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PAYE, 2021/22 Tax Thresholds, Employment Allowance & P800s

PAYE, 2021/22 Tax Thresholds, Employment Allowance & P800s

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PAYE, 2021/22 Tax Thresholds, Employment Allowance & P800s

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 and the South West.

This post was brought to you by Daniel at Taxfile.

Get peace of mind by using an experienced and friendly team of tax advisers and accountants

Peace of Mind from Using an Experienced Tax Team

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Get peace of mind by using an experienced and friendly team of tax advisers and accountants

When using Taxfile, you are using an experienced team that will make dealing with your tax affairs seamless. A lot of clients start by coming into our office stressed and overwhelmed, not knowing where to start. Using your current position and needs, we plan a step-by-step approach to keep you on top of your affairs and the relationship between you and HMRC harmonious. Once you are officially on board with us, we will have access to your HMRC record and, with our dedicated agent lines to HMRC, we’ll be able to speak to them on your behalf. This way, you are free from having to call them yourself and wait longer than we do for a call handler. You can also have any issues or queries explained to you in an easy to understand way by our friendly team. If you receive any letters that from HMRC and you don’t understand anything, we will be able to take a look for you and explain what it’s all about.

Any fee you pay Taxfile is tax deductible, so will be put on your tax return and result in a reduction of tax.

Our up-to-date knowledge of the tax system will give you peace of mind, alleviate any anxiety you may have and make the whole experience very different to how a lot of people find it when they are not using a team like ours. We know the best way to approach a tax situation that, without our experience and knowledge, could otherwise result in a lot more time and money being spent unnecessarily. From something as small as missing a tax return deadline, it can spiral into something a lot bigger, potentially including penalties, late payment interest, debt collection agencies being involved and so on. We inform all our clients of upcoming deadlines, for their particular tax situation, and let them know what needs doing and when, avoiding this situation and many more.

Unlike a lot of other companies, our tax experts and accountants are approachable, accessible and happy to help. We’re a unique tax advisor and accountancy practice like no other, with offices in Tulse Hill, Dulwich and Devon. We can help with any tax-related issues, including bookkeeping, filling in a tax return, limited company accounts, help accounting for property lettings,  tax refunds and anything accountancy-related. Call Taxfile on 020 8761 8000, book a free 20-minute appointment with us (remote or in-person options available) or simply email us your tax-related query here.

This post was brought to you by Julie at Taxfile.

EU VAT – The BREXIT Effect

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EU VAT – The Brexit Effect: changes in EU VAT treatment are coming on 1 July 2021 for EU B2C transactions.

Changes in EU VAT is incoming from 1st July 2021 for Business to Customer (B2C) sales for those operating within the EU.  The changes need to also be considered for businesses in the UK, post-Brexit, that wish to sell online directly to the customer.

The new EU VAT E-commerce package is comprised of two key components;

  • One Stop Shop (OSS)
  • Import One Stop Shop (IOSS)

It is not compulsory to report VAT using either of these methods, the option is still available to register for VAT in each EU country you wish to do trade with and account and pay VAT in each of those territories.  However, reading that, you would wonder why you would take on such a task, when you can just do one VAT return, where the liabilities are then paid to each country where the B2C transaction occurred.  However, importantly, these 2 methods can only be used for Read more

Taxes & Cryptocurrency

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How crypto currency in the UK is treated for tax by HMRC

According to HMRC, ‘cryptoassets’ are cryptographically secured digital representations of value or contractual rights that can be:

  • transferred
  • stored
  • traded electronically

There are various types of cryptoassets including exchange tokens, utility tokens, and security tokens. HMRC does not consider cryptocurrency to be currency or money & their complete Cryptoassets Manual can be found HERE.

As far taxes are concerned, investing in cryptocurrency is akin to investing in other assets such as stocks, bonds, and the sale of rental properties.  This means that capital gains and losses rules apply when you ‘dispose’ your assets, and in this case your cryptocurrency.

HMRC explains that disposals include:

  • selling cryptocurrency for money
  • exchanging cryptocurrency for a different type of cryptocurrency
  • using cryptocurrency to pay for goods or services
  • giving away cryptocurrency to another person

Any of the above situations subject any profits to Capital Gains Tax (CGT) and the simple formula for calculating capital gains (or losses) is:

Fair Market Value – Cost = Profit or Loss

The fair market value is the market price of the asset at the time that you sold, traded, or disposed of it.  The cost is the price you paid at the time of the purchase.

Although this is a simple and logical calculation, calculating CGT on your profits becomes a bit more complex when you have multiple transactions to account for.  The UK requires a specific type of method for calculating the cost basis of your coins known as Shared Pool Accounting also known as a 104 Pool.

With the shared pooled accounting method, you are essentially Read more

Tax “Payment Plans” are ENDING – Act NOW if you Owe Tax!

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Tax Debt “Payment Plans” are Ending - Act NOW if you Owe Tax!

Are you late paying your tax? Do you owe unpaid tax for the last financial year, or earlier? Are you struggling to pay it?

Taxfile has recently been helping some of our customers with tax debts from 2019/20 and earlier. In particular, we’re helping them to arrange payment plans with HMRC as part of their ‘Time to Pay‘ scheme. This spreads the cost of those tax debts instead of paying them off in one go. This is really useful to those who are struggling financially following the pandemic. The new payment plans are only available until 1 April 2021, though, so really you should apply by 31 March 2021. Our advice is to act now if you are in a position to take advantage of the payment plans while they’re still — just about — available.

