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Demystifying the SA302: Your Tax Summary Explained

Demystifying the SA302: Your Tax Summary Explained

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Demystifying the SA302: Your Tax Summary Explained

by Faiz at Taxfile

An SA302 is a document issued by HM Revenue & Customs (HMRC) that summarizes your income tax calculation for a specific tax year. It shows how your tax bill was arrived at, including your income from various sources, any deductions and allowances, and the final amount of tax owed or refunded.

An SA302 can be essential documentation in various situations. For instance, you might need it when applying for a mortgage, a visa, or a business loan, as it serves as proof of your income and tax obligations.

How & Where to Get an SA302

If you need a copy of an SA302 there are various ways of obtaining them:

• If you have done your tax return yourself via HMRC’s portal, you can log into your Government Gateway and download copies of them;
• If you have used an accountant that uses external software, then your accountant can provide you with the calculations. It’s worth noting that HMRC has a list of lenders that will accept the tax calculations from the accountant’s software. If your lender’s name is not on this link, then you or your accountant would need to contact HMRC and ask them to send you one. This can take up to 14 days to arrive via post.

Avoiding Errors & Information Mismatches

At Taxfile we receive a lot of SA302s for our clients that have been sent to us by HMRC. This happens when there has been some error or omission on a client’s tax return that was submitted and didn’t match what HMRC had logged on their system. To explain:

HMRC holds the following information about each taxpayer:

• Student loans;
• Private pension contributions;
• PAYE income;
• Jobseeker allowance;
• Child Benefit along with salary information (so, if one of the parents was on a salary of £60,000* or more, then HMRC will recover some or all of the benefit);
* (£50,000+ for the tax years 2023/24 and prior)
• Registration for Class 2 National Insurance.

Because HMRC holds such information, our clients must check their tax returns carefully to ensure all the points mentioned above have been correctly covered and included in the tax return where appropriate. This is a crucial step when we provide the calculation and clients should also carefully read the declaration notes that are provided.

Guide to the Employer Payment Summary (EPS) – for Limited Companies within the CIS

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Guide to the Employer Payment Summary (EPS) – for Limited Companies within the CIS

by Daniel at Taxfile.

Understanding the Employer Payment Summary (EPS) monthly claims for limited companies within the CIS

Limited company contractors operating within the Construction Industry Scheme (CIS) have distinct payroll obligations, including the submission of their Employer Payment Summary (EPS). In today’s guide, we’ll explain what the EPS is, its purpose, and the submission rules limited companies have to follow if they work within the Construction Industry Scheme.

What is the EPS?

The Employer Payment Summary serves as a crucial mechanism for limited company contractors to report additional payments, deductions, and adjustments to HM Revenue & Customs (HMRC) alongside their regular payroll submissions. While all such employers submit a monthly EPS, limited company contractors operating under CIS have specific considerations due to their status and the nature of their work within the construction industry.

The purpose of submitting monthly EPSs for Limited Company Contractors in the CIS

The primary purpose of EPSs for limited company contractors operating within the CIS is to provide HMRC with accurate information about deductions suffered under the Construction Industry Scheme. By submitting each monthly EPS for CIS, limited company contractors also ensure compliance with CIS regulations and provide HMRC with essential data for tax calculations and entitlements.

Submitting an EPS for Limited Company Contractors working within the CIS

Limited company contractors operating within CIS are required to submit an EPS to HMRC every month, even if there are no adjustments to report. EPSs should be submitted after the end of the tax month but before the 19th of the following month, in line with HMRC guidelines.

Contractors can use HMRC’s online services or compatible payroll software to submit their monthly EPS for CIS. It’s crucial to ensure that the information provided in each EPS accurately reflects the deductions suffered under CIS.

The CIS deductions suffered sent through an EPS are promptly reflected as a credit on the PAYE account. This credit will then be utilised to set off against other liabilities, including PAYE tax, National Insurance Contributions (NIC), and subcontractor’s tax submitted through the CIS300 return.

