For businesses operating in the UK, understanding Value Added Tax (VAT) schemes is crucial. Not only does VAT impact your cash flow, but navigating the different options can feel overwhelming. This blog post simplifies VAT schemes in the UK, helping you choose the most suitable one for your business. Read more
VAT — the three little letters that strike fear into the hearts of many a Brit. But fear not, fellow taxpayer! Today, we’re taking a break from the spreadsheets and diving into the delightfully quirky world of UK VAT returns.
Ever feel like VAT is playing a game of tax-code whack-a-mole? One minute, it’s 20% on your fancy new bicycle helmet. The next, it’s vanished like a magician’s rabbit on a packet of crisps (because, let’s face it, crisps are a VAT mystery all on their own).
Who knew a simple sponge cake could cause such a stir? Apparently, a sprinkle of chocolate transforms it into a full-VAT situation. Don’t worry, Victoria sponges are safe (for now).
Remember the smoothie wars of ’07? Innocent Drinks tried to claim their creations were “liquefied fruit salad” to avoid VAT. HMRC, ever the defender of fiscal justice, said, “Not so fast, those are clearly beverages!” A tale that proves even the fruitiest tax battles can be entertaining.
We’ve all been there. You’ve spent hours on your return, feeling smug and self-assured. Then, with a click of the submit button, dread washes over you. Did you forget something? Did you use the wrong form for your pet rock collection (because, yes, VAT rules apply there too)? Deep breaths, everyone. VAT return blunders are a thing.
There’s nothing quite like the thrill of a VAT refund. It’s like finding a forgotten banknote in your winter coat – a financial windfall delivered straight from HMRC! Just remember, with great refunds comes great responsibility (to spend it wisely, of course).
VAT returns might not be a walk in the park, but with a little humour and a helpful accountant, they can be a gentle breeze on a summer’s morning.
At Taxfile we take the ‘tax’-ing aspect out of VAT returns leaving you with the ‘value added’, focusing on what is important for you and your business.
We can run your VAT from start to finish; all you need to do is keep a digital footprint of your financial data.
Call us on 0208 761 8000 so we can provide you with all the services we provide from VAT registration, bookkeeping, MTD-compliant software and those VAT calculations and submissions. The only thing we don’t do is pay your VAT bill for you!
by Mohamed at Taxfile.
In today’s guide, we look at the rules around whether or not you need to register for Self-Assessment and submit a tax return to HMRC each year. Let’s take a look.
You generally need to register for a Self-Assessment tax return if your income isn’t taxed at the source, meaning the tax isn’t automatically deducted from your wages/salary. Here are some common scenarios where you would need to register for self-assessment:
If you are still unsure about registration, please contact HMRC or call Taxfile on 0208 761 8000.
Registering for UK taxes is important for a few reasons, as we’ll explain below.
Firstly, it helps you avoid penalties. If you don’t register for Self-Assessment when required, you could face penalties from HMRC. These can be significant, especially if you’ve been earning income for a while without registering.
Secondly, it helps to ensure accurate tax payments. By registering and filing a Self-Assessment tax return, you ensure you’re paying the correct amount of tax. Without it, you might underpay and owe interest, or overpay and have to wait for a refund.
Thirdly, it helps you stay legally compliant. In severe cases, failing to register and pay your taxes can lead to legal action, including prosecution.
Registering also helps you maintain good standing with the Government. Being registered with HMRC shows you’re taking your tax obligations seriously. This can also be important if you’re applying for credit, a mortgage, or a visa.
Not all directors need to do a Self-Assessment tax return, but some do. Here’s a breakdown:
If your only income from the company is through PAYE (Pay as You Earn), where tax is deducted at source, you generally don’t need to do a Self-Assessment.
If you have any other taxable income besides your salary, like dividends, company benefits, or income from another job, you likely do need to do a Self-Assessment tax return in order to report it.
However, even if you aren’t required to register, HMRC might still ask you to file a Self-Assessment return.
Payroll ensures compliance with tax regulations. Directors are considered employees for tax purposes, and PAYE is the system used to collect Income Tax and National Insurance Contributions (NICs) from their salary. Running payroll ensures these deductions are made and reported correctly to HMRC.
Payroll creates a clear and accurate record of your director’s salary payments. This is important for tax purposes, but also for things like calculating benefits and pension contributions that might be tied to salary.
Being on payroll allows directors to qualify for certain benefits they wouldn’t get if paid through dividends alone. These can include enrolling in a company pension scheme and accruing National Insurance credits that contribute to your state pension.
Payroll ensures transparency by helping to maintain a clear separation between personal finances and the company’s finances. This is important for legal and accounting reasons.
While there might be tax advantages to structuring some of your director’s income as dividends, payroll remains a vital part of ensuring you’re following regulations and have a clear record of your director’s overall compensation.
