[As at 1 February 2023]: The 31st January was the Self Assessment tax return and tax payment deadline. Miss the deadline and you’ll be in for a £100 HMRC fine right away. Interest will also be charged from 1 February, as usual, if tax is not paid by midnight on 31 January (rules apply). Time is short, so contact Taxfile for help with your tax return as soon as possible please. Book an appointment* with one of our helpful tax advisors and accountancy experts TODAY — we’ll make it easy!
https://www.taxfile.co.uk/wp-content/uploads/2017/01/0-DAYS-featured-square.jpg338338Markhttps://www.taxfile.co.uk/wp-content/uploads/2020/03/taxfile-logo-2020.pngMark2023-01-29 11:48:182023-02-01 12:24:4731st January was the Self Assessment Tax Return Deadline!
Today we look at the tax-free allowance thresholds for what’s officially known as the tax-free Personal Allowance in the tax and accountancy world.
The Tax-Free Personal Allowance
This is the amount a UK individual can earn as income before they have to pay any Income Tax. In the current tax year (6 April 2022 to 5 April 2023) individuals can earn up to £12,570 before they have to start paying Income Tax, as you’ll see in the first table. In other words, if their taxable income is two thousand pounds more than that, they’ll only have to pay income tax on the extra £2000, not the core £12,570. There are exceptions, and different rules applied before 2016/17, but our aim is to keep things simple in this guide rather than focusing on more rare exceptions. So, below, we show the Personal Allowance thresholds for tax-free income over the last 7 tax years. As you will see, the Tax-Free Personal Allowance has gradually increased over the years.
Tax Bands for Basic Rate, Higher Rate and Additional Rate Taxpayers
The tables also show the various tax bands for earnings above the Personal Allowance threshold. These are the Basic Rate, Higher Rate and Additional Rate income tax bands, with tax rates increasing the more people earn. The information might be useful if you owe income tax from previous years but bear in mind that anyone born prior to 6 April 1948 may be entitled to a larger Personal Allowance.
Please note: this guide focuses only on Income Tax. Taxpayers will also need to allow for other deductions like National Insurance, which we’ll cover in a separate guide, and things like pension contributions, any student loan interest repayments, any tax on dividends, and so on.
Tax-Free Allowance Thresholds 2022/23
For the tax year 6 Apr 2022 to 5 Apr 2023:
The first £12,570 (your Personal Allowance) is tax-free*
Earnings between £12,571 and £50,270 are taxed at 20% (‘Basic Rate’ income tax)
Earnings between £50,271 and £150,000 are taxed at 40% (‘Higher Rate’ income tax)
Earnings over £150,000 are taxed at 45% (‘Additional Rate’ income tax)
* For every £2 earned above £100,000, the Personal Allowance is reduced by £1. It therefore reduces to zero for earnings of £125,140 or more.
Tax-Free Allowance Thresholds 2021/22
For the tax year 6 Apr 2021 to 5 Apr 2022:
The first £12,570 (your Personal Allowance) is tax-free*
‘Basic Rate’ earnings between £12,571 and £50,270 are taxed at 20%
‘Higher Rate’ earnings between £50,271 and £150,000 are taxed at 40%
‘Additional Rate’ earnings over £150,000 are taxed at 45%
* For every £2 earned above £100,000, the Personal Allowance is reduced by £1. It therefore reduces to zero for earnings of £125,140 or more.
Tax-Free Allowance Thresholds 2020/21
For the tax year 6 Apr 2020 to 5 Apr 2021:
The first £12,500 (your Personal Allowance) is tax-free*
‘Basic Rate’ earnings between £12,501 and £50,000 are taxed at 20%
‘Higher Rate’ earnings between £50,001 and £150,000 are taxed at 40%
‘Additional Rate’ earnings over £150,000 are taxed at 45%
* For every £2 earned above £100,000, the Personal Allowance is reduced by £1. It therefore reduces to zero for earnings of £125,000 or more.