When sending the EPS you can also claim Employment Allowance and recover statutory payments that exceed the amount of PAYE due.

Submitting EPSs late may lead to penalties imposed by HMRC, which can vary based on the extent and frequency of delays.

CIS Accountancy Help from Taxfile

At Taxfile, we can provide guidance on compliance requirements, tax calculations, and record-keeping practices.

Get in touch today for any accountancy or tax issue that needs expert help.


020 8761 8000 Book Appointment Contact Us

We can help whether you are a contractor, subcontractor, sole trader or limited company business in South London or the South West.

We are accountants in Tulse Hill, Dulwich and Devon/Cornwall.

Spring Budget 2024: A Balancing Act for the UK Economy

Spring Budget 2024: A Balancing Act for the UK Economy

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Spring Budget 2024: A Balancing Act for the UK Economy

by Ali at Taxfile.

The UK Chancellor, Jeremy Hunt, delivered his Spring Budget on March 6, 2024, amidst a backdrop of subdued economic growth and limited fiscal headroom. The budget aimed to strike a delicate balance between supporting economic activity, controlling public spending, and preparing for future challenges.

If you have missed the announcements, the Key Highlights for the majority of our clients are as follows.

Tax Cuts

The budget continued the government’s commitment to lower taxes, announcing a further 2p cut to National Insurance contributions (NICs) for both employees and the self-employed as of 6th April 2024. This measure, alongside previous cuts, delivers the largest-ever reduction in NICs, aiming to boost disposable income and stimulate economic activity.  Hunt says the National Insurance cut, to begin next month, is worth £450 a year for the average worker earning £35,000 p/a.

VAT Threshold Changes

Recognising the crucial role of small and medium-sized enterprises (SMEs), the Chancellor announced an increase in the VAT registration threshold from £85,000 to £90,000 starting from 1st April 2024. For the de-registration from VAT, the taxable threshold has also increased, by the same amount, to £88,000.

Child Benefit

The Spring 2024 UK Budget contained two key points regarding child benefit:

  1. The income threshold at which the High Income Child Benefit Charge (HICBC) applies increased from £50,000 to £60,000 annually.  This means families with one parent earning less than £60,000 will now receive the full amount of child benefit.
  2. There are also plans for future reform; the government announced a consultation to explore assessing the HICBC based on household income instead of individual earnings. This reform is planned to be implemented by April 2026.

The current system has been criticized for being unfair, as two single parents each earning £49,000 would receive full child benefit, while a single parent earning £50,000 would not. Assessing the charge based on household income aims to address this disparity.

Capital Gains Tax

The Spring Budget also includes two changes relating to Capital Gains Tax (CGT) on property:

1. Reduced rate for residential property

The higher rate of capital gains tax (CGT) due on disposal of residential property will reduce to 24% (from 28%), beginning on 6th April 2024. This means that individuals selling a second home or investment property will pay a lower tax rate on their profits.

2. Abolition of the Furnished Holiday Let (FHL) regime

Announced for 6th April 2025, the budget proposes abolishing the FHL tax regime. This regime currently offers beneficial tax treatment for furnished holiday lets. Instead, all UK residents will be subject to the same capital gains tax rules on their rental income, regardless of whether the property is a long-term or short-term let.

Non-Domiciles: Scrapping of the Remittance Basis

The previous system, where ‘non-doms’ only paid UK tax on non-UK income and gains if they brought them into the UK (remitted), is being abolished entirely.

The reform aims to create a simpler and fairer tax system for individuals regardless of their domicile status. It also encourages spending and investment within the UK by offering temporary tax exemption on foreign income brought into the country.  This will be done by:

1. The introduction of a residency-based system

The new regime focuses on residence instead of domicile. Individuals arriving in the UK after April 2025 will be exempt from tax on foreign income and gains for their first four years of UK residence.

