Hiclass Accounting

*Payments on account*

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

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

• your last Self Assessment tax bill was less than £1,000

• you paid more than 80% of the previous year’s tax you owed, for example through your tax code or because your bank had already deducted interest on your savings

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

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

https://www.gov.uk/understand-self-assessment-bill/payments-on-account

Penalties for late submission of VAT returns

For each late VAT return submission, VAT-registered businesses will accrue one penalty point. HMRC will issue a penalty of £200 at the thresholds of:

• two accrued points for annual VAT return filing
• four accrued points for quarterly VAT return filing
• five accrued points for monthly VAT return filing

Once you have reached these thresholds, £200 penalties will be charged every time you file your VAT return late. To remove penalty points, you must file all your future VAT returns on time for one year and have no outstanding returns unsubmitted from the previous two years.

Penalties for late payment of VAT
In addition to the penalties for late submission outlined above, the following penalties for late payment of VAT also apply:

0-15 days: no penalty
16-29 days: 2% of the amount outstanding
30 days: 2% of the tax outstanding at day 15 plus 2% of the tax outstanding at day 30*

HMRC’s Time to Pay service provides an option for VAT-registered businesses to agree a schedule of payment with HMRC to stop a penalty from accruing.

Read more here:

https://www.freeagent.com/guides/making-tax-digital/the-truth-about-making-tax-digital-for-vat-penalties/

Companies House fees are set on a cost recovery basis. This means their fees must cover the cost of the services they deliver.

They do not make a profit on their fees.

Annual confirmation statement is going up from £13 to £34, if you file digitally.

They’ve published a list of all increases from 1 May 2024. https://changestoukcompanylaw.campaign.gov.uk/changes-to-companies-house-fees/

VAT registration threshold

The VAT registration threshold will rise from £85,000 to £90,000 from 1st April 2024.

If your annual VATable sales in the last 12 months are above the threshold - or they are set to pass that limit within the next 30 days - then you must register for VAT. This is the first time the threshold has been increased since April 2017. You can find out more about registering for VAT on HMRC’s website.

The VAT de-registration threshold is also being increased, to £88,000, from 1st April 2024. This means that if your VATable sales fall below that level, you're allowed to de-register. This threshold is currently set at £83,000.

https://www.freeagent.com/guides/vat/registering/

https://www.gov.uk/register-for-vat

Increase to the High Income
Child Benefit Charge threshold

The High Income Child Benefit Charge (HICBC) adjusted net income threshold will increase to £60,000, from 6 April 2024.

For individuals with income above £80,000, the amount of the tax charge will equal
the amount of the Child Benefit payment.

For individuals with income between £60,000 and £80,000, the rate at which
HICBC is charged is halved, and will equal one per cent for every
£200 of income that is more than £60,000.

https://www.gov.uk/government/publications/income-tax-increasing-the-high-income-child-benefit-charge-threshold

Minimum wage rates for 2024

The Government has announced the rates of the National Living Wage (NLW) and National Minimum Wage (NMW) which will come into force from April 2024.

In doing so, it has accepted in full the recommendations of the Low Pay Commission.

Today is the day for paying your self assessment tax if you owe any!

Deadlines

HM Revenue and Customs (HMRC) must receive your tax return and any money you owe by the deadline.

The last tax year started on 6 April 2022 and ended on 5 April 2023.
Deadline for telling HMRC you need to complete a return
You must tell HMRC by 5 October if you need to complete a tax return and have not sent one before.

You can tell HMRC by registering for Self Assessment.

Deadline for submitting a paper return
If you’re doing a paper tax return, you must submit it by midnight 31 October 2023.

Deadline for submitting an online return
If you’re doing an online tax return, you must submit it by midnight 31 January 2024.

Deadlines for paying tax you owe
You need to pay the tax you owe by midnight 31 January 2024.

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

You’ll usually pay a penalty if you’re late. You can appeal against a penalty if you have a reasonable excuse.

https://www.gov.uk/self-assessment-tax-returns/deadlines

✉️ Our mailing address has changed.

