by Acuaccounts | Jul 24, 2024 | accounting, kings speech, latest news, self assessment, tax, tax return
The recent King’s Speech, delivered by King Charles III on 17 July 2024, outlined the new Labour government’s legislative agenda for the coming year. While the speech covered a wide range of topics, several proposals have implications for small businesses and the self-employed.
Let’s delve into the details of these key areas:
National Wealth Fund Bill
The government plans to inject £7.3 billion of capital into the National Wealth Fund.
This initiative aims to:
- Deploy funding through the UK Infrastructure Bank
- Expand the bank’s remit to catalyse private investment
- Generate £3 of private sector investment for every £1 it invests
For more information click here.
Budget Responsibility Bill
This bill introduces a ‘fiscal lock’, requiring any government making significant and permanent tax and spending changes to undergo an independent assessment by the Office for Budget Responsibility (OBR).
For small businesses, this could mean:
- More predictable economic policies, aiding in long-term planning
- Increased market credibility and public trust in fiscal decisions
- Potentially slower implementation of major tax changes, allowing more time for businesses to adapt
For more information click here.
Pension Schemes Bill
This bill proposes several changes to pension schemes, including:
- Consolidation of small, deferred pension pots
- Ensuring value for money in pension schemes
- Requiring schemes to offer retirement products
Small business owners should be aware of these changes, both for their own retirement planning and for managing employee pension schemes.
For more information read the article or speak to our team.
Draft Audit Reform and Corporate Governance Bill
While primarily aimed at larger companies, this bill could have trickle-down effects on small businesses, especially those aspiring to grow.
Key points include:
- Replacing the Financial Reporting Council with a new regulator
- Extending Public Interest Entity status to large private companies
- Removing unnecessary rules for smaller Public Interest Entities
- New powers to investigate and sanction company directors for serious financial reporting failures
More information here.
Planning and Infrastructure Bill
This bill aims to streamline the planning process for building homes and delivering major infrastructure projects.
For small businesses in construction and related industries, this could mean:
- More opportunities for contracts and projects
- Potentially faster approval processes for development plans
- Alignment with industrial, energy, and transport strategies
Great British Energy Bill
The creation of a new, publicly-owned energy production company could impact small businesses through:
- Potential changes in energy pricing and availability
- New opportunities for businesses in the clean energy sector
- Possible partnerships between the public entity and private sector companies
Employment Rights and Skills
While not detailed in the additional information, the speech mentioned plans to reform employment rights and skills training.
This could include:
- Changes to flexible working arrangements
- Reforms to zero-hour contracts and fire-and-rehire practices
- Transformation of the Apprenticeship Levy into a Growth and Skills Levy
Small business owners should prepare for potential increases in employment costs and new obligations but also look for opportunities in workforce development.
EU Relationship Reset
The government’s intention to reset relationships with EU partners could have significant implications for small businesses engaged in international trade, potentially easing some of the post-Brexit challenges.
What’s Missing?
Despite these proposals, some key small business concerns were not directly addressed. The Federation of Small Businesses (FSB) noted that the government’s 105-page briefing document doesn’t mention ‘small business’ once.
Notably absent were:
- Specific legislation to tackle late payments which is a significant issue for many small businesses
- Clear commitments to reduce the tax burden on small businesses
- Measures to help small employers adapt to the new employment rights package
Read the full FSB reaction here.
Looking Ahead
While the King’s Speech provides a roadmap for the government’s intentions, many details are yet to be clarified. Small business owners should keep an eye on the autumn budget for more concrete measures and potential addressing of concerns raised by small business representatives.
In the meantime, it’s advisable to start considering how these proposed changes might affect your operations. Speak to us at AcuAccounts to help you prepare for the evolving business landscape and identify challenges and opportunities in the coming year.
Remaining Tax Deadlines for 2024:
Here are the key remaining tax deadlines for 2024, starting from July:
July 2024:
- 22 July 2024: Deadline for paying Class 1A National Insurance Contributions (applicable to employee benefits like private medical insurance)
- 31 July 2024: Second Income Tax and National Insurance payment on account deadline
October 2024:
- 5 October 2024: Deadline to register with HMRC if you became self-employed or started receiving income from property in the 2023/24 tax year
- 31 October 2024: Deadline for paper Self Assessment returns for the 2023/24 tax year
December 2024:
- 30 December 2024: Deadline for online submission of Self Assessment tax returns for HMRC to collect tax through PAYE tax codes (if less than £3,000 is owed)
- 31 December 2024: Deadline for filing your company’s annual accounts if you have a limited company with an accounting year end of 31 March
January 2025:
- 31 January 2025: Deadline for online Self Assessment tax returns for the 2023/24 tax year and for paying the tax bill for the 2023/24 tax year
VAT Return Deadlines: For VAT-registered businesses, returns are typically filed quarterly. The deadlines are one month and seven days after the end of each quarter.
