Tag: self assessment

changes to self assessment threshold for 2023-24 in the UK; london accountants

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

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:

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

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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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For personalized advice and further assistance, feel free to get in touch with our expert team at CIGMA Accounting. We’re dedicated to simplifying the complexities of the financial world for you.


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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

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.

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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

  1. Calculate Your Earnings:
    Verify if you cross the Small Profits Threshold or the £12,570 limit for Class 4 NICs.
  2. Check Exemptions:
    Ensure that you don’t fall under any of the categories that are exempt from Class 2 NICs.
  3. State Pension Forecast:
    It’s wise to check your State Pension forecast to understand how your NICs impact your future benefits.
  4. 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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hmrc deadlines july and august 2023; london accountant; wimbledon accountant

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

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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1 August 2023 – Corporation Tax
For the fiscal year ended 31 October 2022, the due date for corporation tax is 1 August 2023. All corporations and businesses operating within the UK need to ensure they’ve prepared to meet this deadline.

19 August 2023 – PAYE and NIC deductions
For the month ending 5 August 2023, the PAYE and NIC deductions are due by 19 August 2023. Electronic payments can be made until 22 August 2023. All employers deducting PAYE and NICs from their employees’ wages need to take note of this deadline.

19 August 2023 – CIS300 monthly return and CIS tax
The filing deadline for the CIS300 monthly return and payment for the CIS tax deducted for the month ending 5 August 2023 is 19 August 2023. This is crucial for contractors operating under the CIS.

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HMRC’s Self-Assessment line summer closure

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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Need Assistance from an Accountant?

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

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


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guide to tax relief for work expenses in the uk; london accountant; learn how to claim for job costs you pay yourself

Guide to tax relief for work expenses in the UK

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.

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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; london accountant; self assessment; rental income

Self Assessment Tax Return for Landlords in the UK

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.

how much tax do I pay on rental income; tax return for landlords; self assessment; rental income; london accountant

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.

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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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