Suite 15, 1 Ensbury Park Road, BH9 2SQ

The deadline for voluntary National Insurance contributions has been extended to April 2025.

The government is giving people more time to pay National Insurance contributions towards their State Pension.

You can check your National Insurance record online to see:

• what you’ve paid, up to the start of the current tax year (6 April 2023)

• any National Insurance credits you’ve received

• if gaps in contributions or credits mean some years do not count towards your State Pension (they are not ‘qualifying years’)

• if you can pay voluntary contributions to fill any gaps and how much this will cost

Pay online - You can pay online by approving a payment through your online bank account.

https://www.gov.uk/pay-voluntary-class-3-national-insurance

https://www.gov.uk/government/news/deadline-for-voluntary-national-insurance-contributions-extended-to-april-2025

Mettle is offering an incentive for people to open an account with them.

All NEW to Mettle clients now get £50 when opening a Mettle account and make a deposit within the first 90 days.

The incentive is available to new clients only and will need to complete the following steps:

•. Make a note of the code Mettle50 (this might be the last time you see it).

•. Open a new Mettle account (applies to accounts opened on or after 5 July 2023).

•. Make your first deposit into the account within 90 days of your account opening.

After making your first deposit, share the code Mettle50 via the “redeem a code” section of the app also within 90 days of opening the account.

Mettle will transfer the money into your Mettle account within 30 days of you successfully making your first deposit and sharing the code

Please see the Mettle website for full details and T&C's:

https://www.mettle.co.uk/get-50/

**This offer may be withdrawn by Mettle at any point.

Mettle business account – apply in minutes | Mettle The bank account built for the self-employed, backed by NatWest.

On 1‌‌‌ April‌‌‌ 2023, the government will increase the National Living Wage (NLW) for workers aged 23 years and over by 9.7% to £10.42.

This 92 pence increase is the largest ever cash increase to the NLW. Changes to the other National Minimum Wage (NMW) rates can be found on GOV‌‌‌.‌‌‌UK.

https://www.gov.uk/national-minimum-wage-rates

Budget payment plan for Self Assessment customers.

HMRC provides Self Assessment customers whose payments and returns are up to date, the option to start a budget payment plan.

A budget payment plan allows you to make regular advance payments towards your next Self Assessment tax bill. HMRC will collect payments by Direct Debit as instructed by you.

You can set up and manage your budget payment plan using your HMRC online account. You can:
•decide the regular weekly or monthly amount you want HMRC to collect
•choose to amend your regular payment amount
•choose to suspend payment for a period of up to six months
•cancel it at any time

The budget payment plan does not mean you can delay payment beyond the due date. You will need to ensure that any balance still owing (after subtracting your budget payment plan payments) is paid off by the due date. Any balance still owed after the due date will become liable for interest.

Making regular payments reduces what you will have to pay on 31 January and 31 July deadline.

Use this link to get started : https://www.gov.uk/pay-self-assessment-tax-bill/pay-weekly-monthly

You may be affected by the tax charge if your income is over £50,000. Income includes taxable benefits you get from your job, like a company car or medical insurance.

Your partner is responsible for paying the tax charge if their income is more than £50,000 and higher than yours.

You’ll need the dates Child Benefit started and, if applicable, Child Benefit stopped.

https://www.gov.uk/child-benefit-tax-calculator

Tax-Free Childcare

£2,000 in government funding is available to help with childcare costs.

Parents and carers could be eligible for Tax-Free Childcare if they:

• Have a child or children aged up to 11. They stop being eligible on 1 September after their 11th birthday. If their child has a disability, they may get up to £4,000 a year until they are 17

• Earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week, on average

• Each earn under £100,000 per annum

• Do not receive tax credits, Universal Credit or childcare vouchers

Click here for more information about Tax-Free Childcare and how to register:-

https://www.gov.uk/tax-free-childcare

Employers PAYE — introduction of variable payment plan.