For example:
- 7 August 2024 for the quarter ending 30 June 2024
- 7 November 2024 for the quarter ending 30 September 2024
- 7 February 2025 for the quarter ending 31 December 2024
AcuAccounts is committed to helping clients navigate the complexities of tax legislation, pensions, accounting, and more. We are here to assist you in understanding and implementing the changes outlined in the King’s Speech, as well as ensuring you meet all upcoming tax deadlines.
Want to find out more? Get in touch at info@acuaccounts.com and book a consultation with our team. You can also call us directly on 0203 907 9027. Visit https://www.acuaccounts.com/contact/ for all contact information.
by Acuaccounts | Mar 4, 2024 | accounting, tax, tax return, vat
What is Value-Added-Tax (VAT)?
VAT is a tax on the consumption of goods and services applicable in 175 countries worldwide. In the UK, consumers pay VAT, businesses collect it at each stage of the supply chain, and HMRC administers it.
When a business charges VAT on goods or services, it must pay this VAT to HMRC. Businesses can also reclaim the VAT they have paid on purchase pays the VAT.
The standard rate of VAT in the UK is 20%. Some goods and services, such as children’s clothes or food, have lower VAT rates. Others are zero-rated or exempt.
When do you need to register for VAT as a business or as a self-employed person?
Registered businesses, partnerships, and the self-employed must register for VAT if their taxable annual turnover exceeds £85,000. Once registered, they must charge VAT on applicable goods or services, and submit VAT returns.
Your business must register for VAT if:
- your total taxable turnover for the last 12 months was more than £85,000); or
- you expect your turnover to exceed £85,000 in the next 30 days.
Remember to keep accurate records to know if and when you exceed the threshold within 12 months. The £85,000 threshold averages to £7,083 per month or £21,250 per quarter.
What is included in the total taxable annual turnover?
When determining if you meet the £85,000 VAT registration threshold you must calculate your total taxable turnover.
This includes:
- Sales of all standard-rated, 5%, or zero-rated goods and services.
- Rent received from letting goods and or property.
- Goods bartered, part-exchanges, or given as gifts (for example, goods to influencers or bloggers in exchange for content, branded merchandise, bartering services in exchange for other services, and more).
- Sales of vehicles and other assets.
- Commissions and bonuses.
- Goods used personally that were originally bought for the business.
- Reverse charge services from overseas suppliers.
- Building work over £100,000 the business did for itself.
Your annual taxable turnover does not include:
- Sale of goods that are VAT exempt, such as certain financial services, insurance, healthcare, education, etc.
- Statutory sick pay.
- Sales of capital assets like property, businesses, equipment, etc.
How to Register for VAT
You can complete the VAT registration application on the GOV.UK website at https://www.gov.uk/register-for-vat/how-register-for-vat.
You can start charging VAT on your sales and reclaiming VAT on items you bought from your ‘effective date of registration’ and deal with HMRC on your behalf.
To register for VAT as a limited company, you’ll need:
- The company’s registration number.
- Business’s bank account details.
- Unique Taxpayer Reference (UTR).
- Details of annual turnover.
To register for VAT as an individual or partnership, you’ll need:
- Your National Insurance number
- An identity document, such as a passport
- Bank account details
- Unique Taxpayer Reference (UTR)
- Details of annual turnover
After you’ve registered for VAT, you will get:
- A 9-digit VAT number, which you must include on all invoices.
- Information about using the VAT online service.
- Information about your first VAT return and payment.
- Confirmation of your effective date of registration.
Accounting for VAT while you wait for your VAT registration number
You cannot include VAT on your invoices until you get your VAT registration number, but you can increase your prices to account for the VAT that you need to pay to HMRC.
Voluntary VAT Registration, or how to register under the threshold
Businesses with an annual taxable turnover of less than £85,000 can voluntarily register for VAT. This enables them to charge VAT and reclaim it on purchases.
