recommend buying a car through your company?

It will not often be the case that buying a car for personal use through your company works out to be tax efficient.

As you are the director of the company you will also be considered an employee. Therefore, if the company buys the car for yourself then you will be subject to 20% tax and 13.8% employer National Insurance based on the car’s BiK value. If your income is over £50,000, this will increase to 40% tax.

This is especially inefficient for second-hand cars, whose BiK value is still calculated using its original list price.

We suggest you claim mileage instead, which will be tax efficient for you as this will reduce your corporation tax and not affect your Self-assessment if you only claim the fuel used for work purposes. Fuel reimbursements are tax-free assuming they stay under the limits of 45p/mile for the first 10,000 miles and 25p/mile thereafter.

Buying a car through your company can end up being tax efficient, but likely only if it is an electric car or one with very low CO2 emissions. If you are looking to buy a car through the company for personal use, the best option by far is to buy a van.

taking a loan from your company to purchase a car

You also have the option of taking out a loan through your company to purchase a car. These loans could also generate a taxable benefit which you will have to calculate the value of and pay appropirate Class 1A National Insurance.

However, some kinds of loans are exempt. Any loans with an outstanding value of under £10,000 are automatically exempt. There are other reasons a loan may be exempt, such as:

in the normal course of a domestic or family relationship as an individual (not as a company you control, even if you are the sole owner and employee)
with a combined outstanding value to an employee of less than £10,000 throughout the whole tax year (£5,000 for 2013 to 2014)
to an employee for a fixed and invariable period, and at a fixed and invariable rate that was equal to or higher than HMRC’s official interest rate (usually 2%) when the loan was taken out
under identical terms and conditions to the general public as well (this mostly applies to commercial lenders)
that are ‘qualifying loans’, meaning all of the interest qualifies for tax relief – see the technical guidance for an explanation of this complex area
using a director’s loan account as long as it’s not overdrawn at any time during the tax year

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day.

HMRC issues warning about phishing emails

Phishing emails warning from HMRC

20/02/202306/03/2023 by , posted in Blogs, FAQ, HMRC notices, Personal

‘Phishing’ is the term for attempting to get someone to give you personal information / access to systems by pretending to be someone else. This could be an email from someone who claims to be writing from your bank, or a phone call from someone pretending to be with a government department.

How do i spot phishing?

Fraudsters fish (or ‘phish’) for information like passwords or ID numbers, but also try to get you to do something like enter your login details on a fake site that looks like the real thing. Some of the most effective techniques are subtly changing things so that the fraud goes unnoticed, like changing banking details on invoices so that payments are made to the fraudsters.

There is almost never a reason to give out your details to someone over phone or text, no matter where they claim to be from.

The government does not need your ID details over the phone – they have the most complete set of information about you out of everyone. And services like Slack don’t need your login details – they literally own and run the platform, they simply don’t need your password in order to do anything.

How do i report phishing?

Recipients of phony messages should avoid clicking on any links. HMRC asks that phishing emails and bogus text messages are reported. The emails can be sent to HMRC by email phishing@hmrc.gsi.gov.uk or by text message to 60599.

In HMRC’s latest update there is information on the valid use of QR codes by HMRC. HMRC includes QR codes in the welcome letter issued by post to taxpayers who are newly-registered for Self-Assessment. HMRC also uses QR codes to help taxpayers complete a payment to HMRC using a mobile phone. The QR code is only displayed when logged in.

HMRC may also send you a text message if you call a helpline from a mobile phone. On the call, HMRC will tell you to expect a text message — it will be either immediately or shortly after the call.

But HMRC will never ask for personal or financial information when they send text messages.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

Better Space

127 Farringdon Road

London

EC1R 3DA

How to complain about an accountant

14/02/202306/03/2023 by , posted in Blogs, FAQ, General, Income Tax, Pension, Personal

Regulatory groups are important in any profession. Someone must make sure, for example, that people who call themselves lawyers are actually trained and qualified. Someone must also make sure that professionals’ work is up to standard, and handle complaints when it is not.

This is doubly important for accountants, whose work with both public and private money makes ethical and competent work essential.

CIGMA Accounting is registered with the Chartered Institute of Management Accountants (CIMA), which holds its members an international standard of excellent work and ethical practice. Our accountants specialise in management accounts and personal tax returns.