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.
https://www.taxfile.co.uk/wp-content/uploads/2022/03/Spring-Statement-2022.jpg501894Markhttps://www.taxfile.co.uk/wp-content/uploads/2020/03/taxfile-logo-2020.pngMark2022-03-24 17:16:372025-03-13 13:05:54Key Takeaways from the Spring Statement 2022
We’re aware that many people are struggling right now. So, I wanted to personally touch base with you to confirm that, although the official deadline for submission of 2020/21 self-assessment tax returns and tax payments is Monday (31 January), there is now some extra time this year. This is great news for you if you are concerned about missing the deadlines or having to pay an HMRC penalty for being late. It should really take the pressure off for those who are struggling or worried.
For self-assessment tax returns, you now have until midnight on 28 February to submit. HMRC will only charge you a late filing fee if you file later than this.
For self-assessment tax payments, you now have until 1 April to make your payment (or arrange an HMRC payment plan) before incurring an HMRC late tax payment surcharge. While you will still incur interest for late tax payments from 1 February, HMRC’s interest rate is only 2.75% per annum, so even a month’s interest is unlikely to equate to much for most people.
For tax payments on account (payment in advance for the next tax year), there is no HMRC surcharge/penalty if you’re late but it does attract interest. However, again, that’s only at HMRC’s low rate, so is unlikely to amount to much for most.
We are here to help you, so don’t worry if you owe tax or are running late on your tax return. The Taxfile team can help you sort things out, particularly as we have a little longer than usual. We can work something out during February if you are worried about HMRC surcharges, interest and deadlines. Please get in touch if so.
Lastly, don’t forget that we are open on Saturdays during January and February (by appointment) and open later (until 6pm) on Mondays and Tuesdays. Read more
https://www.taxfile.co.uk/wp-content/uploads/2022/01/Guy-Bridger-Taxfile.jpg537537Taxfilehttps://www.taxfile.co.uk/wp-content/uploads/2020/03/taxfile-logo-2020.pngTaxfile2022-01-29 11:18:522025-03-13 15:15:28A Personal Message from Guy Bridger at Taxfile
HMRC has taken the decision to not issue a late filing penalty for anyone who does not submit their self-assessment tax return before midnight on 31st January 2022. It is important to point out that the deadline for filing your 2020-21 tax return remains 31/01/22 but the waiving of the penalty allows anyone who is unable to file their self-assessment tax return by the 31/01/22 deadline avoid a £100 late filing penalty as long as they submit their tax return sometime before midnight 28th February 2022.
Furthermore, anyone that is unable to pay their self-assessment tax liability before 31st January 2022 will not receive a late payment penalty if they pay their tax in full, or call HMRC to arrange a payment plan before 1st April 2022. It is important to note that interest will be added on taxes owed from 1st February 2022.
For a second year in a row, due to COVID, an extra Read more
https://www.taxfile.co.uk/wp-content/uploads/2021/02/Late_Payment_Penalty_Relief.jpg533800Taxfilehttps://www.taxfile.co.uk/wp-content/uploads/2020/03/taxfile-logo-2020.pngTaxfile2022-01-10 09:05:492022-01-12 09:15:16HMRC Waives Late Filing & Payment Penalty for 31st January Deadline
Season’s greetings to all our clients and readers and sincere thanks to all of you who have kept us busy with work during 2021 — we really appreciate it.
Here’s a quick reminder of our opening times during the Christmas period and into the New Year. This is for our Tulse Hill office (Thurlow Park Road) and our Dulwich office (Turney Road) except where otherwise indicated.
Friday 24 December 2021 (Christmas Eve): we’re open from 9am until 3pm (Tulse Hill office only).
Saturday 25 December 2021 (Christmas Day): closed.
Sunday 26 December 2021 (Boxing Day): closed.
Monday 27 December 2021 (a public holiday): closed.
Tuesday 28 December 2021 (a public holiday): closed.
Wednesday 29 December 2021: open 9am until 5pm.
Thursday 30 December 2021: open 9am until 5pm.
Friday 31 December 2021: open 9am until 3pm (Tulse Hill office only).
Saturday 1 January 2022 (New Year’s Day): closed.