Late registration and the risk of penalties
There are consequences for not registering when legally required to do so. If you exceed the turnover threshold and do not register on time, you may have to pay HMRC the VAT due from when you should have registered. Late registration can also mean paying financial penalties based on how overdue the VAT registration is and the amounts owed.
How and when to get a VAT Exemption?
Businesses can apply to HMRC for a temporary exemption if they exceed the £85,000 threshold due to an unusual, short-term spike in taxable turnover. The application must include evidence showing turnover is expected to fall below £85,000 in the next 12 months.
HMRC reviews applications to determine if granting an exception avoids unnecessary compliance burdens for businesses whose high sales level is temporary.
What are the changes and responsibilities after VAT registration?
As a VAT-registered business, you must:
- Issue valid VAT invoices for all taxable sales, including VAT charges.
- File and pay VAT returns – usually every three months.
- Maintain accurate VAT records.
- Use VAT accounting schemes if they simplify compliance.
Issuing VAT Invoices
You must provide VAT invoices to customers showing the VAT charged. VAT is calculated based on the full sale value, including exchanges or part exchanges.
Filing VAT Returns
You must report the total VAT collected and paid to HMRC in VAT returns every three months, even if no VAT is due. Over-charged VAT must be paid, and any underpaid VAT can be reclaimed.
Record Keeping
You must keep records of all sales and purchases with VAT details for HMRC reporting and audits.
VAT Schemes
Some schemes, like Flat Rate or Cash Accounting, can simplify VAT accounting for small businesses. Please speak to our team for more information.
What can you reclaim VAT on?
Businesses registered for VAT can reclaim the VAT paid on many goods and services that are used specifically for operating the company, like staff travel, phone bills, company vehicles and fuel, utilities for home offices, etc. However, entertainment costs and assets only used personally by owners cannot have their VAT reclaimed.
What are the costs and administrative work required for VAT?
Costs and administrative work include:
- Accounting system requirements: You may need to upgrade your accounting software and systems to track VAT details.
- Additional software, staff training, or professional advice
- Knowing how HMRC payments work. VAT payments to HMRC are made online through bank transfers or direct debit. VAT refunds can be claimed the same way.
We hope this outline of VAT registration requirements, process, and post-registration obligations has been helpful. Please reach out if you have any questions.
As your accountants, AcuAccounts is committed to helping clients comply with VAT rules and avoid penalties. We’re ready to assist with VAT scheme advice, accounting system changes, and overall optimization of your VAT compliance. Our goal is to ensure your business has smooth and orderly VAT handling at every stage.
Want to find out how to best manage VAT for your business finances?
Get in touch at info@acuaccounts.com and book a consultation with our team. You can also call us directly on 0203 907 9027.
by Acuaccounts | Dec 21, 2022 | accounting, latest news, r&d credits, self assessment, selfemployed, tax return
The 2022 Autumn Statement by chancellor Jeremy Hunt reversed several policies introduced with the previous mini-budget by his predecessor Kwasi Kwarteng, as well as changing several thresholds that apply to businesses and the self-employed.
The autumn budget freezes the VAT threshold for businesses at £85,000, which with the current price rises will likely make VAT registration mandatory for more small businesses. Similarly, the personal tax allowance freeze at £12,570 was extended from 2026 to 2028, which with rising wages will move more people into higher tax brackets.
Reduced thresholds and allowances in 2023, 2024 and beyond
Two annual tax-free allowances that frequently apply to company owners and directors will be reduced in 2023-24: the dividend allowance and capital gains tax allowance.
The dividend allowance applies to directors paying themselves partially or entirely in dividends. The tax-free amount will be cut from £2,000 to £1,000 in 2023-24, then to £500 in 2024-25. The capital gains tax allowance, that applies for example, for sales of business assets will be cut from £12,300 to £6,000 in 2023-24, then to £3,000 in 2024-25.
Changes to business rates and energy bills for businesses
From 1 April 2023, business rates will be updated to reflect changes in property values since the previous evaluation in 2017. To support changes in business rates, the UK government has disclosed a targeted support package worth £13.6 billion over five years.
Furthermore, the Energy Bill Relief Scheme for businesses will remain in place until 31 March 2023. The government will introduce more targeted support on energy bills for the most vulnerable businesses from April 2023.