We believe small businesses can change the world, and love helping them work in the most tax-efficient way.

Who regulates accountants?

At the highest level, the accountancy profession is regulated by the Financial Reporting Council (FRC). The FRC is an independent body that receives its power from the UK government.

However, the FRC does not deal with complaints about individual accountants. Rather, the FRC designates what are called ‘professional accountancy bodies’ to create standards and hold accountants to them.

The six chartered accountant bodies chosen by the FRC to oversee accountants are the following:

These accountancy bodies train accountants, run exams, and finally award qualifications. To call yourself a ‘chartered accountant’ in the UK, you must have a qualification from one of these bodies.

In addition, these bodies are responsible for handling complaints and disciplining accountants where needed. For example if an accountant holds an ACCA qualification, then they are a member of the ACCA and that is where you should direct a complaint.

Can I complain about an accounting firm?

Accountancy bodies like the ACCA and CIPFA are meant to oversee individual accountants that are part of their organisation. They are not responsible for handling complaints about an entire firm, except under specific circumstances.

Accountancy bodies will consider complaints against firms when it is about serious misconduct on the level of the whole organisation – such as money laundering. Complaints against firms may also be considered if the body has given the firm authorisation to perform auditing work.

What complaints will be considered?

Usually, these bodies will only consider complaints about a member’s conduct while they were providing accounting-related services. There are several valid reasons to complain about an accountant:

Poor quality of work / service.
Dishonest or misleading behaviour.
Breaching confidentiality.
Providing their services when there is a conflict of interest.
Making exaggerated claims.
Signing audit forms when they are not legally eligible to do so.

How do I submit a complaint?

Importantly, the FRC stresses that you should always reach out to the accountant or their firm first. The firm employs the accountant, and it is primarily their responsibility to handle any misconduct.

Professional bodies even provide standard forms online which you can use to submit your complaint to the accountant or their firm.

But if the accountant or firm has not resolved your complaint in four weeks, their professional body will take up the case. The bodies will each have their complaint forms online, along with instructions on how to submit them. Here are links to the complaints web pages for each of the accounting oversight bodies:

What complaints can bodies not investigate?

Accountancy bodies cannot handle complaints relating to an Insolvency Practitioner – for example a Trustee under a Trust Deed or a liquidator. You must submit your complaint to the Insolvency Service via its online complaint form.

The following kinds of complaints will also not be considered:

Ones that should have first been brought to accountant’s firm.
Complaints that do not involve the accountant providing accounting-related services.
Complaints made more than 12 months after the incident / reason for complaint.
Criminal offences, which should be taken to the police.
Fee amounts. Professional bodies do not set fees for accounting work, and they are considered a commercial matter.

If you’d like to learn more about the organisations that qualify and regulate accountants, have a look at this post. If you’re looking to avoid accountants and file your own taxes, check out this post about self-assessment. A reminder that soon you will have to use HMRC-approved software to submit self-assessments! You can learn about those here.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

Better Space

127 Farringdon Road

London

EC1R 3DA

HMRC Penalties: Failure to Pay/File by Deadline

12/01/202306/03/2023 by cigma, posted in Blogs, HMRC notices, Income Tax, Personal

So you’re sitting with failure to pay by deadline and you’re stressing out. In this blog post we explore what failure to pay/file by deadline means and what you can expect from the process going forward.

What is Self Assessment Failure to Pay/File Penalty?

The self assessment deadline in the UK is 31 January. You are expected to file and pay your taxes by the 31st January. Ideally you would file your self assessment before the 25th and pay by the 31st January. This will give you enough time to review the amount of tax you need to pay and make payment stress-free. If the deadline is missed, you will be charged a penalty fee.

This penalty fee is called “Failure to Pay/File”.

It is important to note that there are two different penalties that apply: Failure to File Self Assessment Tax Returns and Failure to Pay your Self Assessment Tax. Let’s look at the penalties that are applicable on each respectively.

How much is Failure to File Self Assessment Tax Returns?

