UK tax diary for october and november 2023, farringdon accountant

Key UK tax dates for October and November 2023

18/09/202318/09/2023 by James Browning, posted in Blogs, General

How to claim work from home tax relief in the UK

As we step into the final quarter of the year, it’s vital to stay ahead of the impending UK tax deadlines to ensure a smooth end to the financial year. Below, we have listed the crucial tax dates for October and November 2023 that UK businesses and individuals need to keep in mind.

October 2023

1st October 2023

Corporation Tax – Companies with a year-end of 31st December 2022 must ensure their Corporation Tax is settled by this date. Meeting this deadline is critical to avoiding penalties.

19th October 2023

A critical day with multiple deadlines, take note of the following:

PAYE and NIC deductions – The deductions due for the month ending 5th October 2023 should be completed. If you are paying electronically, you have until 22nd October to settle these dues.
CIS300 Monthly Return – The filing deadline for the CIS300 monthly return for the month ended 5 October 2023.
CIS Tax – Ensure to settle the CIS tax deducted for the month ended 5th October 2023.

31st October 2023

Self-Assessment Tax Return – This is the last date to file a paper version of your 2022-23 self-assessment tax return. Don’t miss this to avoid potential late filing penalties.

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November 2023

1st November 2023

Corporation Tax – Businesses with a year-end date of 31st January 2023 must ensure to pay their Corporation Tax by this date.

19th November 2023

Mark this date for several important submissions:

PAYE and NIC deductions – Due for the month ending 5th November 2023. If you are planning to settle this electronically, the due date extends to 22nd November 2023.
CIS300 Monthly Return – File the CIS300 monthly return for the month ended 5th November 2023 by this date to remain compliant.
CIS Tax – The CIS tax deducted for the month ended 5th November 2023 should be paid by today.

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Early company account filing can save you from penalties

05/09/202305/09/2023 by James Browning, posted in Blogs, Corporate Governance & Regulation, Corporation Tax

Early company accounting filing can save you from penalties

Running a business in the UK entails several responsibilities, and foremost among them is ensuring that your company’s accounts are filed on time. Companies House, the executive agency responsible for company registration, has recently emphasised the importance of this duty and emphasised the fines that result from late filing.

Mandatory Requirement for All

Companies House has made it clear: all limited companies must deliver their annual accounts each year, regardless of whether they actively trade or not. This also encompasses dormant companies. Thus, no company is exempt from this requirement.

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Directorial Responsibilities

As a director, your role is multifaceted. It’s not only about growth and profits, but also about ensuring the company remains compliant with set regulations. This includes keeping all company records updated and ensuring timely submissions.

Credit Scores & Financial Reputation

Late or missing account filings could negatively impact your company’s credit score. This might hinder your access to vital financing options, and potentially deter other businesses from collaborating or transacting with you.

Consequences of Late Filing

Apart from the financial repercussions, there are potential legal consequences to be aware of:

Filing late by up to 1 month results in a £150 fine.
Delays of more than 1 month but less than 3 months result in a £375 fine.
If your accounts are late by more than 3 months but less than 6 months, the penalty stands at £750.
Delays of over 6 months see the penalty rise to a hefty £1,500.

Furthermore, in addition to these fines, you risk acquiring a criminal record or facing disqualification.

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Self-Assessment Threshold Change for 2023-24: Find out if you’re affected

04/09/202304/09/2023 by James Browning, posted in Blogs, Income Tax

Change to Self Assessment Threshold: Are you affected?

The world of tax is always evolving, and we understand how crucial it is for our clients to stay informed. Recent changes by HMRC regarding the Self-Assessment threshold could affect many taxpayers, and we’re here to break it down for you.

Increased Threshold for Self-Assessment from 2023-24

Starting from 6 April 2023, HMRC has announced a notable increase in the threshold for Self-Assessment for taxpayers who are taxed solely through PAYE. The previous limit was set at £100,000, but this has now risen to £150,000.

While on paper this does mean fewer individuals will need to submit Self Assessment returns, HMRC thresholds (including tax bands) drift upwards annually to match wage inflation.

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Impact on 2022-23 Tax Returns

It’s important to note that if you’re submitting a Self-Assessment tax return for the 2022-23 period, the earlier threshold of £100,000 still applies. However, taxpayers who have a reported income ranging between £100,000 and £150,000, and do not fit any other Self-Assessment criteria, can expect an “exit letter” from HMRC. Receiving this letter signifies that you won’t be required to file an annual Self-Assessment tax return, granted you meet the set qualifications.

Criteria for 2023-24 and Beyond

Despite the increased threshold for those taxed under PAYE, certain conditions will still necessitate a Self-Assessment tax return. You will have to file one if:

You have received any untaxed income.
You’re a partner in a business partnership.
You’re liable to the High Income Child Benefit Charge.
You’re a self-employed individual with a gross income surpassing £1,000.

Act Promptly!

If this is your first time completing a Self-Assessment return, it’s essential to notify HMRC swiftly. The deadline to inform them is by 5 October following the tax year’s conclusion. And if the 2022-23 tax year applies to you, remember to electronically file your tax return and settle any tax obligations by 31 January 2024.

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The Best and Worst Banks in Great Britain Revealed

30/08/202330/08/2023 by James Browning, posted in Blogs, FAQ, Latest News

BEST AND WORST BANKS IN GREAT BRITAIN

If you’re in the market for a new bank, whether for your personal or business needs, you’ll want to take a close look at the latest rankings. Recently, a comprehensive survey in Great Britain asked current account holders to rate their providers on various metrics, such as online and mobile services, branch and overdraft facilities, and the quality of relationship management for businesses. Read on to find out the top-rated and bottom-rated banks to help you make an informed decision.

Top-Ranked Personal Current Account Providers

1. Monzo

Monzo tops the list for personal current accounts. Known for its excellent mobile banking experience, Monzo offers convenient services and a user-friendly interface.

2. Starling Bank

Following closely behind is Starling Bank. Similar to Monzo, it offers a fantastic online and mobile banking service. Its financial products are designed to be straightforward and easy to use.

3. First Direct

A pioneer in telephone banking, First Direct has successfully transferred its emphasis on customer service to the digital world, earning itself the third spot on the list.

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Bottom-Ranked Personal Current Account Providers

Virgin Money, Royal Bank of Scotland

Tied for the last spot are Virgin Money and the Royal Bank of Scotland. While both banks have a long-standing presence in the UK, they seem to fall short in satisfying the modern consumer’s banking needs.

TSB

TSB comes in just above the last two, facing challenges in areas like online and mobile services, as well as customer satisfaction in general.

Top-Ranked Business Current Account Providers

Monzo, Starling Bank

Monzo and Starling Bank claim the top spots for business accounts as well, indicating a strong performance across both personal and business banking services.

Handelsbanken

Handelsbanken stands out for offering excellent relationship management, which is a crucial aspect for small businesses.