Sunday 2 January 2022: closed.
Monday 3 January 2022 (a public holiday): closed.
Tuesday 4 January 2022: we re-open from 9am until 6pm.
Wednesday 5 January 2022: open as usual, 9am until 5pm.
Thursday 6 January 2022: open as usual, 9am until 5pm.
Friday 7 January 2022: open as usual, 9am until 3pm (Tulse Hill office only).
Saturday 8 January 2022: open 9am until 1pm by appointment (Tulse Hill office only).
Sunday 9 January 2022: closed.
From week commencing Monday 10 January: open as usual (see footer).
Have You Contacted Taxfile About Your Tax Return Yet?
If you need a self-assessment tax return or any other kind of return and haven’t yet arranged it with us, please arrange an appointment urgently. January becomes frantically busy in the accounting world, so please make the most of the remaining December appointments while they’re still available — thank you. Appointments are by telephone, Zoom, Microsoft Teams, in person (under safety protocols) … Read more
https://www.taxfile.co.uk/wp-content/uploads/2021/12/Christmas-Opening-Times.jpg524894Markhttps://www.taxfile.co.uk/wp-content/uploads/2020/03/taxfile-logo-2020.pngMark2021-12-22 13:59:132025-03-13 13:08:18Christmas & New Year Opening Times at Taxfile
New rules have now come into force in relation to capital gains made on disposals of UK residential property*. Several key actions are now required if a taxable capital gain has arisen, including some that now need to be made fast:
Taxpayers need to report the property’s disposal within 30 days of the actual disposal;
They will need to pay the estimated Capital Gains Tax (‘CGT’) to HMRC within 30 days of the disposal.
Those who fill in and submit a Self-Assessment tax return will also need to include details of the disposal on their return.
Who Do the New CGT Rules Apply To?
The new rules apply whether you’re an individual, joint property owner, trustee, partner in a partnership or LLP, or a personal representative.
What Counts as a Residential Property Disposal?
The new rules apply to all UK residential property that was disposed of (taken as the date of the exchange of contracts) since 6 April 2020 inclusive, where a capital gain was made that will require payment of CGT.
To fall within the rules, a UK residential property must be one that:
is suitable for use as a dwelling, or;
is being built or adapted for use as a dwelling.
It can be one in which the the owner has never lived or has lived for only part of the period they owned it. It can also be a rental property or a holiday home.
Where a property has been used for mixed purposes, only the capital gain that’s equivalent to Read more
https://www.taxfile.co.uk/wp-content/uploads/2021/06/New-Property-CGT-rules-SQ.jpg894894Markhttps://www.taxfile.co.uk/wp-content/uploads/2020/03/taxfile-logo-2020.pngMark2021-07-22 17:25:522025-03-13 13:27:29New 30-Day Rules for Capital Gains on Residential Property
Are you self employed? If so, Joe from Taxfile has some quick advice for you:
Class 2 National Insurance
It is important to register for Class 2 National Insurance. A lot of people don’t have this set up correctly and, if not sorted, then it can greatly affect your pension in the future. Class 2 National Insurance isn’t a lot of money, so speak to one of our advisors to make sure you’re set up. Finding out missing years is also possible.
Tax Returns
Try to file your tax return early. A major benefit to this is knowing what your tax liability will be long before it is due. That way, you can plan ahead or even set up a payment plan.
If you are filing your return late, then it is very important to try to get up to date as soon as you can. Apart from the initial £100 penalty for late returns, you will eventually end up paying a £10 per day penalty too if you don’t get up to date soon enough. That can soon spiral out of control. HMRC is very good at helping people who are struggling, but they can’t help if you bury your head in the sand. Penalties for late tax returns can be appealed but you must have very a good reason, like illness or death in the family.
Are you claiming the right expenses?
Speak to one of our agents about allowable expenses. A lot of people don’t claim the right expenses and can end up overpaying their tax. We can help with that, so you save unnecessary tax.