If you have not filed your self assessment by the 31st of January you will be penalised with a £100 fine. However, if you delay your returns for an extended time, you will be penalised more. Here is a breakdown of the penalties you can expect to pay if you do not file your tax returns timeously:

1 day — you’ll have to pay a penalty of £100
3 months — you may have to pay a penalty of £10 a day, for a maximum of 90 days (£900)
6 months — you may have to pay a further penalty of 5% of the tax you owe or £300, whichever is greater
12 months — you may have to pay a further penalty of 5% of the tax you owe or £300, whichever is greater – in some cases, you may have to pay up to 100% of the tax you owe

These penalties are in addition to any penalties for paying your tax late.

How much is the Failure to Pay Tax penalty?

Once you have submitted your tax returns, you will know how much tax you owe the HMRC for that tax year. If you fail to pay this on the due date (31 January), you will receive additional penalties. Here are the penalties you could be looking at if you delay in paying the taxes:

30 days — you’ll have to pay 5% of the tax you owe at that date
6 months — you’ll have to pay a further penalty of 5% of the tax you owe at that date
12 months — you’ll have to pay a further penalty of 5% of the tax you owe at that date

These penalties are in addition to any penalties for sending your tax return late.

I can’t pay my HMRC Tax

Okay. So you’ve submitted your tax returns and you know how much you owe. However, you do not have the financial capacity to pay everything by the 31st of January. That’s okay, you can work out a payment plan with the HMRC to pay your taxes in monthly or weekly instalments.

You will need the following information to apply for a payment plan with the HMRC:

the relevant reference number for the tax you cannot pay, such as your unique tax reference number
your bank account details
details of any previous payments you’ve missed

Need an accountant?

Check out our reviews...

Other HMRC Penalties

These are not the only penalties the HMRC can charge. There are a few other penalties that can be given if your tax returns are not done correctly. This includes penalties for:

Failure to Notify
Penalties for Inaccurate
- Carelessness (Between 0% – 30%)
- Deliberate (Between 20% – 70%)
- Deliberate and Concealed (Between 30% – 70%)
VAT and Excise wrongdoing Penalty

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day.

10 Biggest Mistakes People Make in Self-Assessments

11/01/202306/03/2023 by cigma, posted in Blogs, FAQ, General, Income Tax, Personal

As accountants that specialize in tax returns we see these self assessment mistakes over and over again. Self assessments is already stressful enough as it is. But let’s just look over 10 of the biggest mistakes people make when they are filing their personal tax returns.

These are all avoidable mistakes if you know your way around the tax legislation, and if you don’t know your tax legislation, CIGMA Accounting is here to lend a helping hand.

Forgetting about tax-free allowances

The HMRC is quite generous with their tax free allowances. It is just about you having to know what they are to take advantage of them!

Not declaring the correct salary and Benefits for PAYE

If you are permanently employed and have a PAYE job, it’s important that you are aware of your benefits and expenses. Your company should provide you with a P11D which has a breakdown of all your benefits and expenses to the company. You need to ensure that this information is declared in your tax returns.

Follow Us On Social MEDIA

Claiming ineligible expenses

There are many things that you can claim for, but there are also many things that you cannot claim for. There are different categories for different individuals, these are split into three basic categories:

Private Tax Relief

Sole Traders / self employed

paye individuals

We laid all of these expenses out in detail so you can have a look at what you can claim for, and what you cannot claim for:

Save On Taxes: Exemptions in the UK

What is an allowable expense?

Remember that if you have multiple income streams, you can claim for tax relief in multiple categories if applicable.

Using the wrong tax code

Your tax code is used by your employer to determine how much income tax to take from your pension or your pay (Note that if you are a sole trader, you will not have a tax code, as a sole trader you will have a 10 digit Unique Tax Number).

If you are using the wrong tax code, you could be paying more tax than you should. If you are wondering what your tax code means, you can visit the HMRC website to get a detailed explanation of what the numbers and letters in your tax code means.

However, if you are self-employed and employed on either a full-time or part-time basis, or have a pension, you’ll have tax codes for them.

not declaring all income

It’s important that you declare any income that you currently receive. Make sure that you declare:

PAYE Salary
Sole Trader Income
Foreign Income
Rental Income
Investments such as SEIS/EIS
Capital gains (properties, crypto,stocks and shares)
Interest income
Dividends

If you have left a job during a tax year you need to add both jobs in the tax returns (P60 when you stay with the company & P45, when you leave your company during the tax year).

If you are declaring multiple forms of income, ensure that you go through the tax-free allowances of each, as well as which expenses you can claim back for each form of income.