Bottom-Ranked Business Current Account Providers

HSBC UK

HSBC UK finds itself at the bottom of the list, signaling the need for improvement in multiple areas, particularly in relationship management for small businesses.

The Co-operative Bank, Virgin Money

Also struggling in the business banking sector are The Co-operative Bank and Virgin Money, who will need to up their game to compete with the leaders in the field.

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How to Navigate VAT Recovery When Leasing Business Vehicles

30/08/202330/08/2023 by James Browning, posted in Blogs, Value Added Tax

How to claim work from home tax relief in the UK

The world of VAT (Value-Added Tax) can seem complicated, especially when it involves leasing vehicles for your business. While leasing often provides flexibility and financial benefits, the intricacies of VAT recovery on these leases can be confusing. This guide aims to simplify VAT treatment related to motor expenses, helping your business make the most out of tax recovery options.

What You Need to Know About VAT and Leasing Vehicles

Leasing Company’s Perspective:

If you run a leasing company, good news! You can generally recover the VAT incurred on the purchase of cars, provided they are leased at a commercial rate. This can offer you considerable savings and lower your operating costs.

Business Leasing a Car:

If your business is leasing a car for official purposes, the rules are a bit different. The tax authority, HMRC, allows the recovery of 50% of the VAT charged on what it considers a ‘qualifying car.’ This 50% that you can’t reclaim is designed to cover any private use of the car. It means that your business can recover the other 50% subject to the normal rules of input VAT recovery.

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Special Cases: Taxis and Driving Schools

For businesses that lease cars primarily for use as taxis or for providing driving instruction, there is a beneficial exception. You can reclaim all of the VAT charged on the lease if the vehicle is a qualifying car and is intended primarily for either:

Hire with a driver for carrying passengers, or
Providing driving instruction

This exception allows you to maximize VAT recovery and keep your business running efficiently.

Self-Drive Hire and Daily Rental

Do note that the 50% restriction on VAT recovery isn’t limited to just leasing scenarios; it also applies to self-drive hires or daily rentals. If you are hiring a car simply to replace an ordinary company car that’s temporarily off the road, the 50% VAT recovery block will still apply.

Key Takeaways

Leasing Companies:
Can usually recover all the VAT incurred if the cars are leased at commercial rates.
Businesses Leasing Cars:
Can generally recover 50% of the VAT on a qualifying car, the remaining 50% is blocked to account for private use.
Special Business Uses:
Taxis and driving schools may reclaim 100% of the VAT.
Self-Drive or Daily Rentals:
Subject to the 50% VAT recovery block, similar to leased cars.

Understanding the intricacies of VAT recovery on leased vehicles can go a long way in optimizing your business expenses. If you need specialized advice tailored to your business needs, feel free to reach out to our team of expert accountants who can guide you through the VAT maze.

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national insurance contributions for self-employed; wimbledon accountant

Class 2 and Class 4 NICs: Quick Reference for Self-Employed Individuals in the UK

30/08/202330/08/2023 by James Browning, posted in Blogs, Employment & Payroll, National Insurance

How to claim work from home tax relief in the UK

When you’re self-employed in the UK, understanding your National Insurance contributions (NICs) is critical for both compliance and for securing your future benefits such as the State Pension. For the 2023-24 tax year, the HMRC highlights two primary classes of NICs that self-employed individuals need to be familiar with: Class 2 NICs and Class 4 NICs. Here’s a quick reference of what these contributions mean for you.

What are Class 2 NICs?

Class 2 National Insurance Contributions are payable by almost all self-employed individuals. However, if you earn under the Small Profits Threshold (SPT), which is currently set at £6,725 for the 2023-24 tax year, you are exempt from these payments.

Key Features:

Rate: The flat weekly rate for Class 2 NICs is £3.45.
Benefits: Payments count towards the basic State Pension, employment and support allowance, maternity allowance, and bereavement benefits.

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What are Class 4 NICs?

If you’re self-employed and your annual profits exceed £12,570, you’re also required to pay Class 4 NICs in addition to Class 2 NICs.

Key Features:

Rates: Class 4 NIC rates for 2023-24 are 9% on chargeable profits between £12,570 and £50,270. An additional 2% is payable on any profits over £50,270.

are you exempt?

There are a few professions where Class 2 NICs are not applicable. These include:

Examiners, moderators, invigilators, and people who set exam questions.
People who run businesses involving land or property.
Ministers of religion who do not receive a salary or stipend.
Individuals making investments for themselves or others, but not as a business and without a fee or commission.

If you belong to any of these categories, it may be beneficial for you to get a State Pension forecast and consider making voluntary Class 2 NICs to make up for missing years.

Next steps

Calculate Your Earnings:
Verify if you cross the Small Profits Threshold or the £12,570 limit for Class 4 NICs.
Check Exemptions:
Ensure that you don’t fall under any of the categories that are exempt from Class 2 NICs.
State Pension Forecast:
It’s wise to check your State Pension forecast to understand how your NICs impact your future benefits.
Consult an Expert:
Given the intricacies, it might be beneficial to consult with a tax advisor or accounting professional to help you navigate the NIC landscape.

Understanding your National Insurance contributions is vital for financial planning and fulfilling your tax obligations. If you have more questions about how these classes apply to your situation, feel free to get in touch with us.

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VAT Supplies for No Consideration: What You Need to Know

29/08/202329/08/2023 by James Browning, posted in Blogs, Value Added Tax

VAT Supplies for No Consideration: What You Need to Know

Value Added Tax, commonly known as VAT, is a part of everyday business transactions. However, not all supplies are straightforward, and the landscape gets complicated when dealing with VAT supplies for no consideration. This concept seems counter-intuitive because, in most cases, ‘supply’ generally involves a transaction for some kind of ‘consideration,’ whether in the form of money or in-kind.

But did you know that UK VAT law includes provisions for transactions made without consideration? These are considered supplies for VAT purposes. In this article, we’ll delve into these less talked about, yet critical areas of VAT compliance, guided by the information from HM Revenue and Customs (HMRC).

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What is Consideration?

Although the VAT Act 1994 doesn’t provide a legal definition for ‘consideration,’ HMRC refers to a definition from the EC 2nd VAT Directive Annex A13. It defines “consideration” as everything received in return for the supply of goods or services, including incidental expenses like packing, transport, and insurance. However, it should be noted that this directive is no longer in force after Brexit, but the conceptual framework remains.

Supplies for No Consideration: The Exceptions

1. Permanent Transfer/Disposal of Business Assets

If a business permanently transfers or disposes of its assets, the transaction is treated as a supply for VAT purposes. For example, if you give away a business laptop to an employee, this counts as a supply and is VAT applicable.

2. Temporary Application of Business Assets to Non-Business Use

When a business uses its assets for non-business activities temporarily, it constitutes a supply for VAT purposes. Suppose your business owns a vehicle primarily used for business tasks but occasionally gets used for private purposes. In that case, that non-business usage is subject to VAT.