Increase in national living wage and reduction in research and development tax relief
The government has announced that the national living wage will increase from 1 April 2023, from the current rate of £9.50 per hour to £10.42 per hour for employees aged 23 and over. The UK minimum hourly wage for employees aged 21 to 22 will increase from £9.18 to £10.18, and the rate for employees aged 18 to 20 will increase from £6.83 to £7.49.
Research and development tax relief supports companies carrying out R&D projects related to their trade or business sector. However, in an effort to reduce fraud, the rate for small businesses will be reduced to 86 per cent, and the credit rate will be reduced to 10 per cent. The rate of the separate research and development expenditure credit will increase from 13 per cent to 20 per cent.
How to file your self-assessment correctly in 2023
With the self-assessment deadline less than a month and a half away, we review who needs to file for self-assessment and how it works.
You need to file for self-assessment in the UK in 2023 if any of the following apply:
- you have earned more than £1,000 from self-employment income
- you have earned from than £2,500 from renting property
- you have earned more than £2,500 in untaxed income like tips or commissions
- you have earned more than £10,000 from savings or investments
- you are a company director
- your taxable income was over £100,000
- you have earned income abroad that you need to pay tax on, or you live abroad but have an income in the UK
- you owe capital gains tax on profits from selling things like shares or a second home
- additional conditions as outlined on the government website
You can find the full list of conditions for self-assessment and check if you need to file a self-assessment tax return at https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return
To file a self-assessment tax return, you will need to gather the following information:
- your National Insurance Number and your ten-digit Unique Taxpayer Reference (UTR)
- detailed information about any untaxed income from the tax year, including your income from self-employment, dividends and interest on shares
- records of any expenses relating to your self-employment
- any contributions to charity or pensions eligible for tax relief
- your P60 or any other records showing any income you received and have already paid tax on
For any questions on how to prepare the information about your untaxed income, what can and cannot be expensed, or to book a full self-assessment service feel free to get in touch with our team at info@acuaccounts.com or on 0203 907 9027.
Keep track of your monthly and yearly tax and payment deadlines in 2023
In the UK, there are several important tax deadlines for businesses throughout the year.
Here are some of the key deadlines for the calendar year 2023:
- Self-Assessment Tax Return deadline: 31 January 2023 for the tax year that started on 6 April 2021 and ended on the 5 April 2022
- VAT Return deadline: Every 7th of the month following the end of the VAT period
- Corporation Tax Return deadline: 9 months and 1 day after the end of the company accounting period
- Payroll deadlines: Real Time Information (RTI) submissions must be made to HMRC on or before the date that payment is made to the employee
Review the monthly and quarterly tax deadlines in 2023:
Monthly Tax Deadlines
- On the 1st of the month: Corporation Tax payment for the tax year ending nine months prior (for example on January 1 2023 the Corporation Tax payment for tax year ending 31 March 2022 will be due)
- Every 7th of the month: VAT return submission and payment (online) if your business payment cycle is month-end
- Every 21st of the month: PAYE, NIC and CIS payment (electronic) for month-end 5 January 2022 and quarter-end 5 January 2022
Quarterly Tax Deadlines
- Due on the 21st of every three months: PAYE, NIC and CIS payment (electronic) if your company pays quarterly
Do you have questions about the recent updates and changes from the Autumn Statement? Any concerns about how to manage your taxes and business in 2023 or do you need help to submit your self assessment tax return?
Have a look at our services and feel free to get in touch with us. You can book a consultation at info@acuaccounts.com or call us directly on 0203 907 9027.
by Acuaccounts | Mar 29, 2022 | accounting, selfemployed, tax, tax return
Chancellor Rishi Sunak unveiled his Spring Statement on March 23rd, amidst the fastest price increases seen in the past 30 years.
Inflation is expected to peak at 8.7% in the final quarter of 2022, with significant effects on individuals and small businesses. Energy costs alone are estimated to rise on average by 54% from April 2022.
The Spring Statement included announcements on cuts in fuel duty, it raised the threshold at which people start paying National Insurance from July and included a pledge to cut the basic rate of income tax before the next general election.
