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

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.

Spring Budget 2024: A Balancing Act for the UK Economy

Spring Budget 2024: A Balancing Act for the UK Economy

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.

 

Boost Your State Pension with Voluntary National Insurance Contributions

Boost Your State Pension with Voluntary National Insurance Contributions

Boost Your State Pension with Voluntary National Insurance Contributions

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

Pension Contribution Deadline Extended

Deadline for Voluntary Insurance Contributions Extended to 5th April 2025

Deadline for Voluntary Insurance Contributions Extended to 5th April 2025

The original deadline for buying National Insurance ‘credit’ was 31st July 2023, but you can now ‘buy’ incomplete years to boost your state pension until 5th April 2025. The extension was approved by the Government, giving HMRC more time to deal with the process.

You can view our original blog on what you need to do to plug the gaps in your National Insurance contributions here.

Boost State Pension by Plugging Gaps in National Insurance

Boost State Pension by Plugging Gaps in National Insurance

IMPORTANT: the video mentions the original deadline in April 2023. This has now been extended to 5th April 2025.

Do you have gaps in your National Insurance record? If so, it could mean that you could get a lower State Pension when you reach state retirement age, particularly if you are aged between approximately 45 and 70 at the moment. Generally speaking, you need 10 years of contributions for a basic state pension and around 30 to 35 years for a full state pension. It does vary by circumstance though and, even with gaps, some people might have enough qualifying years for the full state pension already.

Urgently Check Whether You Have National Insurance Gaps

Our advice is to urgently check whether you do have any gaps in your National Insurance record. If so, in many cases it would be wise to make some one-off payments to plug any gaps for the years 2006 to 2016. However, there is limited time to do so despite the deadline for this opportunity having been extended from early April to the end of July 2023 [UPDATE: This has now been extended again to 5th April 2025]. Thereafter, the chance to fix all 11 years from 2006 to 2016 will be gone forever. Read more

The Spring Budget, March 2017

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

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

‘Employment Allowance’ to save businesses up to £2k in NIC

In April 2014 the new ‘Employment Allowance’ will be introduced. This will cut up to £2k off the National Insurance costs incurred by businesses and save employers nearly £5.5 billion across the UK as a whole by the end of the Parliament. This equates to £200 per UK employee.

These savings will also be helped by the abolishment of the National Insurance previously paid by businesses for employees under 21 years of age (from April 2015) and by the increase in the “threshold before an employer has to begin paying National Insurance contributions for employees” (from April 2011).

George Osborne, Chancellor of the Exchequer, said:

“Small businesses make a vital contribution to our economy, creating jobs and stimulating growth. The ones I have visited today want to expand, take on new staff and make new investments so the actions we have taken to cut the jobs tax will be a real boost to them.” Read more