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Connected persons for tax purposes

27/07/202331/07/2023 by cigma, posted in Capital Gains Tax

Breaking Down Connected Persons for UK Capital Gains Tax

When it comes to Capital Gains Tax (CGT) in the UK, understanding the concept of “connected persons” is essential. However, navigating the statutory definition set out in Section 286 of the Taxation of Chargeable Gains Act (TCGA) 1992 can be complex.

In this article, we’ll provide a clear and comprehensive guide to connected persons for CGT purposes, including insights from HMRC’s internal guidance. If you’re a taxpayer or an investor, it’s crucial to grasp this concept to ensure compliance with the tax regulations and make informed financial decisions.

What are Connected Persons for Capital Gains Tax?

According to Section 286 of the TCGA 1992, a person is considered connected with an individual for CGT purposes if they fall under any of the following categories:

Spouse or Civil Partner: Any person who is legally married to the individual or in a registered civil partnership with them is automatically considered connected.
Relatives: Connection also extends to relatives, including brothers, sisters, ancestors (parents, grandparents, etc.), or lineal descendants (children, grandchildren, etc.) and their respective spouses or civil partners.

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Notable Exceptions for connected persons

It’s important to note that the term “relative” does not encompass all family relationships. Specifically, nephews, nieces, uncles, and aunts are not considered connected persons for CGT purposes.

Furthermore, there are certain scenarios where individuals are excluded from being connected persons, as outlined in HMRC’s internal guidance:

Widows/Widowers and Surviving Civil Partners: Unless a connection can be established by means not involving the deceased spouse or civil partner, widows, widowers, and surviving civil partners of deceased persons are not considered connected for CGT.
Dissolution of Civil Partnership or Divorce: Following the dissolution of a civil partnership or a divorce, individuals in addition to the former civil partner or spouse may cease to be connected for CGT purposes.

Need Assistance from an Accountant?

Being aware of who is considered a connected person can impact various transactions, such as property transfers, gifts, or sales, and may result in different tax treatment. To ensure compliance with the tax regulations and make informed financial decisions, seeking guidance from a reputable UK accounting firm with expertise in CGT matters is highly recommended.

If you require professional assistance with understanding connected persons or any other tax-related queries, our team of experienced accountants at CIGMA Accounting is here to help. Contact us today for expert advice tailored to your specific needs.

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Tax on savings interest

27/07/202331/07/2023 by cigma, posted in Income Tax

Understanding Tax Exemptions on Savings Interest for 2023-24

As a UK taxpayer, knowing how the tax exemptions work on savings interest can be a significant aspect of your financial planning. In this article, we will break down the tax rules for the tax year 2023-24, including the starting rate for savings, the personal savings allowance (PSA), and the procedures for reclaiming overpaid tax.

Important to note is that the deadline for making claims for the 2019-20 tax year is 5 April 2024.

No Tax on Interest for Low Income

If your taxable income is less than £17,570 for the 2023-24 tax year, you won’t have to pay any tax on the interest you receive. This figure comes from the £5,000 starting rate limit for savings (which is taxed at 0%) plus the current £12,570 personal allowance.

However, if your non-savings income surpasses £17,570, the starting rate limit for savings no longer applies.

Tapered Relief for Middle-Income Brackets

For those earning between £12,570 and £17,570 from non-savings income, there’s a tapered relief system. Every £1 of non-savings income over your personal allowance reduces your starting rate for savings by £1.

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The Personal Savings Allowance

The Personal Savings Allowance (PSA) is another feature of the tax system that is beneficial to many savers. For basic-rate taxpayers, the first £1,000 of savings income interest is tax-free, while for higher-rate taxpayers, the tax-free allowance stands at £500. However, if you’re an additional rate taxpayer, with a taxable income of over £125,140, the PSA does not apply.

Interest from ISA's and Premium Bonds

It’s important to note that interest from ISAs and premium bonds does not count towards these limits. So even if you have these types of savings, you can still benefit from the PSA.

Deduction of Tax from Savings Interest

Banks and building societies no longer automatically deduct tax from savings interest. If you’re required to pay tax on your savings income, you’ll need to declare this in your annual Self-Assessment tax return.

Reclaiming Overpaid Tax on Savings Interest

If you’ve overpaid tax on your savings interest, you can submit a claim to have it repaid. Claims can be backdated for up to four years from the end of the current tax year. This means that as of the 2023-24 tax year, you can still make claims for overpaid interest dating back to the 2019-20 tax year.

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The Construction Industry Scheme

27/07/202331/07/2023 by cigma, posted in Business, Construction Industry Scheme

Navigating the UK Construction Industry Scheme (CIS)

The Construction Industry Scheme (CIS) is a set of tax and National Insurance rules specifically crafted for individuals and businesses operating in the UK construction industry. Whether you’re a ‘contractor’ or a ‘subcontractor’, understanding CIS can ensure you manage your tax obligations effectively.

What is the Construction Industry Scheme (CIS)?

The CIS is a tax initiative by the UK government that mandates contractors to deduct a portion of payments made to subcontractors and transfer this amount directly to Her Majesty’s Revenue and Customs (HMRC). These deductions are essentially advance payments towards the subcontractor’s tax and National Insurance liabilities.

Who Does the Construction Industry Scheme Apply to?

The CIS applies to contractors who pay subcontractors for construction work or businesses that have spent more than £3 million on construction in the 12 months since their first payment. While subcontractors are not obligated to register for the CIS, they will see a 30% deduction from their payments if they remain unregistered. However, if a subcontractor registers under the CIS, this deduction is reduced to 20%. Alternatively, subcontractors can apply for gross payment status.

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What are the Reporting Obligations under C.I.S.?

Under the CIS, contractors are required to submit monthly returns online, which detail payments made to subcontractors for each tax month (from the 6th of one month to the 5th of the next). The deadline for submission is 14 days after the end of the tax month. If a contractor doesn’t make any payments to subcontractors in a particular month, they must submit a ‘CIS nil return’ or notify HMRC that no return is due.

Changes in VAT Rules under the c.i.s.

As of 1 March 2021, the VAT rules for building contractors and subcontractors have changed. For certain specified supplies, subcontractors no longer add VAT to their services for most building customers. Instead, contractors are required to pay the output VAT on behalf of their registered subcontractor suppliers – a mechanism known as the Domestic Reverse Charge. Contractors can then reclaim the output tax paid as input VAT, as per the standard rules.

Need Assistance from an Accountant?

Navigating the intricacies of the CIS can be daunting, but it’s an essential aspect of tax compliance for contractors and subcontractors in the UK construction industry. Partner with a trusted UK accounting firm to ensure you meet your CIS obligations, allowing you to focus on what you do best – building and creating.