Summary Points of the Spring Statement 2022
The key points announced in the Chancellor’s spring statement are as follows:
- Fuel duty was reduced by 5p per litre for one year
- The increase in National Insurance Contributions (NIC), called the Health and Social Care Levy, will go ahead as planned from April 2022
- The threshold to start contributing NIC will rise from July for Class 1 employees NIC, Class 2 self-employed NIC and Employers NIC (for smaller employers)
- The basic rate of income tax will be cut by 1% from 20% to 19% from April 2024
- The planned reforms for R&D relief to be implemented from April 2023 will go ahead with some exceptions to the block in deductions for oversees R&D work including clinical trials, regulatory reasons and geographical factors. Furthermore, companies will be able to claim R&D relief on projects supported by pure maths. Further reforms to R&D relief are being considered and expected to be published in the summer
- VAT on energy-saving materials like insulation will be reduced from 5% to 0% from April 2022 to April 2027
- The Apprenticeship Levy will be reviewed to determine whether the scheme is “doing enough”
- A review of the Enterprise Management Incentives has concluded that they do not require reform
- Several tax reliefs will be simplified or removed in the lead-up to 2024
How to prepare for the changes in National Insurance Contributions and Thresholds
Businesses and employers must ensure that their payroll systems are ready to handle the increase in NICs in April 2022 and the new Health and Social Care Levy in April 2023.
In addition, changes to the threshold which will increase when NIC has to be paid will come into effect on July 6th 2022. According to HMRC, the increase in the threshold should save the typical employee over £330 per year.
Changes to National Insurance Contributions for employees and employer
From April 6th 2022, the Class 1 rate of National Insurance Contributions will be increased from 12% to 13.5% on earnings between £9,880 and £50,270 per year. Contributions on earnings of more than £50,270 will increase from 2% to 3.25%.
From July 6th 2022, the threshold to pay the new increased rate of 13.5% for Class 1 NIC will increase from £9,880 as it stands currently to £12,570. No changes will apply to incomes above £50,270.
The changes in NIC will impact take-home pay for employees across the board. For example, an employee making £25,000 per year today has a net income of £20,662. From April, their net income will be reduced to £20,511 and increased again from July to £20,867. This increases take-home pay for an employee earning £25,000 between today and July by £205.
On the other hand, an employee earning £60,000 today takes home £43,489. Their take-home pay will decrease to £42,900 in April and increase again to £43,257 in July. The employee will take home £232 less from July.
The contributions to National Insurance paid by employers will rise from 13.8% to 15.05% in April 2022.
Changes to National Insurance Contributions for the self-employed
The self-employed pay Class 2 and Class 4 NICs depending on their profits.
Class 2 weekly contributions to National Insurance will increase to £3.15 a week in 2022-23. Class 4 rates on the other hand will increase by 1.25%.
However, the lower earnings limit thresholds will be increased to £12,570 reducing the tax burden on profits for most self-employed people in the UK.
Currently the self-employed with profits up to £9,568 pay £3.05 per week (Class 2), and Class 4 contributions of 9% kick in for profits between £9,568 and £50,270 in addition to Class 2. From July 6th 2022, the self-employed making profits under £12,570 will not have to contribute to National Insurance.
Class 3 contributions, usually paid on a voluntary basis to avoid contribution gaps, will increase from £15.40 per week to £15.85 per week from July 2022.
Changes to National Insurance Credits for state pension etc.
Paying National Insurance builds an employee’s entitlement to certain benefits, such as the state pension. The lower earnings limit to receive a National Insurance credit will remain at £6,396 for employees.
For the self-employed, the current weekly flat-rate contribution will be scrapped for profits between £6,515 and £9,568. Anyone exceeding the new increased small-profits threshold of £6,725 will continue to receive National Insurance credits.
The 2022 Spring Statement can be accessed in full at https://www.gov.uk/government/publications/spring-statement-2022-documents
Do you have questions about the Spring Statement? Any concerns about payroll and upcoming changes in National Insurance Contributions? Have a look at our services and feel free to get in touch with us.
You can book a consultation at info@acuaccounts.com or call us directly on 0203 907 9027.
by Acuaccounts | Sep 21, 2021 | accounting, eis, r&d credits, seis, tax, tax return
Research and Development (R&D) are essential drivers of economic growth. A vibrant economy relies on sustainable global competitiveness and support for businesses investing time and funds into R&D.
R&D tax credits, SEIS, and EIS are three ways the UK government supports business innovation.
What are R&D tax credits and how do they work?