2. A transition period

Existing non-doms will have a transition period to adjust to the new system.

 

Key Takeaways from the Spring Statement 2022

Key Takeaways from the Spring Statement 2022

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Key Takeaways from the Chancellor of the Exchequer's Spring Statement 2022

The Chancellor Rishi Sunak unveiled his Spring Statement for 2022 on 23 March and in some ways it was more like a mini budget.

Key takeaways from the Spring Statement include:

  • The earnings threshold at which you start to pay National Insurance Contributions (NICs) will increase to £12,570 from July 2022. This is currently set at £9,880 (correct at time of writing, March 2022), so will leave people with more money in their pockets.
  • Class 2 NICs for the self-employed will also reduce, from April 2022, to zero for profits between £6,515 and £9,568
  • 5p per litre has been cut immediately from fuel duty.
  • The basic rate of income tax will reduce from 20% to 19% starting in April 2024.
  • The Employment Allowance will increase to £5,000 per annum from April 2022. Currently it’s set at £4,000. The allowance reduces the NICs that employers have to pay.
  • VAT on materials that save energy will be reduced from 5% to zero from April 2022. This should reduce the cost of things like solar panels, heat pumps and insulation.
  • Councils in England will be able to pass on their share of an additional £500m in extra Government support via the Household Support Fund. The new tranche is for the period 2022/23. The fund helps vulnerable residents, via councils, with short-term help with things like fuel and household bills, food, clothing and other essentials. The previous tranche ends on 31 March 2022, so this is timely.

Watch the Chancellor’s 28 minute Spring Statement 2022, as delivered to the House of Commons, in the video above (skip any adverts). Alternatively get all the detail in the House’s briefing summary here. There’s also a Read more

The Spring Budget, March 2017

Spring Budget 2017: Key Changes Affecting SMEs & the Self-Employed

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Philip Hammond, Chancellor of the Exchequer, delivered his Spring Budget to the House of Commons today.

If you missed it, you can watch and listen to the entire speech by clicking the video above. For those without 55 minutes to spare, we spotlight the key changes, particularly in relation to tax, National Insurance, the self-employed and small businesses.

  • For the self-employed, Class 2 National Insurance Contributions (NICs) were already set to be abolished from April 2018. Today, to the surprise of many, the Chancellor announced that Class 4 NIC rates will increase from 9% to 10% from April 2018, increasing again to 11% in April 2019. The Chancellor said that this was to more closely align self-employed NI rates with those paid by employees, particularly in view of the new State Pension to which the self-employed will now have access.
  • Tax-free dividends for those working through a limited company will also be reduced from the current £5,000 level to just £2,000 in April 2018. Corporation Tax will then be charged above that threshold. Again, the reason cited was to bring the self-employed more in line with employees in terms of tax paid overall.
  • The National Living Wage, for those over 25, will increase to £7.50 per hour from April.
  • From April this year, the personal allowance (the amount people can earn before paying income tax) will increase to £11,500 and to £12,500 by 2020. The threshold for higher rate tax will also increase from £43,000 to £45,000 this April.
  • Up to £2,000 (tax-free) will be available towards the cost of childcare for children under 12 from April this year. So for every 80 pence you pay in childcare costs up to £10,000 maximum, the government will add a further 20 pence.
  • Those lucky enough to be able to afford it will be able to save up to £20k maximum in their ISAs from this April. There will also be an NS&I bond introduced, which will pay 2.2% interest on a maximum of £3,000 per person.
  • There will be help for businesses following business rate increases, particularly pubs, which will receive a £1,000 discount if their rateable value is less than £100k (apparently that’s 90% of all English pubs). Also businesses coming out of ‘small business rate relief’ will be helped through the transition with a promise of increases no larger than £50 per month from next year.
  • There will also be an expansion of the clampdown on tax avoidance where some businesses were converting capital losses into trading losses.

Other announcements made by the Chancellor Read more