Not adding supplementary pages

Leading from the previous mistake, many people forget to download and fill in the supplementary pages for their self assessments. Here is a detailed list of the supplementary documents that you may have to fill in (based on the information you have already supplied in your self assessment.

human error

As with many other things in life, Self Assessments are not immune to human error! That is why you need to double check your self assessment to ensure that you have not made any glaring mistakes like:

Calculation errors
Ticking the wrong boxes
Leaving boxes unticked that needs to be ticked

Submitting self assessment when you don’t have to

If you’re wondering whether you should be submitting a self assessment we’ve compiled a blog post talking about exactly who needs to submit tax returns. This blog post is summarised in the image below:

missing deadline for submission

Missing the deadlines will inevitably lead to penalties from the HMRC. How do the penalties work?

30 days — you’ll have to pay 5% of the tax you owe at that date

6 months — you’ll have to pay a further penalty of 5% of the tax you owe at that date
12 months — you’ll have to pay a further penalty of 5% of the tax you owe at that date

Failing to plan for your tax account accordingly

Failing to plan adequately for your tax returns could result in you having to work out a payment plan with the HMRC. However, the Making Tax Digital (MDT) initiative will assist individuals by allowing them to see how much tax they owe in real-time.

The good news is that you don’t have to do this alone! If you are in need of some assistance, we’ll be happy to help you at CIGMA accounting! We’re an boutique accountancy firm in London, UK that specializes in Tax returns. We’re a small, but growing company looking to make tax returns stress free and efficient all over the UK.

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

Better Space

127 Farringdon Road

London

EC1R 3DA

Save on Taxes: Exemptions in the UK

09/01/202306/03/2023 by cigma, posted in Blogs, Income Tax, Inheritance Tax, Personal, Tax Diary

Tax exemptions, also referred to as Tax allowance or tax relief in the UK, is the amount of money you can claim without having to pay tax on it. There are a few different benefits and expenses that will allow you to claim tax exemption. These are mainly divided into two sections namely: private tax exemptions and work exemptions. Let’s look at these in more detail:

Private Tax Relief

Pension contributions

You may be able to claim tax relief on pension contributions if:

You pay Income Tax at a rate above 20% (Higher rate of 40% and Additional Rate at 45%) and your pension provider claims the first 20% for you (relief at source).
Your pension scheme is not set up for automatic tax relief. Note that you cannot claim UK tax relief if your pension scheme is not registered with the HMRC.
Someone else (for example your partner) pays into your pension.

You can claim up to 100% tax relief on private pension contributions.

You can read about Defined Contribution Pensions on our blog.

Charity Donations

Donations to charity from individuals are tax free. You can get tax relief if you donate:

Through Gift Aid
Straight from your wages or pension, through Payroll Giving.

If you are paying an income tax rate of over 20%, you need to declare this on your Self Assessment. If you do not complete a self assessment, you need to call the HMRC to inform them of your situation.

You are also entitled to “Married Couples Allowance”. If your income is below your personal allowance (£12,570), and your partner pays income tax at the basic rate (their income is between ( £12,571 and £50,270). This tax free allowance allows you to pay up to £1,260 of your personal allowance to your spouse (married or civil partnership).

Maintenance Payments

If you and your partner or spouse separate ways and you are required to pay maintenance, you can claim for maintenance tax exemption. Maintenance Payments Relief is worth 10% of the maintenance you pay to your ex-spouse or civil partner, up to a maximum of £364 a year (or 10% of £3,640).

Time spent working on a ship outside the UK

To get up to 100% tax relief on earnings you must have:

Worked on a ship
Worked outside of the UK long enough to qualify for the deduction – usually a minimum of 365 days
Been resident in the UK or resident for tax purposes in a European Economic Area (European countries, Iceland, Liechtenstein and Norway) State (other than the UK)

You can’t get the deduction if you were:

a Crown employee (for example, a Royal Navy sailor)
not a UK resident
not a resident of an EEA State (other than the UK)

Tax Relief for Employed and Self Employed Individuals

As a self employed, or employed individual, you have a whole list of additional expenses that you can claim tax relief on. In this section we will look at most of these expenses.