From 3 October 2022, in response to customer feedback, employers’ PAYE customers will be able to take advantage of a new variable Direct Debit payment plan.

The service can be accessed through Pay employers’ PAYE or directly through the business tax account and the employers PAYE service.

There will be changes to the business tax account and the employers’ liabilities and payments screens on the employers PAYE service. A new link ‘Set up a Direct Debit’ will be introduced and this will allow customers to set up a Direct Debit instruction, authorising HMRC to collect direct from their bank account based on their return submissions.
Following set up, the link will change to ‘Manage your Direct Debit’ and an employer will be able to view, change or cancel the Direct Debit online.

The facility to create, view, amend and cancel a Direct Debit is restricted to employers only, there is no scope for agents to do this.

If signed up to variable payment plan, the following charges will be collected on receipt of the returns to HMRC:

* Full Payment Submission
* Employer Payment Summary
* Construction Industry Scheme
* Apprenticeship Levy
* Class 1A National Insurance
* Earlier Year Update

https://www.gov.uk/government/publications/employer-bulletin-august-2022/august-2022-issue-of-the-employer-bulletin -PAYE

Avoid and report internet scams and phishing

Report misleading websites, emails, phone numbers, phone calls or text messages you think may be suspicious.

Do not give out private information (such as bank details or passwords), reply to text messages, download attachments or click on any links in emails if you’re not sure they’re genuine.

• Suspicious emails - Forward the email to [email protected].
The National Cyber Security Centre (NCSC) will investigate it.

• Text messages - Forward the text message to 7726 - it’s free.
This will report the message to your mobile phone provider.

https://www.gov.uk/report-suspicious-emails-websites-phishing

Voted the UK's #1 bookkeeping software for small businesses.

• Top Product: 2020 and 2021 AccountingWEB Software Awards, SME Accounting / Bookkeeping Software
• Top Product: 2020 and 2021 AccountingWEB Software Awards, Data & Expense Management Software
• Winner: 2021 ICB Luca awards, Client App of the Year

You could get FreeAgent for free
Get FreeAgent for free if you have a business current account with NatWest, Royal Bank of Scotland, Ulster Bank NI, or a business account with Mettle, for as long as you retain your account.

https://signup.freeagent.com/signup

What is tax avoidance?

Tax avoidance is when people bend the rules of the tax system to try to pay less tax than they should.

Spotting tax avoidance is straightforward, even though you might think it is difficult to spot, or that you need to be an expert.

Read HMRC’s quick guide to spotting the signs of tax avoidance schemes to protect yourself from them.

https://www.gov.uk/government/publications/tax-avoidance-facts

Understanding how you’re being paid is the best way to make sure you don’t get caught up in tax avoidance – this applies to people in PAYE as well as Self Assessment.

Checking your payslips and contractual arrangements will help you confirm you are paying the right amount of Income Tax and National Insurance contributions, so you do not get an unexpected tax bill later.

Things to look out for include:

• receiving more money in your bank account than what is shown on your payslip

• receiving untaxed payments like loans or capital advances

The money you receive in your bank account should match the net pay on your payslip.

To understand more about what your payslip HMRC have a great guide.

https://www.gov.uk/guidance/check-your-payslip-if-you-work-through-an-umbrella-company

You can also use their risk checker to check whether your current contract could involve tax avoidance.

https://www.gov.uk/guidance/check-if-you-are-at-risk-of-tax-avoidance

From 6 July 2022, as an employee you will be able to earn £3,000 a year more before you start paying National Insurance.

Use the HMRC tool to get an estimate of how the changes to National Insurance contributions will affect you.

You can use this tool to get an estimate if you’re employed and paid the same amount monthly, by your employer through the PAYE system.

https://www.gov.uk/guidance/estimate-how-the-national-insurance-contributions-changes-will-affect-you

Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your husband, wife or civil partner.
This reduces their tax by up to £252 in the tax year (6 April to 5 April the next year).