Learn more about how to pay yourself as a director here.
If you need any accountancy help for your limited company or small business, Taxfile is here to help:
Are you in the South East or London? Taxfile has offices in Tulse Hill, and Dulwich, in South London.
Companies House is the Government agency responsible for maintaining the public register of companies in the UK. Filing with Companies House typically refers to the submission of various documents and records, as required by the registrar of companies in the United Kingdom. In today’s guide, we’ll take a look at what types of document need to be filed, when to file them, and what happens if they’re not filed on time.
Some of the most common types of filings with Companies House include the following:
Most companies are required to file annual accounts, which include a balance sheet, profit and loss account, and notes to the accounts. The filing deadline for this varies and depends on when the company was set up.
A company gets nine months from its year-end in which to file the company accounts to Companies House and such a period helps in some ways. However, it also leaves the company’s accountants with little time to prepare and the directors with very little time to pay their Corporation Tax bill. Ideally, therefore, records should be with the accountant in the month following the company’s year-end rather than in the month the deadline falls — which is so often the case.
The Confirmation Statement replaced the Annual Return in 2016. It confirms that information about the company held by Companies House is accurate and up to date. The Confirmation Statement must be filed at least once a year, even if there have been no changes to the structure of the company (e.g. changes to directors, shareholders, share capital etc.).
It is very important to update the Confirmation Statement when it is due. That’s because, if it becomes too overdue, Companies House is quick these days with a potentially severe punishment: a proposal to strike off the company.
Any changes to the company’s details, such as changes to the registered office address, directorships, company name, or share structure, need to be filed with Companies House.
Similarly, any significant changes to the company’s structure or decisions made by shareholders (such as issuing new shares or changing the company’s constitution) need to be filed with Companies House.
When registering a new company, various documents such as the Memorandum and Articles of Association need to be filed with Companies House.
Once the company has been set up, the director of the company will receive an Authentication Code. This needs to be kept safe as it works like a PIN code and is used for filings with Companies House online.
Conversely, if a company is being dissolved (closed down), the necessary paperwork also needs to be filed with Companies House.
Filing requirements and deadlines can vary depending on the type and size of the company. Failure to file required documents accurately and on time can result in penalties and other adverse consequences for the company and its officers. It’s important, therefore, for company directors and secretaries to stay on top of their filing obligations with Companies House. By doing so, they should avoid the negative consequences associated with non-compliance with the law.
Get in touch with our friendly tax team today for accountancy help for your limited company or small business. We’ll be happy to help!
Taxfile are accountants and tax advisors in Tulse Hill, and Dulwich (South London).
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.
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.
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:
• 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.
Taxfile are accountants & tax advisors in Tulse Hill, and Dulwich, South London.
by Daniel at Taxfile.
The CIS Contractor’s Monthly Return is a mandatory requirement for contractors operating within the Construction Industry Scheme (CIS). It acts as a mechanism for contractors to disclose to HM Revenue and Customs (HMRC) payments issued to subcontractors and the corresponding tax deductions withheld from those payments. By providing HMRC with information regarding payments rendered and the accompanying tax deductions, the CIS Contractor’s Monthly Return guarantees transparency and adherence to regulations within the construction sector. In today’s guide, we explain the various components of the monthly ‘CIS300’ return, how the process works, key deadlines, the ramifications of non-compliance, and much more.
The CIS Contractor’s Monthly Return typically includes the following key components:
1. Contractor Details
This section includes information about the contractor, such as their name, Unique Taxpayer Reference (UTR), and contact details. Ensuring accuracy in this section is crucial for HMRC’s records and communication purposes.
2. Subcontractor Details
Contractors must provide details of all subcontractors they have engaged during the reporting period. This includes the subcontractors’ names, UTRs, and payment amounts.
3. Payments Made
Contractors must report the total payments made to each subcontractor during the reporting period. This information helps HMRC track payments within the construction industry and verify compliance with tax obligations.
4. Tax Deductions
Contractors are required to calculate and report the tax deductions made from payments to subcontractors. The deducted amounts are typically based on the subcontractors’ verification status and tax treatment under the CIS.
5. Total Amount Due
The Monthly Return concludes with the calculation of the total amount due to HMRC, taking into account the tax deductions made from payments to subcontractors.
The CIS Contractor’s Monthly Return deadlines follow a structured timeline, which includes:
Once you’ve calculated the total CIS deductions, prepare to make the payment to HMRC. You will need to have the following information ready:
HMRC offers various payment options for settling your CIS liabilities, which are explained here.
Failure to meet CIS Contractor’s Monthly Return deadlines can lead to various consequences, which may include the following:
For contractors, efficiently managing the CIS Contractor’s Monthly Return process involves the following steps:
Contractors should maintain accurate records of payments made to subcontractors and tax deductions applied. This includes keeping track of invoices, receipts, and CIS statements.