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South Yorkshire first UK Investment Zone

20/07/202331/07/2023 by cigma, posted in Business Support

South Yorkshire Paves the Way as UK's First Investment Zone

In an effort to stimulate economic growth and create new job opportunities, the UK government announced in its Spring Budget 2023 the establishment of twelve Investment Zones throughout the country. Taking the lead in this groundbreaking initiative, South Yorkshire has been declared the first UK Investment Zone.

As a business in the UK, it’s essential to understand what this significant development means for you, especially if you’re in or around South Yorkshire. This transformative venture is designed to spur investment, generate new economic activities, and support growth and jobs.

Investment Zones: The Gateway to Business Prosperity

Investment Zones are strategically designed to fuel business investment and speed up development. Businesses operating within these zones will benefit from more relaxed planning frameworks and lower taxes, ultimately catalysing growth and promoting innovation.

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South Yorkshire Investment Zone: A Hub for Advanced Manufacturing

The inaugural Investment Zone in South Yorkshire will specifically target Advanced Manufacturing, a sector with strong roots and potential in the region. If your business operates in or relates to this sector, this presents a golden opportunity.

Cities within South Yorkshire, including Sheffield, Rotherham, Doncaster, and Barnsley, are expected to reap significant benefits. By 2030, it is projected that this Investment Zone will deliver an estimated 8,000 new jobs and £1.2 billion of private funding.

Notable partners such as Boeing, Spirit AeroSystems, Loop Technology, and the University of Sheffield Advanced Manufacturing Research Centre (AMRC) have already pledged support for the initiative, with an initial investment exceeding £80 million.

Looking Ahead: Investment Zones Across the UK

This new economic venture will also extend its reach beyond England. The government is collaborating with devolved administrations and local partners to drive local growth in Scotland, Wales, and Northern Ireland.

If your business is situated in or connected to these regions, keep an eye out for more information on prospective Investment Zones. Glasgow City Region and North East Scotland are reportedly the front-runners for hosting Investment Zones in Scotland.

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Tax on property you inherit

18/07/202331/07/2023 by cigma, posted in Capital Gains Tax, Inheritance Tax, Stamp Duty Land Tax

Tax implications when inheriting property

Inheriting property can be an emotionally charged and complex process. Not only do you have to deal with the emotional turmoil that comes with losing a loved one, but you also need to navigate the complicated world of tax laws associated with your inheritance. In this comprehensive guide, we will shed light on the UK Inheritance Tax (IHT), Stamp Duty, Income Tax, and Capital Gains Tax related to inherited property, and we will discuss your responsibilities in these matters.

Understanding Inheritance Tax (IHT)

The first tax-related aspect you need to consider when you inherit property is the Inheritance Tax. According to HM Revenue and Customs (HMRC), the estate of the deceased individual is usually liable to pay any IHT due. This means that as a beneficiary, you’re not generally expected to pay tax on the inheritance you receive. The IHT is deducted from the estate before the distribution of any cash or assets to the beneficiaries.

IHT is currently payable at a rate of 40% on death and 20% on lifetime gifts. However, there’s a potential reduction on some assets if the deceased leaves 10% or more of the ‘net value’ of their estate to a charity. It’s a testament to the UK’s commitment to charitable giving and can be a worthwhile consideration when estate planning.

Stamp Duty, Income Tax, and Capital Gains Tax

You’ll be relieved to know that when you inherit a property, you are generally not liable for Stamp Duty. Likewise, Income Tax or Capital Gains Tax are not immediately applicable upon receiving your inheritance.

That said, there are situations where you may need to pay Income Tax or Capital Gains Tax. For instance, you would need to pay Capital Gains Tax on any profit earned from an increase in property value if you decide to sell the property after the date of inheritance. Additionally, you would also be liable to Income Tax on any rental income generated from the inherited property.

If you inherit a property and this means you now own two properties, it’s crucial to inform HMRC which property is your primary residence within two years. This information is significant as it influences the tax implications if and when you decide to sell one of the properties.

Navigating Through The Inheritance Process

HMRC would usually make contact if there were any IHT due from you. However, if the property is held in a trust, special rules apply.

Inherited property can indeed raise many questions concerning tax liabilities. This complexity underscores the importance of getting expert advice to ensure you navigate the process appropriately, understand your tax obligations, and avoid any unwelcome surprises.

At CIGMA Accounting, we are dedicated to helping our clients understand and manage the potential tax implications that come with inheriting property. Our team of experienced tax advisors is here to guide you every step of the way.

Contact us today to learn more about our services and how we can support you in understanding and navigating the tax implications of inherited property. Our mission is to make your tax matters as straightforward as possible, providing you with peace of mind in what may be a challenging time.

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Duty free limits if you are travelling abroad

10/07/202310/07/2023 by cigma, posted in Blogs, FAQ, General

DUTY FREE LIMITS WHEN returning from ABROAD

Looking to understand the ins and outs of UK duty-free allowances? At CIGMA Accounting, we’re committed to delivering the latest, most accurate information to help you enjoy your international travel stress-free.

When returning to Great Britain (England, Wales, Scotland) from abroad, here’s a rundown of what you can bring back duty-free for personal use.

You are permitted to bring back:

200 cigarettes, 100 cigarillos, 50 cigars, 250g of tobacco, or 200 sticks of tobacco for electronic heated tobacco devices. Feel free to divide these allowances; for instance, 100 cigarettes and 25 cigars are perfectly fine.
18 litres of still table wine.
42 litres of beer.
4 litres of spirits or strong liqueurs exceeding 22% volume or 9 litres of fortified wine (like port or sherry), sparkling wine or other alcoholic beverages under 22% volume. A split is possible here as well; for example, 4.5 litres of fortified wine and 2 litres of spirits meet the limit.
Other goods, including perfume and souvenirs, up to the value of £390. For those arriving via a private plane or boat for leisure, the limit is £270 tax-free.

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Returning to northern ireland from the eu

For those returning to Northern Ireland from an EU country, no limits are imposed on tobacco or alcohol, provided you can prove that the goods are for your personal use, and all relevant taxes and duties were paid at purchase. However, HMRC suggests these maximum guidelines:

800 cigarettes
200 cigars
400 cigarillos
1kg of tobacco
110 litres of beer
90 litres of wine
10 litres of spirits
20 litres of fortified wine (like port or sherry)

Exceeding these numbers may trigger additional inquiries from HMRC.

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Key HMRC Deadlines for July and August 2023 You Need to Know

29/06/202329/06/2023 by , posted in Blogs, Corporate Governance & Regulation, Corporation Tax, Employment & Payroll, General, HMRC notices, Income Tax, Payroll

Key HMRC Deadlines for July and August 2023

As we step into July and August 2023, it’s essential to stay updated with the upcoming deadlines from HM Revenue and Customs (HMRC). Here’s a comprehensive guide to help you navigate these crucial dates and ensure that your business remains tax compliant.

1 July 2023 – Corporation Tax
The due date for corporation tax for the fiscal year ending 30 September 2022 is 1st July 2023. This deadline applies to corporations and businesses operating within the UK, and it pertains to the tax owed on all profits from your trading, investments, and chargeable gains. Ensure your business has calculated and prepared to pay its tax liability by this date.