Self Employed Tax Exemptions

The HMRC provides various opportunities to claim for the running costs of your UK based sole proprietorship. You can look at the following categories to see if you qualify for any tax exemptions:

Office, property and equipment

Car, van and travel expenses

Clothing expenses

Staff expenses

Reselling goods

Legal and financial costs

Marketing, entertainment and subscriptions

Training courses

Furthermore, it is important to know that your have a standard personal allowance of up to £12,570. This means that anything under £12,570 you are not required to pay tax returns. However, as a sole proprietor you still need to submit a self assessment even if you are not required to pay taxes to the HMRC.

Follow Us On Social MEDIA

Employed / Job Tax Relief Expenses

You do not have to be a sole proprietor or company owner to make use of tax exemptions. Some of the expenses you can still claim even if you are employed are as follows:

However, it is important to note that if your employer has reimbursed you for the expenses or if you request to make use of an alternative service or equipment as given by the employer (for example, if you are travelling and the company pays for public transport however you prefer to rent a vehicle).

Additionally, it’s important that you keep receipts or records on what you have spent. You have four years to claim the tax reliefs on this. If you would like to see if you are eligible to claim, you can visit the HMRC website and answer a few simple questions to see what is allowable.

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day.

Mortgage Guarantee Scheme extended

05/01/202306/03/2023 by cigma, posted in Personal

The Mortgage Guarantee Scheme was set to end on 31 December 2022. In a last-minute announcement from HM Treasury, it was confirmed that the scheme will now be extended for a further 12 months until 31 December 2023.

The scheme helps prospective home buyers (mainly first-time buyers) who only have a small deposit and may find getting a traditional mortgage difficult. Under the scheme, lenders can offer 95% mortgage products.

The scheme has assisted over 24,000 households since it was launched in April 2021.

The scheme is open to first time buyers and home movers across the UK. Home buyers can purchase properties valued at up to £600,000 and both new-build and existing properties are eligible.

The government provides lenders with the option to purchase a guarantee on the top-slice of the mortgage (over 80%). Lenders will also take a 5% share of net losses above this 80% threshold. This helps to ensure that lenders are not motivated to provide poor quality loans. Lenders also need to pay the government a commercial fee for each mortgage in the scheme. The mortgage guarantee is valid for up to seven years after the mortgage is taken out.

Source:HM Treasury| 02-01-2023

Self Assessment Due Dates 2023

04/01/202306/03/2023 by cigma, posted in Blogs, Personal

What is a Self Assessment?

Self Assessment is a system HM Revenue and Customs ( HMRC ) uses to collect Income Tax. Tax is usually deducted automatically from wages, pensions and savings. People and businesses with other income (including COVID-19 grants and support payments) must report it in a tax return.

Self Assessments due on the 31st of January 2023 is relating to the latest tax year ( 6th of April 2021 to the 5th of April 2022).

What is the Earliest I can Submit My Self Assessment?

You could’ve submitted your completed self assessment as soon as the previous tax year ends i.e. 6 April 2022 if everything is up to date. However, if that is not the case and you have not completed your self-assessment yet, the following deadlines are important to know:

Deadline for all self assessments – Midnight 31 January 2023
Deadline for paying taxes you owe – Midnight 31 January 2023

There’s usually a second payment deadline of 31 July if you make advance payments towards your bill (known as ‘payments on account’).

Follow Us On Social MEDIA

What is “Payments on Account”

‘Payments on account’ are advance payments towards your tax bill (including Class 4 National Insurance if you’re self-employed).

You have to make 2 payments on account every year unless:

Your last Self Assessment tax bill was less than £1,000
You paid more than 80% of the previous year’s tax you owed, for example through your tax code or because your bank had already deducted interest on your savings

Each payment is half your previous year’s tax bill. Payments are usually due by midnight on 31 January and 31 July.

If you still have tax to pay after you’ve made your payments on account, you must make a ‘balancing payment’ by midnight on 31 January next year.

Failing to submit your self assessment on or before the 31st of January 2023 will result in penalties from the HMRC. Contact CIGMA Accounting to help you in your self assessment. We have two offices based in London (Farringdon and London respectively).

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day.

Is Limited Company or Self Employment Better

Self Employed vs Limited Company

13/12/202206/03/2023 by cigma, posted in Blogs, Corporation Tax, General, Income Tax, Personal

Can you save taxes by registering as a limited company instead of being self employed?