R&D tax credits can today be claimed by a range of companies seeking to research or develop an advance in their field. Even for unsuccessful projects.
Research and Development tax credits are a UK government incentive launched to reward UK companies for funding innovation. The tax credits can be a precious source of funds for businesses to invest in expediting their R&D, hiring new personnel and ultimately scaling up their business.
Businesses in every sector of the economy, which have invested or are investing funds to develop new products, processes or services; or enhancing existing ones, may qualify for R&D tax relief.
An R&D tax credit can be claimed in the form of a payment and/or Corporation Tax reduction. Businesses claiming for the first time can typically claim R&D tax relief on their previous two completed accounting periods.
What kind of projects can claim R&D tax credits?
The work qualifying for R&D relief must be part of a specific project aimed at advancements in science or technology. Progress within social sciences or theoretical fields does not qualify.
The project needs to relate to the company’s business – either to an existing trade, or a trade intended to launch based on the results of the R&D.
To qualify for R&D relief, the project needs to meet the following criteria:
- looked for an advance in science and technology
- tried to or succeeded in overcoming uncertainty
- could not be easily worked out by a professional in the field
Advances in the field must relate to the overall industry and field of work, not just the business.
In addition, the project requires a level of complexity which a professional in the field could not have worked out with ease.
To prove scientific and/or technological uncertainty businesses need to show the uncertainty of experts at the beginning as well as the research, testing and analysis required for development. For example, in a description of the successes and failures during the project.
What types of R&D relief are available in the UK?
Different types of R&D relief are available, depending on company size and whether the project has been subcontracted or not.
SME R&D Relief
Companies can claim SME R&D relief if they operate with:
- less than 500 employees
- a turnover of under 100 million euros or a balance sheet total under 86 million euros
SME R&D relief allows companies to:
- deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, for a total deduction of 230%
- claim a tax credit if the company is loss-making, worth up to 14.5% of the surrenderable loss
Research and Development Expenditure Credit
Large businesses can claim a Research and Development Expenditure Credit (RDEC) for their R&D projects.
SMEs and large companies who have been subcontracted for R&D work by a large organisation can also claim RDEC.
The RDEC is a tax credit at 11% of qualifying R&D expenditure up to 31 December 2017.
It has since been increased to:
- 12% from 1 January 2018 to 31 March 2020
- 13% from 1 April 2020
What else do I need to know about R&D relief?
While the number of companies filing for R&D tax credits is growing rapidly, with over 50,000 R&D claims made by SMEs last year, not all companies realise that they may be eligible to claim that R&D cash back.
R&D relief cannot just be claimed by traditional tech companies or laboratories. The company needs to demonstrate that some of that work in developing a product or project, was done with the aim of making an advance in science or technology.
The main eligible costs for R&D relief are employee costs, subcontractor costs, software, consumable items, prototyping and clinical trials volunteers.
In addition costs of subcontractors can be claimed, even if they are not in the UK.
Many companies are unaware that the project does not have to achieve commercial success to be eligible for the R&D credit. The aim of the tax incentive is after all to de-risk innovation.
What is SEIS, and EIS?
The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are two UK government initiatives granting private investors a significant tax break when investing in early-stage, ‘high-risk’ companies.
SEIS is focused on very early-stage companies, while EIS focuses on medium-sized startups.
SEIS allows for a 50% tax break in return for an individual investing up to £100,000 per tax year. EIS allows individual investors to invest up to £1 million per tax year, receiving a 30% tax break in return.
Most trades qualify for SEIS and EIS funding, but a number are excluded entirely, for example, those dealing in land or commodities, trades involved with banking, insurance or money-lending and more.
Funds raised must be used for qualifying business activity and solely to promote the growth and development of the company, like hiring new employees, developing the product or marketing activities.
Companies can raise up to £150,000 in SEIS funding and no more than £12 million in EIS funding. Individual investors under SEIS or EIS are not allowed to hold more than 30% of the company’s overall shares.
Do you have questions about how to claim an R&D tax credit for your business? Are you interested in SEIS and EIS funding for your business? Have a look at our services and feel free to get in touch with us.
You can book a consultation at info@acuaccounts.com or call us directly on 0203 907 9027.
by Acuaccounts | Dec 7, 2020 | accounting, self assessment, selfemployed, tax, tax return
Self assessment is how HM Revenue and Customs (HMRC) collects income tax not automatically deducted from wages, pensions and savings. People and businesses with other income must report it in a tax return.