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6 July 2023 – Forms P11D and P11D(b)
By 6th July 2023, businesses should complete and submit the P11D and P11D(b) forms. These forms concern the return of benefits and expenses (P11D) and the return of Class 1A National Insurance Contributions (NICs) (P11D(b)). This obligation primarily concerns employers who have provided certain benefits to their directors or employees.

19 July 2023 – Class 1A NICs
The payment for Class 1A NICs is due by 19 July 2023. However, if you plan to pay electronically, the deadline extends to 22 July 2023. This payment pertains to employers who have provided benefits such as company cars to their employees.

19 July 2023 – PAYE and NIC deductions
PAYE and NIC deductions for the month ending 5 July 2023 must be made by 19 July 2023. If you opt to make your payment electronically, the due date extends to 22 July 2023. This deadline applies to all employers who deduct PAYE and NICs from their employees’ wages.

19 July 2023 – CIS300 monthly return and CIS tax
The deadline for filing the CIS300 monthly return for the month ending 5 July 2023, and payment of the CIS tax deducted for the same period, is 19 July 2023. This applies to contractors operating under the Construction Industry Scheme (CIS).

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National Insurance credits

29/06/202306/07/2023 by cigma, posted in Blogs, National Insurance

QUICK READS: NATIONAL INSURANCE CREDITS

At CIGMA Accounting, we understand the complexity of the UK’s National Insurance system and the value of optimising your benefits. This article explains National Insurance credits, a crucial element that can help build your National Insurance record and ultimately increase the entitlements you receive, including the State Pension.

National Insurance credits provide an invaluable lifeline for those not currently working, and thus, not contributing to their National Insurance. These credits can fill gaps in your National Insurance record, and we see it especially relevant to those who are job-seeking, on sick leave, maternity, paternity or adoption leave, caring for someone, or serving on a jury.

You can click here to read our full guide to UK National Insurance.

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Our firm often receives inquiries on how to apply for National Insurance credits. The process varies depending on the specific circumstances; sometimes they are applied automatically, while in other cases, an application is necessary. To better understand your situation, we recommend seeking professional advice.

Two primary types of National Insurance credits exist – Class 1 and Class 3. Class 3 credits contribute towards your State Pension and some bereavement benefits. Class 1 credits not only cater to the same benefits as Class 3 but also offer additional ones like Jobseeker’s Allowance.

However, it’s important to note that National Insurance credits usually don’t apply to self-employed individuals who pay Class 2 National Insurance or older married women who opted to pay a reduced rate of National Insurance before April 1977.

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Selling overseas property

29/06/202306/07/2023 by cigma, posted in Blogs, Capital Gains Tax

UK CAPITAL GAINS TAX WHEN SELLING OVERSEAS PROPERTY

Are you a UK resident contemplating selling an overseas property? You need to understand the implications of Capital Gains Tax (CGT) on your transaction. This piece will guide you through what you need to know about CGT, your potential liabilities, and any possible exemptions or reliefs.

In the 2023-24 tax year, UK residents are liable for Capital Gains Tax when selling overseas property at a profit. A change in the annual exempt amount means you can exclude the first £6,000 of gains from CGT, down from £12,300 in the previous year.

You can click here to read our full guide to Capital Gains Tax in the UK.

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Capital gains rates and double taxation

When it comes to the rates of CGT, it’s usually a flat 20% on most gains for individuals. However, basic rate taxpayers with modest capital gains might qualify for a 10% rate. But beware, if your combined taxable income and gains cross the higher rate threshold, anything above this level is taxed at 20%.

When dealing with the disposal of residential property that’s not your primary residence, higher rates apply. Basic rate taxpayers face an 18% CGT, while higher-rate taxpayers have a 28% duty.

One critical point to remember is that you might also owe tax in the country where the property is located. But don’t worry – relief from double taxation could be available, thanks to various tax agreements between the UK and other countries. Dual residents can also seek additional guidance to understand their tax obligations better.

Do remember, there are special regulations if you’re a UK resident, but your permanent home (domicile) is overseas. To avoid any unexpected tax surprises, it’s always best to consult with tax professionals.

If you’re navigating the complexities of selling overseas property and Capital Gains Tax, our accounting experts are here to help. Contact us today for personalised advice and guidance tailored to your situation.

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Private Residence Relief: minimise tax when selling your home

27/06/202327/06/2023 by cigma, posted in Blogs, Capital Gains Tax, FAQ

Private Residence Relief: minimising tax when selling your home

Have you ever considered selling your home? If yes, you’ve probably wondered about the tax implications. Specifically, there might be one tax you’ve heard about: Capital Gains Tax (CGT). In this article, we aim to clarify what this tax is and how Private Residence Relief can potentially protect you from it.

If you need assistance with your tax and accounting, whether it is personal or corporate, CIGMA Accounting is here to help. Visit our Contact Page to set up a free consultation with our CIMA-registered professionals.

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What is Capital Gains Tax (CGT)?

Capital Gains Tax is a tax on the profit or gain you make when you sell or dispose of an asset that has increased in value. This applies to finance assets, investments like art, and company shares. In the context of property, if you sell a house that is not your main home, you may need to pay CGT on the profit you make.

What is Private Residence Relief?

Private Residence Relief, also known as Principal Private Residence Relief (PPR), is a valuable tax relief that can significantly reduce, or even eliminate, CGT when you sell your main family home. This relief recognises that your primary residence should not be subject to the same tax burdens as other investment assets.

Who Qualifies for Private Residence Relief?

There are specific conditions you need to meet for Private Residence Relief. According to the HMRC, the following conditions must be satisfied:

Main Residence: The property must have been your only or main residence throughout the period of ownership.
No Rental: You must not have let out part of the house (having a lodger is not considered letting out a part).
Business Use: No part of your home should have been used exclusively for business purposes. However, using a room as a temporary or occasional office doesn’t count as exclusive business use.
Property Size: The garden or grounds including the buildings on them should not be greater than 5,000 square metres (approximately an acre) in total.
Profit Motive: The property must not have been purchased solely to make a financial gain.

If you meet all these conditions, you may be entitled to full Private Residence Relief on CGT.

Final Period Exemption

Even if you move out of your home, HMRC provides a Final Period Exemption. Under this provision, the last nine months of ownership are disregarded for CGT purposes. This means you might still qualify for Private Residence Relief even if you weren’t living in the property when it was sold. Under certain limited circumstances, this time period can be extended to 36 months.

Private Residence Relief for Married Couples and Civil Partners

It’s important to note that for married couples and civil partners, only one property can be counted as the main home at any one time for the purposes of Private Residence Relief.

In summary, understanding Private Residence Relief can save you significant sums of money when selling your home. However, it’s always wise to consult with a tax advisor or expert who understands your specific circumstances to ensure you maximise any tax relief you are entitled to.