To benefit as a couple, you (as the lower earner) must normally have an income below your Personal Allowance - this is usually £12,570.

You can calculate how much tax you could save as a couple. (Link below)

You should call the Income Tax helpline instead if you receive other income such as dividends, savings or benefits from your job. You can also call if you do not know what your taxable income is.

When you transfer some of your Personal Allowance to your husband, wife or civil partner you might have to pay more tax yourself, but you could still pay less as a couple.

https://www.gov.uk/marriage-allowance

Dividends 2022/23
How dividends are taxed

You may get a dividend payment if you own shares in a company.
You can earn some dividend income each year without paying tax.

You do not pay tax on any dividend income that falls within your Personal Allowance (the amount of income you can earn each year without paying tax).

You also get a dividend allowance each year. You only pay tax on any dividend income above the dividend
allowance, which £2,000 for 2022/23

You do not pay tax on dividends from shares in an ISA.

8.75% Basic rate
The basic rate is paid on taxable income over the Personal Allowance to £37,700.

33.75%Higher rate
The higher rate is paid on taxable income over the Personal Allowance from £37,701 to £150,000.

39.35%Additional rate
The additional rate is paid on taxable income over £150,000.

As a the sole director of a Limited company, the best amount to pay yourself as a salary for the tax year 2022/23 is £9,100 per annum (£758.33 a month).

• As a sole director you cannot claim the Employment Allowance, so this figure is at the secondary threshold, meaning your company won’t need to pay employer’s NI on it.

• This amount is under the primary threshold, so you won’t need to pay employee’s NI.

• Ensures your payment is above the Lower Earnings Limit, so you will still earn your NI credits.

• Keeping you under the annual tax-free Personal Allowance threshold of £12,570.

The hourly rate for the minimum wage depends on your age and whether you’re an apprentice.

You must be at least:

• school leaving age to get the National Minimum Wage.
• aged 23 to get the National Living Wage - the minimum wage will still apply for workers aged 22 and under.

Current rates

These rates are for the National Living Wage (for those aged 23 and over) and the National Minimum Wage (for those of at least school leaving age). The rates change on 1 April every year.

You can use the minimum wage calculator to check whether the National Minimum Wage or National Living Wage is being paid.

https://www.gov.uk/national-minimum-wage-rates

Your National Insurance contributions might increase when the Health and Social Care Levy comes into effect in the UK (England, Scotland, Wales and Northern Ireland) on 6 April 2022.

The increase in your contributions will be used to help fund the NHS, health and social care.

You should read this guidance to prepare for the levy if you’re any of the following:
* an employer
* self-employed
* an employee
* self-employed or an employee and above State Pension age from April 2023

You will not be affected by these changes if you’re above State Pension age and are not an employee or self-employed. Find out more information in the ‘If you’re above the State Pension age’ section.

What the changes are and when they will affect you

For tax year 6 April 2022 to 5 April 2023

Employer Class 1, employee Class 1, Class 1A, Class 1B and Class 4 National Insurance contributions will increase, for one year, by 1.25 percentage points.

From 6 April 2023

The National Insurance contribution rates will go back down to 2021 to 2022 levels, and the levy will become a separate new tax of 1.25%.

How the levy will affect you

Between 6 April 2022 and 5 April 2023
If you are an employer, employee or self-employed (and below the State Pension age), you will pay the 1.25 percentage points increase in National Insurance contributions.

https://www.gov.uk/guidance/prepare-for-the-health-and-social-care-levy

Pay your Self Assessment tax bill through your online bank account

You can pay your Self Assessment bill directly using your online or mobile bank account.

When you’re ready to pay, start your Self Assessment payment. Select the ‘pay by bank account’ option. You’ll then be directed to sign in to your online or mobile banking account to approve your Self Assessment payment.

The payment is usually instant but sometimes it takes up to 2 hours to show in your account.
You’ll need to have your online banking details ready to pay this way.

https://www.gov.uk/pay-self-assessment-tax-bill/approve-payment-through-online-bank-account