The benefits of arranging a tax payment plan now

Agreeing a payment plan with HMRC will help avoid the 5% late payment penalty that’s usually charged on outstanding tax not paid by the deadline. And, of course, spreading the cost helps those who might otherwise struggle to get together the full amount in one transaction. The HMRC interest rate seems relatively low too.

How Tax Payment Plans have gone so far

What we’ve found so far is that Read more

Furlough Scheme Extended until End of September

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Furlough Scheme Extended until End of September

In The Chancellor’s 2021 budget speech it was announced that the furlough scheme would be extended until the end of September 2021, to protect the jobs and livelihoods of the UK population during the pandemic.

The Government will pay employees 80% of the hours not worked through to the end of June 2021.  As the country opens up it will then offer 70% with the employer to contribute the other 10%, then in August through to the end of September they will ask the employer to pay 20% while the Government covers the remaining 60%, so the employee continues to receive the 80% of their income for the hours not worked.

If you or your business need help setting up a payroll and help with the furlough scheme, then please do not hesitate to contact us on 020 8761 8000.

Latest e-Newsletter Confirms Important Updates

Latest News on Gov. Grants, Support, Loans, Deadlines & More

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Latest e-Newsletter Confirms Important Updates

Don’t miss our latest newsletter. Published just this week, it includes several updates on the latest Government support for small businesses during the pandemic, including:

  • a possible 4th SEISS grant coming for the self-employed and …
  • extensions of both the Job Retention Scheme (‘furlough’) ….
  • and Bounce-Back Loan Scheme.
  • There’s also a useful link where you can check what help may be available to you using a simple but genius interactive interface.

The newsletter also includes imminent deadlines that may affect you and news about a significant VAT change that will affect the entire Construction Sector.

Have you submitted your Self-Assessment tax return for the year 2019-20? It’s due in a few days! Learn more in the newsletter or get the ball rolling here.

Have you paid any tax you owe for the same period? It’s now overdue if not. Also see the newsletter for more information contact us using the yellow buttons below.

Learn much more about all these topics and more in our latest e-Newsletter, which can be viewed here. For help with any tax or accounting related issue, simply contact us and we’ll be happy to help. Choose an option below …

Book an Appointment
Send us a Message
T: 020 8761 8000
SEISS Grant 4 – News Coming Soon!

SEISS Grant 4 – News Coming Soon!

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Money Saving Expert founder Martin Lewis has announced¹ exclusive news about a possible 4th SEISS Grant for self-employed people. The Self-Employment Income Support Scheme (SEISS) offers direct financial support from the Government for those self-employed people who have seen a significant drop in profits due to the coronavirus pandemic, where eligible. He says the official announcement is currently scheduled for 3rd March 2021 during the Chancellor of the Exchequer’s Spring Budget.

Applications for the current 3rd SEISS grant closed on the 29th of January. The fourth SEISS grant period will cover the months February, March and April. Martin’s exclusive information suggests:

“… there will not be an announcement made on the amount of that grant and who is eligible […] until the budget, which is on the third of March. So over a month after the grant period starts, there won’t be news on exactly how much money you can get, and who is going to get it.”

He goes on to say:

“I doubt this actually means that people will receive their money any later, relatively, than they have done in the prior grants, because you’ve never been able to apply on the first day of the period”

Martin goes on to confirm that he suspects Read more

HMRC Extends the Self-Assessment Submission Deadline to 28th February BUT Payments still need to be made by 31st January

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Self-Assessment tax return deadline extendedto February but tax needs to be paid by 31 January

Yesterday HMRC made an 11th hour decision to give the remaining 3 million tax payers an additional 28-days to file their tax return electronically.

For most, a submission after the 31st of January would have resulted in a £100 late filing penalty.  With planning already underway at HMRC on how to cope with the administrative task of appeals around COVID & late filing, HMRC has decided to only issue the penalties after 28th February, effectively offering a 1-month extension on the electronic submission of self-assessment income tax.

However, the payment date for taxes remains unchanged, so it is important to note that taxpayers are still obliged to pay any tax they still owe (including any deferred payments) by 31/01.  In fact we are advising our clients to pay as much as they can into their HMRC self-assessment account and to view it as a bank account with HMRC so that, once their taxes are filed, they are not left with any unwanted surprises with interest on late payments, as any unpaid tax from 19/20 will be charged interest as of 01/02.

The extension has been welcomed and our own Director Guy Bridger had approached the Treasury requesting this extension.  so even though there is a sense of relief, we are adamant that tax payers realise they need to settle their outstanding tax bill if they can, even if it is an estimate, otherwise they will face HMRC’s low rate of annual interest on late payment of taxes along with the initial surcharge of 5% of any tax unpaid for the 19/20 tax year after 28-days.  So Guy’s suggestion is to pay as much tax as you can before 28th of February.

Please view your UTR as a bank account with HMRC, and any money paid into HMRC’s account with your UTR is money that will sit on your account until it needs to be used up.

So, even though your taxes can now be filed electronically by no later than 28/02, you will need to pay money into your HMRC account by 31/01.  If you still need us to calculate and submit your 19/20 taxes, please come and see us or call us on 020 8761 8000. Even though we might not file them before the 31st January, you will at least know the outstanding amount owed.