Company directors, self-employed or members of partnerships need to file for self assessment. Likewise, if you have made additional untaxed income of more than £2,500 for example by renting out property, you will also have to file for self assessment.
When is the 2019/2020 self assessment due?
Your self assessment tax return for the tax year which started on 6 April 2019 and ended on 5 April 2020 is due by Midnight January 31st 2021 if you file online. The deadline for filing a paper return was October 31st 2020. Furthermore, the tax you owe will also be due on January 31st 2021.
If you have never submitted a return before, you will first need to register for Self Assessment. It can take up to 20 working days for receiving your Unique Taxpayer Reference (UTR) in the post.
There are different ways to register if you’re self-employed, not self-employed but need to declare income, or if you’re in a partnership. The registration for 2019/2020 should have happened by 5th October 2020. To register you need your National Insurance (NI) number and personal and business details.
Who needs to file for self assessment?
You will need to file for self assessment in the following cases:
- your self-employment income was more than £1,000
- you are a director of a company (unless it was a non-profit organisation, such as a charity)
- your income from renting property exceeded £2,500
- you earned more than £2,500 in untaxed income, for example from tips or commissions
- your income from savings or investments was £10,000 or more before tax.
- you need to pay Capital Gains Tax on profits from selling things like shares
- you or your partner’s, income was over £50,000 and you’re claiming Child Benefit
- you have income from abroad you need to pay tax on, or you live abroad but have an income in the UK.
- your taxable income was over £100,000
- if you earn over £50,001 in the 2019/20 tax year (£50,001 for 2020/21) and make pension contributions you may have to complete an assessment to claim back the extra tax relief you’re owed
- you are a trustee of a trust or registered pension scheme
- your State Pension was more than your personal allowance and was your only source of income
- you received a P800 from HMRC saying you did not pay enough tax last year.
You can check if you need to file a self assessment using the government website at https://www.gov.uk/check-if-you-need-tax-return
At AcuAccounts we work to integrate the information from your company or sole trader accounts into your tax self assessment return. We will also factor in income from other investments, land or property and overseas assets if applicable.
What documents do you need to file for a personal tax return?
In order to file for self assessment online you will need to prepare the following documentation:
- your 10-digit Unique Taxpayer Reference (UTR)
- your National Insurance (NI) number
- Details of all your untaxed income from the tax year, including income from self-employment, dividends and interest on shares
- records of any expenses relating to self-employment
- any contributions to charity or pensions which might be eligible for tax relief
- P60 or other records showing how much income you received which you’ve already paid tax on
Self assessments can be filed either by yourself or by an authorised agent on your behalf, like AcuAccounts.
What is the difference between a personal tax return for self-employed and company directors?
As self-employed, you complete a self-assessment tax return and tell HMRC what profit you have made during that tax year and then you pay tax on this profit. Self-employed record expenses via the self-assessment and are taxed on profits.
In a similar fashion, limited company directors will run expenses through their limited company. A Limited Company pays tax from the moment it makes £1 in profit. However, directors can extract personal income from the Limited Company in the form of salary and dividends. This will be included in the limited company director self assessment, where the personal allowance applies.
How much tax can I expect to pay as a self-employed?
HMRC calculates Income tax for the self-employed on profits plus any other income. As self-employed you pay tax on any earnings that exceed the personal allowance. Business expenses from your self-employed work can be offset against your income from self-employment, reducing your tax bill.
The standard personal allowance for 2019/2020 was set at £12,500, which is the amount of income a person can get before they pay tax.
Can self assessment tax be paid in instalments?
You might be able to pay the bill in instalments, depending on whether you need to make payments against your latest bill or want to make advance payments against your next bill.
According to information on the HMRC website, you can set up a payment plan to spread the cost of your latest Self Assessment bill should you owe £30,000 or less or do not have any other payment plans or debts with HMRC.
It must be remembered that in case you don’t keep up with your repayments, HM Revenue and Customs (HMRC) can ask you to pay everything you owe. Not to mention you can set up a budget payment plan if you want to put aside money to cover your next Self Assessment tax bill ahead of time.
What is next?
You can file your tax return online on the HMRC website or get in touch with us to book a self-assessment consultation at info@acuaccounts.com or by calling us directly on 0203 907 9027.
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