If you are earning money in the UK, it is important for you to have a thorough understanding of the different tax brackets and systems. Being informed puts you in a position to manage your finances in the most efficient way possible.

One of the most frequently asked questions is which is better? To be employed by a company, self-employed or open a Limited company? Let’s take a closer look at the different tax rates that apply to each of these categories.

Employed (PAYE)

An employee is an individual that works under an employment contract. This contract may be permanent, part-time, flexible hours or temporary. However, the status of the employee is guaranteed (i.e. the employee is aware of the expectations and timelines of their employment with the company and is in possession of a contract with the company).

If you are currently employed and you are considering opening a Limited Company it is important to investigate whether you fall in or out of the IR35 criteria. Falling outside of the IR35 criteria means that HMRC genuinely sees you as “self-employed” or a third party providing services to the company on an ad-hoc basis. If you fall in this category you can pay yourself in a tax efficient way

Cases where people frequently fall outside of IR35:

Locums
Contractors
Replacement Worker

This leads us into the next section: What is the definition of a self-employed individual?

Self-Employed Definition

There are many terms to describe a self-employed individual in the United Kingdom. Some of the most frequently used terms are: (we can link to self employed or expenses blog)

Self Employed

Sole Proprietor
Sole Trader

In essence, this means that you are actively running your own business without it being incorporated at the companies house (registered). When running this type of business, you can keep all your profits after paying the required tax on the profit. A big part of being a sole trader is that you are personally responsible for any losses your business may make.

Summary:

Sole trader is not a separate legal entity
Keep all profits after paying necessary tax rate
Personally responsible for business losses

Limited Company Definition

A limited company is a business that is incorporated (registered) and the company has a legal identity of its own. The owners/directors are separate from the business. The limited company must have a registered office address in the United Kingdom, there must be at least one director appointed and all directors must be above 16 years old.

Summary:

Registered Business
Registered office address
At least one director
All directors over 16 years of age

There are a few exclusions of individuals that cannot open a limited company in the UK. These are listed below. If you are:

Not a UK resident, you cannot be the sole director of a limited company. You require an individual with UK residency and UK bank account to act as a director in the UK.
On the UK blacklist

Comparison of Tax Paid

The following section will explore the difference between tax rates when working as an employee vs. sole proprietor vs. as a sole director of a Limited Company. It is important to note that employees and sole traders fall in the same tax bracket, therefore, they pay the same tax rate depending on their income.

Limited companies have a minimum of 19% tax rate and maximum of 25% tax rate, depending on what your profits are for the year. However, if you are operating as a sole trader / sole proprietor, your tax rate will be dependent on your income bracket (basic, higher or additional). Let’s take a closer look at a comparison of the tax rates below:

Another major benefit to setting up a ltd company is that you can also claim tax returns based on expenses for your business. These expenses can range from internet expenses, phone bills and fuel. This means that you get even more money back from your tax returns. At CIGMA our clients (on average) are able to get back up to 9% with their corporate tax returns. This means our clients effectively only pay 10% tax on their income as a limited company based on a £50k profit company.

Let’s look at a case study to explain how this works in the “real world”

Case Study / Example:

John (Pseudonym) is currently working 3 jobs as a medical practitioner. He is receiving a monthly income from each job which is summarized below:

Job	Monthly Income	Annual Income
Locum General Practitioner at a Hospital	£5,000	£60,000
Private General Practitioner Appointments	£600	£7200
Guest Lecturer at university	£200	£2400
Total Income	£5,800	£69,600

John wants to manage his money efficiently and save on paying taxes legally.

Due to the nature of John’s work, he falls outside of IR35 because of the following reasons:

Currently John is paying approximately 40% tax on income above £50k.

However, John speaks to a CIGMA Accountant to find out if there’s a better way to manage his financial affairs. The CIGMA Accountant suggest the following:

Why Register a Limited Company?

Instead of paying 40% tax on above £50k income, John will now pay l 19% corporation tax up to £50k profit. Additionally, John will be able to claim tax returns on business expenses. These expenses include:

As can be seen from this example, John can save up to 21% (Most likely significantly more) by following the procedure recommended by the CIGMA Accountant.

Want to talk to a consultant to Incorporate a Company? Book a 10 minute session.