Our CIMA-registered professionals at CIGMA Accounting provide affordable accounting services to clients across the UK and abroad. Get in contact via the form below, or via our Contact Page, to organise a free consultation.

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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.

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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.

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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.

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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.

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UK Share Scheme Filing Deadlines and Tax Advantages

15/06/202328/06/2023 by cigma, posted in Blogs, Corporate Governance & Regulation, Employee Benefits, HMRC notices

UK Share Scheme Filing Deadlines and Tax Advantages

In this blog post, we’re going to delve into the world of UK share schemes, those exciting yet often perplexing plans that can offer some serious tax advantages to employees. We’ll unpack the four approved share schemes – Share Incentive Plans (SIPs), Save As You Earn (SAYE) schemes, Company Share Option Plans (CSOPs), and Enterprise Management Incentive (EMI) schemes. Most importantly, we’ll discuss their annual filing deadlines, with a focus on the tax year 2022-23.

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What are the approved share schemes?

Firstly, what are these approved share schemes? Let’s break them down:

Share Incentive Plans (SIPs): SIPs allow employees to acquire shares in their employing company. The shares are usually held in a special trust and can offer significant tax and National Insurance contribution benefits if the shares are held in the plan for a certain period.
Save As You Earn (SAYE) schemes: SAYE schemes, also known as Sharesave, allow employees to save between £5 and £500 per month over a set period (3, 5, or 7 years). At the end of the saving period, employees have the option to use their savings to buy shares in their company at a discount, or take the cash. You can read our full post on SAYE here.
Company Share Option Plans (CSOPs): CSOPs offer employees the opportunity to acquire shares at a fixed price. The real advantage comes if the company’s share price rises above that fixed price, as the difference is not subject to Income Tax or National Insurance.
Enterprise Management Incentive (EMI) schemes: EMI schemes are particularly suited for small, higher-risk companies. They offer selected employees the chance to acquire shares in the company. The tax advantages can be significant, especially if the company grows in value.

deadlines and penalties for share scheme filing

Now that we’ve defined these schemes, let’s talk about the important annual filing deadlines. For the tax year 2022-23, the deadline for submitting the online employment-related securities annual return is 6 July 2023. Failure to meet this deadline will result in an automatic late filing penalty of £100. Further penalties apply if the return remains outstanding after 6 October 2023 (£300) and 6 January 2024 (£300).

Even if a share scheme operator has received and paid the initial penalty, they must still submit an end-of-year or nil return to meet their filing obligations. Employers that don’t submit annual returns on-time run the risk that they and /or their employees may lose any tax advantages from the scheme.

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Double Taxation: How to Claim Relief for Foreign Income

07/06/202307/06/2023 by , posted in Blogs, Capital Gains Tax, Overseas Corporate tax issues, Overseas personal tax issues, Overseas tax issues

Double Taxation: How to Claim Relief for Foreign Income

If you earn income from a foreign source, you may find yourself in a situation where you’re taxed twice — both by the country where your income originates and by the UK. However, the good news is that you can often claim tax relief to recover some or all of the additional tax you’ve paid. In this blog post, we’ll explore the process of claiming relief for foreign income in an easy-to-understand manner.

This post explores double taxation for UK residents. There is a separate process for UK non-residents who are being taxed on their UK income by the foreign country in which they reside.

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Claiming Relief Before Being Taxed on Foreign Income

In some cases, you may need to apply for tax relief in the country where your income is generated before it is taxed. This is typically applicable when:

Your income is exempt from foreign tax but is taxed in the UK (e.g., most pensions).
It is required by the double-taxation agreement between the two countries.

To initiate the process, you should contact the foreign tax authority and request the appropriate form. If there is no form available, you can apply by letter. Before applying, you must prove your eligibility for tax relief. You can do this by either completing the form and sending it to HM Revenue and Customs (HMRC), who will verify your residency status and return the form to you, or by including a UK certificate of residence if you are applying by letter. Once you have obtained proof of eligibility, you should send the form or letter to the foreign tax authority.

Claiming Relief After Paying Tax on Foreign Income

If you have already paid tax on your foreign income, you can generally claim Foreign Tax Credit Relief when reporting your overseas income in your tax return. The amount of relief you receive depends on the UK’s double-taxation agreement with the country where your income originates.

Even if there is no specific agreement in place, you will usually still be eligible for relief unless the foreign tax does not correspond to UK Income Tax or Capital Gains Tax. If you’re unsure about whether you qualify for relief or need assistance with double-taxation relief, don’t hesitate to reach out to us at CIGMA Accounting for assistance.

Determining the Amount of double taxation Relief

It’s important to note that the full amount of foreign tax paid may not be refunded to you. The relief you receive will be reduced if:

The double-taxation agreement specifies a lower relief amount.
The income would have been taxed at a lower rate in the UK.

HMRC provides guidance on how Foreign Tax Credit Relief is calculated, including special rules for interest and dividends, which can be found in their ‘Foreign notes’ section. However, it’s essential to remember that you cannot claim this relief if the UK’s double-taxation agreement requires you to claim tax back from the country where your income originates.

Capital Gains Tax

When it comes to Capital Gains Tax, typically, you’ll pay tax in the country where you are a resident and be exempt from tax in the country where the capital gain occurs. Usually, you won’t need to make a claim for relief.

However, there is an exception for UK residential property. Regardless of your residency status, you are required to pay Capital Gains Tax on any gains made from UK residential property.

When to Claim Capital Gains Relief

The rules for claiming relief vary depending on the nature of the asset generating the gain. If the asset cannot be taken out of the country, such as land or a house, or if it is used for business purposes in that country, you’ll need to pay tax in both countries and seek relief from the UK.

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Understanding double tax treaties in the UK

07/06/202307/06/2023 by , posted in Blogs, Corporation Tax, Income Tax, Overseas Corporate tax issues, Overseas personal tax issues, Overseas tax issues

Understanding double tax treaties in the UK

Double tax treaties, also known as double taxation agreements, play a vital role in facilitating international trade and investment by preventing double taxation. These agreements are designed to provide relief and clarity to taxpayers operating across borders. In this blog post, we will explore the concept of double tax treaties, examine their impact on taxpayers, and shed light on the countries with which the United Kingdom (UK) has such treaties.

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What are Double Tax Treaties?

Double tax treaties, also known as tax conventions or tax treaties, are agreements established between two or more countries to resolve potential conflicts regarding taxation. These treaties aim to eliminate or reduce instances of double taxation, where the same income is taxed by more than one jurisdiction. By doing so, they help avoid situations where taxpayers could be subjected to excessive tax burdens, fostering a favourable environment for cross-border trade and investments.

Double tax treaties typically address several key aspects, including:

Tax Residency
Determining an individual or entity’s tax residency status is essential to determine which country has the primary right to tax their income.

Income Categories
The treaties define the various types of income, such as dividends, interest, royalties, and capital gains, and allocate taxing rights between the countries involved.