The Monthly Return must be submitted to HMRC by the 19th of each month following the end of the reporting period. Contractors should ensure timely submission to avoid penalties and maintain compliance.
HMRC provides online services for submitting CIS returns, making the process convenient and accessible for contractors. Registering for and using these online services can streamline the submission process and reduce administrative burdens.
The CIS Contractor’s Monthly Return is the key tool through which to report payments and tax deductions accurately to HMRC. Understanding its components and effectively navigating the submission process helps to ensure that contractors are compliant — and also avoids unnecessary penalties.
Rest assured, though: Taxfile is here when you need help with CIS returns and accountancy for construction workers, bookkeeping, CIS tax rebates for subcontractors, limited company accounts, and any tax-related matters that require professional help. We’re happy to provide guidance on compliance requirements, tax calculations, record-keeping practices, and much more.
We have accountancy practices in Tulse Hill and Dulwich in South London.
by Mohamed at Taxfile.
Have you ever felt that you’ve paid more in taxes than necessary? Whether due to calculation errors, changes in personal circumstances, or evolving tax laws, overpayments can happen to anyone. The good news is that there’s a way to reclaim those excess funds through the process of overpayment relief claims. In this comprehensive guide, we’ll walk you through the ins and outs of reclaiming your hard-earned money.
Overpayment relief allows you to recover money you’ve mistakenly paid to HMRC within four years after the end of the tax year in which the overpayment occurred. It’s a financial safety net that allows you to correct discrepancies and regain control of your finances. Understanding the concept is the first step toward putting your overpaid taxes back where they belong – in your pocket.
The overpayment must be for income tax, capital gains tax (CGT), Class 4 National Insurance contributions (NICs), or corporation tax. It applies to both overpayments and excessive assessments.
You must have a valid reason for believing you overpaid tax. This could be an error in your tax return, incorrect coding by HMRC, or changes in your circumstances affecting your tax liability. You cannot claim overpayment relief simply by correcting your tax return after the deadline.
You need to submit a formal claim to HMRC in the correct format, explicitly stating that it’s for “overpayment relief.”
The claim should clearly identify the tax year, the amount you believe you overpaid, and the reason for the overpayment. Include any supporting evidence, like documents confirming income, deductions, or expenses. Your claim must be submitted within specific time frames — generally, four years from the end of the tax year for which you’re claiming. Special rules apply for late claims.
Your claim must be made in writing, stating the tax year, the amount overpaid, the reason for your claim, and whether you’ve previously appealed. You cannot claim through your tax return.
For more information please refer to the HMRC website or get in touch with Taxfile.
At Taxfile we are skilled at identifying opportunities for additional savings, deductions, and credits that individuals might overlook. You can call us on 020 8761 8000 to schedule a free 20-minute, no-obligation consultation for any tax-related matter — or simply use the buttons below:
Taxfile is a tax advisor and accountant in Tulse Hill at 25 Thurlow Park Road, Tulse Hill, London SE21 8JP. We’re on the corner at the junction of Birkbeck Hill and the South Circular (A205), within easy walking distance of Tulse Hill station (map). We also have a Dulwich office.
As of April 6, 2023, the Self-Assessment (SA) for income tax has undergone a significant transformation, known as Basis Period Reform. This change aims to align the taxation of business profits with the standard April-April tax year, rather than any other accounting periods that may have been required by the taxpayer.
While the transition to the new basis period has introduced certain complexities, it also presents opportunities for businesses to manage their tax liabilities more effectively. One such opportunity lies in the spreading of tax arising from transitional profits.
Transitional profits refer to the profits that arise from the transition between the old and new basis periods. These profits can be spread over Read more
Are you a sole trader or in a partnership?
Do you have different accounting dates from the standard 6th of April to the 5th of Apri?
If you answered YES to both questions, some IMPORTANT changes will apply for the tax year 2023-24.
The concept of the basis period determines the time frame used to calculate taxable profits or losses for self-employed individuals, partnerships, and some trusts. It marks a departure from the traditional “current year” basis, where business profits were taxed based on the accounting period ending within the tax year. Instead, it introduces a “tax year” basis, aligning taxable profits with the UK’s standard tax year, running from 6 April to 5 April. Read more
As we approach retirement, ensuring a comfortable financial future becomes a top priority. The state pension, a crucial source of retirement income, is dependent on the number of qualifying years of National Insurance (NI) contributions you have made. While gaps in your NI record can diminish your state pension entitlement, there’s a solution: voluntary NI contributions.
To receive the full state pension, you need 35 qualifying years of NI contributions. These years typically accumulate as you work, with contributions automatically deducted from your salary. However, there may be instances where you may not have earned enough to make mandatory NI contributions, leading to gaps in your record. Read more