Second cost of living payment

20/10/202206/03/2023 by cigma, posted in Personal

Back in May 2022, the then Chancellor Rishi Sunak announced a package of support measures targeted mainly to the most vulnerable members of society. One of the main measures was the Cost of Living support package to help over 8 million households in receipt of mean tested benefits.

These households were set to receive a payment of £650 before the end of the year with the DWP making the payment in 2 lump sums. The first payment of £326 was made in July and it has been confirmed that the second payment of £324 will be made in November.

The money will be paid between 8 November and the 23 November. The second payment will automatically be paid into the bank accounts of those eligible in England, Scotland, Wales and Northern Ireland who receive a qualifying benefit, meaning they will not need to do anything to receive the money.

Some individuals who are not on a qualifying DWP benefit may still be eligible for the £324 payment as HMRC are also making payments to those who receive tax credits and no other eligible benefits.

The Work and Pensions Secretary, Chloe Smith said:

‘Millions of families will soon see a £324 cash boost as part of our extensive £1,200 support package, helping to raise incomes and manage the rising cost of living.’

An additional one-off payment of £300 will also go to the over 8 million pensioner households across the UK who receive the Winter Fuel Payment. This amount will be paid in addition to any other one-off support a pensioner household is entitled to.

The Winter Fuel Payment is not taxable and does not affect eligibility for other benefits. The government will make these payments directly to households across the UK. This money will be paid out as top-up to pensioner households annual Winter Fuel Payment in November / December.

Source:Department for Work & Pensions| 17-10-2022

Guide to overseas workday relief in the UK

Require accounting services?

What is Overseas Workday Relief (OWR)?

Who is Eligible for Overseas Workday Relief?

How Does Overseas Workday Relief Work?

Related Blog Posts:

Claiming Overseas Workday Relief

Need Assistance from an Accountant?

Wimbledon Accountant

Farringdon Accountant

HMRC Self-Assessment Helpline closes for the summer

Require accounting services?

Related Blog Posts:

Need Assistance from an Accountant?

Wimbledon Accountant

Farringdon Accountant

How to claim work from home tax relief in the UK

Require accounting services?

Who Can Claim Work from Home Tax Relief?

What working from home expenses Can You Claim For?

How Much tax relief Can You Claim when working from home?

Related Blog Posts:

How to Claim Work from Home Tax Relief

Deadline for Claiming Work expense Tax Relief

Need Assistance from an Accountant?

Wimbledon Accountant

Farringdon Accountant

Guide to tax relief for work expenses in the UK

Require accounting services?

Which work expenses qualify for tax relief?

Work from Home tax relief

Tax relief for Uniforms, Work Clothing, and Tools

tax relief on fuel and Vehicles Used for Work

Related Blog Posts:

Travel and Overnight Expenses

Buying Other Equipment

Need Assistance from an Accountant?

Wimbledon Accountant

Farringdon Accountant

Do I need to file a Self Assessment Tax Return for rental income?

Require accounting services?

Key Steps in Filing a Tax Return for Landlords in the UK

Tax-Deductible and allowable Expenses for Landlords

Allowable expenses for rental income

Tax deductible Domestic items

Related Blog Posts:

Tax relief for mortgage interest payments

Important Deadlines for landlord tax returns

Need Assistance from an Accountant?

Wimbledon Accountant

Farringdon Accountant

1. Protect Your Assets from Creditors and Lawsuits

Require accounting services?

2. Register trusts with HMRC to Minimize Estate Taxes and Probate Costs

3. Register trusts to Maintain Control Over Your Assets

Related Blog Posts:

4. Ensure Privacy and Confidentiality

5. register trusts to Provide for Your Loved Ones After You're Gone

Need Assistance from an Accountant?

Wimbledon Accountant

Farringdon Accountant

Accountant near Me

Advantages of Accountant Near You

In-Person meetings

Region-specific knowledge on taxes and business

Disadvantages of Accountant Near You

Expertise

Bad reviews / Turnaround times

Remote Accountants

Advantages of Remote Accountant

Find the right fit

Flexible Times

Efficiency

Competitive pricing

Nationwide knowledge on taxes in different regions

Disadvantages of Remote Accountant

Lack of In-person Meetings

Cyber Security Concerns

How To Choose the Best Accountant for you and your business

Location, location, location…