Avoidance of Double Taxation
The agreements specify mechanisms to avoid double taxation, such as granting exemptions, providing tax credits, or applying a reduced tax rate.

Exchange of Information
Double tax treaties often include provisions for the exchange of information between tax authorities to prevent tax evasion and ensure compliance.

Which Taxpayers are Affected by double taxation agreements?

Double tax treaties impact different categories of taxpayers engaging in international activities. These include:

Individuals
Individuals who are tax residents of one country but earn income in another are directly affected by double tax treaties. These can include employees working abroad, students receiving scholarships, or retirees receiving pensions from foreign sources.

Businesses
Multinational corporations, small and medium-sized enterprises (SMEs), and sole proprietors engaged in cross-border trade or investment activities are significantly affected. Double tax treaties provide clarity on the taxation of business profits, dividends, interest, and royalties, avoiding potential tax burdens.

Investors
Individuals or entities investing in foreign countries may be subject to various taxes, including capital gains tax. Double tax treaties can help mitigate the impact of such taxes by providing relief or reducing tax rates.

Which countries have Double Tax Treaties with the UK?

The UK has an extensive network of double tax treaties with numerous countries worldwide. These treaties aim to promote international trade and investment by facilitating fair and efficient tax treatment. Here are some notable countries with which the UK has double tax treaties:

United States
The UK US double tax treaty helps prevent double taxation on income and capital gains for individuals and businesses operating across these two countries.

Germany
The double tax treaty between the UK and Germany addresses various aspects of taxation, including business profits, dividends, interest, and royalties, benefiting taxpayers from both nations.

France
The double tax treaty between the Uk and France focusses on avoiding double taxation, determining tax residency, and ensuring effective exchange of information, benefiting taxpayers in both countries.

China
The UK and China have a double tax treaty that helps avoid double taxation and provides relief for individuals and businesses earning income in both jurisdictions.

These examples represent only a fraction of the countries with which the UK has double tax treaties. The UK’s extensive network of such agreements enhances certainty, reduces barriers, and encourages cross-border economic activities.

How to claim tax relief if you are taxed twice

To claim relief on foreign income and avoid being taxed twice, there are a few important steps to follow. If you haven’t been taxed yet, you should apply for tax relief in the country where your income originates by contacting the foreign tax authority and submitting the necessary form or letter. If you’ve already paid tax on your foreign income, you can claim Foreign Tax Credit Relief when reporting your overseas income in your UK tax return.

The amount of relief you receive depends on the double-taxation agreement between the UK and the country where your income is from. Make sure to consult HM Revenue and Customs (HMRC) or seek professional tax advice if you have any uncertainties or need assistance with double-taxation relief.

You can also read our full post on claiming relief for double taxation.

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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.

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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.

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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.

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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.

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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.

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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.

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Limited Company Tax Rate UK: 2023 changes explained

31/05/202301/06/2023 by , posted in Blogs, Corporation Tax

The UK government announced in the Spring Budget 2021 that the main limited company tax rate would increase from 19% to 25% from 1 April 2023. This change was originally due to come into effect in April 2022, but was delayed due to the COVID-19 pandemic.

The new corporation tax rate will apply to all companies with profits of £250,000 or more. Companies with profits of less than £50,000 will continue to pay corporation tax at 19%. HMRC has also implemented a system of marginal relief for companies that fall in between these two limits.

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How does marginal relief for corporation tax work?

In addition to the increase in the main rate of corporation tax, there will also be a new system of marginal relief for companies with profits between £50,000 and £250,000. Under this system, the amount of corporation tax payable will be reduced by a percentage for every £100 of profits above £50,000. The percentage reduction will be 1% for the first £100,000 of profits, and 0.5% for any profits above £100,000.

Put simply, companies with profits between £50,000 and £250,000 will pay an effective tax rate somewhere between 19% and 25% after marginal relief. The easiest the way to calculate your new tax obligations if your company falls within this bracket is to use HMRC’s marginal relief calculator.

The following table shows the new corporation tax rates and marginal relief percentages:

Profits	Corporation Tax Rate	Marginal Relief Percentage
£0 – £50,000	19%	n/a
£50,000 – £250,000	25%	1% for the first £100,000 of profits, 0.5% for any profits above £100,000
£250,000 or more	25%	n/a

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Using Companies House WebFiling to simplify your tax returns

30/05/202331/05/2023 by , posted in Blogs, Corporation Tax, FAQ

In today’s fast-paced business environment, efficient and accurate filing processes are essential for every company. Companies House WebFiling provides a convenient and streamlined way to manage your company’s filing requirements online. In this blog post, we will explore the benefits of using Companies House WebFiling and how it can help your accounting firm and clients stay compliant while saving time and resources.

Understanding Companies House WebFiling

Companies House WebFiling is an online platform provided by Companies House, the UK’s official registrar of companies. This platform allows businesses to file various statutory documents electronically, simplifying the entire filing process. With Companies House WebFiling, accountants and businesses can submit documents quickly and securely without the need for manual paperwork or physical visits.

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Key Benefits of Companies House WebFiling

Time-saving Convenience
By using Companies House WebFiling, accounting firms can save valuable time and resources. No longer will your team need to navigate through complex paperwork or make trips to the Companies House office. The platform allows you to file documents anytime, anywhere, making it a convenient solution for busy accounting professionals.
Enhanced Accuracy
Manual paperwork is prone to human error, leading to potential mistakes and delays in filing. Companies House WebFiling eliminates the risk of errors by providing a digital platform that guides you through the filing process, ensuring all required information is entered correctly. The system also performs validation checks, minimizing the chances of rejection due to missing or incorrect data.
Cost Efficiency
Traditional filing methods often incur additional costs, such as printing, postage, and travel expenses. By using Companies House WebFiling, your accounting firm can significantly reduce these expenses. The platform’s online submission process eliminates the need for physical copies and mailing, resulting in cost savings for your firm and clients.
Real-time Updates and Notifications
Companies House WebFiling provides immediate confirmation of document submissions. You can easily track the progress of your filings and receive notifications on the status of your documents. This ensures that you and your clients stay informed throughout the process and can take necessary actions promptly if required.

How to Get Started with Companies House WebFiling

Getting started with Companies House WebFiling is a straightforward process. Follow these steps to make the most of this efficient filing platform:

1. Register for an Account
  Visit the Companies House website and register for a WebFiling account. Provide the necessary information and wait for your account to be approved. Once approved, you can log in and begin using the platform.
2. Familiarize Yourself with the Process
  Take some time to explore the platform and familiarize yourself with its features. Companies House provides comprehensive guidance and tutorials to help you navigate through the system and make the most of its capabilities.
3. Gather the Required Information
  Before filing any documents, ensure you have all the necessary information at hand. Double-check the accuracy of the data to minimize the chances of rejection or delays.
4. Submit Your Documents
  Using Companies House WebFiling, submit the relevant documents in accordance with the statutory requirements. Follow the platform’s instructions to provide all the requested information accurately.