Contact Taxfile
Speak to Taxfile for any of your tax needs. Our staff skills are so versatile that, between us, there is nothing accounting- or tax-related that we can’t help with.
https://www.taxfile.co.uk/wp-content/uploads/2021/06/Advice-for-self-employed.jpg537894Taxfilehttps://www.taxfile.co.uk/wp-content/uploads/2020/03/taxfile-logo-2020.pngTaxfile2021-06-09 11:17:332025-03-13 13:32:45Are you self employed? Advice from Taxfile
My name is Daniel and I have been a part of the Taxfile family since 2007. It started as a part-time job doing bookkeeping, but as time went on, I developed new abilities and a deeper understanding of the tax world. PAYE, VAT, and Company Register are now my areas of expertise.
I understand how complicated the tax world is, so here are a few PAYE things to consider:
Understanding the tax thresholds for 2021-2022
PAYE is calculated based on how much you earn and whether you are eligible for the personal allowance.
Standard Rate: PAYE income tax is charged at 20%, less a personal allowance of £12,570, this is signified by tax code 1257L.
Higher Rate: For most, income over £50,270 to £150,000 is charged at 40%.
Additional Rate: Income above £150,000 is charged at 45%.
What is the Employment Allowance?
The Employment Allowance allows certain businesses that employ workers to reduce their annual National Insurance (NI) bill by up to £4,000 (for the 2021/22 tax year).
Eligible businesses can claim a reduction against their employer’s Class 1 NI liability up to a maximum of £4,000 each tax year. You can still claim the allowance if the liability was less than £4,000 in a tax year.
You can’t claim if you’re a company with only one employee paid above the Class 1 National Insurance Secondary Threshold (£8,840 for the 2021/22 tax year, up from £8,788 for the 2020/21 tax year) if that employee is also a director of the company.
How will I know if I haven’t paid the right amount of PAYE?
HMRC will send out a P800 tax calculation form after the tax year ends on 5 April, which you should receive by the end of November. This will show how much tax is due to be refunded, or is owed for previous years.
Another significant aspect of Taxfile is that it works with a wide range of accounts software (Sage, QuickBooks, Xero, FreeAgent, VT, Forbes, Moneysoft, and so on) and can accommodate everyone. These are just a few examples, but if you need assistance with any area of PAYE, VAT, or other types of tax, Taxfile and the team are here to help. Call Taxfile on 020 8761 8000, book a free appointment (in-person and phone or video call options are available) or simply message us your tax-related query and we’ll be happy to help. We are accountants and tax experts in South London.
This post was brought to you by Daniel at Taxfile.
Making Tax Digital (‘MTD’) was announced as the new initiative by HMRC to revolutionise and modernise the tax system in the UK.
MTD centres around keeping digital financial records that can then be accessed by software to calculate and submit taxes through to HMRC. The goal is that there will be direct ‘digital link’ between the financial record and the software used to calculate and submit the records and therefore ensuring an accuracy in the figures being generated.
With initial teething problems, MTD for VAT started back in April 2019, and as a result of various delays around Brexit & COVID-19, it still has not sailed out of its ‘soft-landing’ period.
Introduced in April 2019, MTD for VAT had a soft-landing period where the rules for this ‘digital-link’ were relaxed. Prior to COVID-19, April 2020 was the date stipulated where all digital links were to be in place for submissions.
As a direct consequence of COVID-19, it has been now been stated that as of 1st April 2021, the ‘soft-landing’ period comes to an end and all VAT registered businesses submitting VAT returns will need to ensure they have these digital links in place for their submissions.
Furthermore, from April 2022, MTD for VAT will apply to all VAT registered businesses and not just those that have a turnover greater than the VAT threshold.
MTD for Income Tax
The 10-year plan targets 6th April 2023 for self-employed businesses and unincorporated landlords to begin reporting Read more
https://www.taxfile.co.uk/wp-content/uploads/2020/07/Taxfile-Digital-excelbg.jpg376800Taxfilehttps://www.taxfile.co.uk/wp-content/uploads/2020/03/taxfile-logo-2020.pngTaxfile2020-07-28 13:41:032021-10-31 17:27:27Making Tax Digital – A New Time Line
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