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How to best pay yourself as a UK company director

26/05/202326/05/2023 by , posted in Blogs, Capital Gains Tax, FAQ, Income Tax, National Insurance, Payroll

As a new company director in the UK, you are likely wondering how to best pay yourself through your company. You have several options for transferring company profits into personal income, including salaries, dividends, and investments. This post outlines the pros and cons of each, and gives you the information you will need to make your income as tax efficient as possible.

How can a company director pay themselves?

Company directors are considered employees of the company and so take a salary which is subject to income tax. Directors can also pay themselves using dividends, which are a common method of distributing profits to shareholders (which includes directors).

Salaries and dividends are subject to different tax rates, tax-free allowances, and National Insurance obligations, which we break down below.

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What is the difference between salary and dividends?

Dividends are a way for companies to distribute a portion of their profits to their shareholders. As a director, you can choose to pay yourself through dividends instead of a salary. Dividends are typically paid out after the company has paid its taxes and can be a tax-efficient way to receive income.

However, there are some basic rules to follow. Firstly, your company must have sufficient profits to pay dividends, and you should keep records of these profits. Secondly, dividends must be declared and approved by the company’s shareholders. Lastly, dividends cannot be paid if the company is insolvent or if the payment would render it insolvent.

When it comes to tax purposes, it’s important to find the right balance. Dividends are subject to lower tax rates than salaries. You also do not need to pay National Insurance Contributions on dividend income, which you would have to do so on any salary income.

Lastly, as is also the case with personal income tax, a certain amount of dividends you receive is tax-free.

You can read our full guide to dividends to learn more.

What is the most efficient way for a company director to pay themselves?

From the explanation above, it should be clear that paying yourself efficiently as a company director involves balancing tax-free personal allowances and differing tax obligations.

The table below should be very helpful in outlining these differences between salary and dividends.

At the most basic level, directors clearly want to use all of their available tax-free personal allowance. That means taking at least £12,570 as salary and £1,000 as dividends.

It is important to note that once you reach the Higher Rate income bracket, your personal allowance amount begins to decrease. And in the Additional Rate bracket, there is zero tax-free personal allowance.

An important factor that is left out of the above table is the added cost of National Insurance Contributions on salary income. National Insurance Contributions must be paid both by the employee and employer. The basic NIC rate for employees is currently 12% of earnings, and an additional 13.8% of earnings to be paid by the employer. These are basic figures, see our guide to National Insurance for a detailed understanding.

As a company director, you will effectively bear both of these costs, making salary income even less appealing when compared to dividends. A common strategy is to take enough of a salary that the director qualifies for state benefits such as the State Pension, but that does not incur NIC payments.

Under most circumstances, dividends will be more tax efficient than salary income, though how easy it is to distribute dividends will depend on the structure of your company and its shareholders.

Using investments as tax-efficient income sources

It is also important to take advantage of any other tax free allowances that HMRC makes available. An example of this would be transferring company profits into investments, rather than personal salary. In that way, you could take advantage of the tax-free capital gains allowance of £6,000.

Trusts are another way of accomplishing this, and which have their own tax-free capital gains allowance of £3,000.

It is also essential to consider how increased income may push you into a new tax band, and create much higher tax liability. For example, the dividend tax rate jumps from 8.75% in the first income bracket to 33,75% in the second.

As such, it may be more profitable in the long term to reinvest money into business (tax-free), or into other investments, rather than taking extra personal income that pushes you into a higher tax band.

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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.

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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.

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Important Corporation Tax Deadlines You Need to Know

16/05/202323/05/2023 by , posted in Blogs, Corporation Tax

Important Corporation Tax Deadlines You Need to Know

As a business owner in the UK, staying on top of your financial responsibilities is crucial, and one of the key obligations is filing your corporation tax return accurately and on time. In this blog post, we will delve into the important deadlines associated with corporation tax, including the filing of tax returns and when you will have to pay corporation tax instalments. Understanding these deadlines is essential to avoid penalties and ensure compliance with HM Revenue and Customs (HMRC).

When are corporation tax returns due?

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what is a corporation tax accounting period?

An accounting period is a period for which a company prepares its financial statements. It usually aligns with the company’s financial year, which may or may not be the same as the calendar year.

Accounting periods differ as companies are set up and begin trading at different times of year. Accounting periods generally cannot be longer than twelve months, though there may be exceptions in the first year of business or when restarting a business.

To check your accounting period, you can refer to your company’s annual accounts, which will indicate the start and end dates of your financial year. Alternatively, you can access this information from Companies House or consult your accountant for assistance.

When do i need to pay corporation tax?

Aside from filing your tax return, it is crucial to meet the deadlines for paying your corporation tax bill. The deadline for payment depends on your company’s size, with most companies falling into one of the following categories.

Small companies

If your company qualifies as a small company, with profits below £1.5 million, the deadline for paying your corporation tax bill is typically nine months and one day after the end of your accounting period. For example, if your accounting period ends on 31st December, the payment deadline would be 1st October of the following year.

Large companies

For larger companies with profits above £1.5 million, the corporation tax payment deadline is generally divided into four quarterly instalments. The first instalment is due six months and 13 days after the start of your accounting period, while the last three are due every 3 months thereafter.

It is important to note that these deadlines may vary depending on certain circumstances, such as companies with different accounting periods, accounting periods shorter than 12 months, or if your company’s taxable profits exceed £20 million.

Need Assistance from an Accountant?

Working with a professional accounting firm like CIGMA Accounting can provide numerous benefits for your business. Not only can they help you stay on top of tax deadlines and avoid penalties, but they can also provide valuable financial advice and support.

Our experts at CIGMA are CIMA-registered Management Accountants. They specialise in working with businesses to form companies, create strategies, and making sure you’re on the right side of financial regulation.

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How to claim work from home tax relief in the UK

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BEST AND WORST BANKS IN GREAT BRITAIN

Top-Ranked Personal Current Account Providers

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Special Cases: Taxis and Driving Schools

Self-Drive Hire and Daily Rental

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Key Takeaways

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How to claim work from home tax relief in the UK

What are Class 2 NICs?

Key Features:

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What are Class 4 NICs?

Key Features:

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are you exempt?

Next steps

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VAT Supplies for No Consideration: What You Need to Know

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What is Consideration?

Supplies for No Consideration: The Exceptions

1. Permanent Transfer/Disposal of Business Assets

2. Temporary Application of Business Assets to Non-Business Use

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3. Self-Supply of Goods or Services

4. Retention of Business Assets After VAT Deregistration

5. Non-Business Use of Services with Recovered Input Tax

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Breaking Down Connected Persons for UK Capital Gains Tax

What are Connected Persons for Capital Gains Tax?

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Notable Exceptions for connected persons

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Understanding Tax Exemptions on Savings Interest for 2023-24

No Tax on Interest for Low Income