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Don't Miss Out! Your Future Pension Needs YOU! - Check Your NI Contributions by April 5th, 2025

Don’t Miss Out! Your Future Pension Needs YOU! – Check Your NI Contributions by April 5th, 2025

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Don't Miss Out! Your Future Pension Needs YOU! - Check Your NI Contributions by April 5th, 2025

By Mohamed at Taxfile.

Have you ever thought about your pension? It might seem far away, but it’s super important to start thinking about it now! One of the key things that helps build your future pension is your National Insurance (NI) contributions.

What are NI Contributions?

Think of NI contributions like little building blocks for your future. When you work and earn money, some of that money goes towards your NI. These contributions help you qualify for things like the State Pension when you’re older.

Why is it Important to Check?

Sometimes, there might be gaps in your NI record. Maybe you didn’t earn enough in a year, were travelling, or something else happened. If you have gaps, it could mean you get less State Pension later on.

The Good News: You Can Fill the Gaps!

You can often fill these gaps by making voluntary NI contributions to fill the gaps between 2006 to 2018 This means you pay a bit extra now to make sure you have a stronger pension later.

Big Deadline Alert! April 5th, 2025

There’s a really important deadline coming up: April the 5th, 2025. This is the last day you can pay voluntary NI contributions to fill certain gaps in your record. After the 5th of April 2025, everyone will only be able to pay for voluntary contributions for the past 6 years.

Why the Rush?

  • Boost your pension because filling gaps means a bigger pension in the future.
  • Don’t miss out — after the 5th of April 2025, everyone will only be able to pay for voluntary contributions for the past 6 years.

What Should You Do?

  1. Check your NI record — it’s free and easy! You can check your NI record online through the government’s website.
  2. See if you have gaps — look for any years where you didn’t contribute enough.
  3. Think about voluntary contributions. If you have gaps, consider paying voluntary contributions.

Lowering the Secondary Threshold for Employer NI – What You Need to Know

Lowering the Secondary Threshold for Employer NI – What You Need to Know

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Lowering the Secondary Threshold for Employer NI – What You Need to Know

From April 2025, the secondary threshold for employer National Insurance (‘NI’) will be lowered. This means that employers will need to start paying employer NI contributions on their employees’ earnings sooner.

How Will This Affect Employers?

This change will affect employers in a number of ways. Firstly, employers will need to pay more in employer NI contributions. Secondly, employers will need to update their payroll systems to reflect the new threshold.

Employer NI and Employment Allowance Update

As an employer, you are responsible for deducting and paying National Insurance contributions (‘NICs’) for your employees. There are two types of NICs:

  • Employer NICs — These are paid by you as the employer.
  • Employee NICs — These are deducted from your employees’ wages.

Employment Allowance

The Employment Allowance is a relief that allows eligible employers to reduce their National Insurance contributions. The allowance increases from £5,000 to £10,500 per year from April 2025.

Increase in Employer NICs

From April 2025, the rate of Employer NICs increases from 13.8% to 15%. This means that you will need to pay more NICs for your employees.

How Taxfile Accountants Can Help

Taxfile Accountant can help you with all aspects of your payroll, including:

  • Calculating and deducting NICs
  • Claiming the Employment Allowance
  • Preparing and filing your payroll reports

We can also provide you with advice on how to minimise your NICs liability.

Accountants for Uber Drivers – Are They Needed?

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Accountants for Uber Drivers – Are They Needed?

Are you an Uber driver? If so, you need to ensure that you submit an accurate self-assessment tax return each year and, with new rules and data sharing now in place, it’s never been more important to get your figures right. You may therefore be wondering whether you need an accountant. Today’s guide gives Uber drivers an overview of the main rules for complying with HMRC, what they need to supply, and how accountants like Taxfile can help drivers with accounting, bookkeeping and self-assessment tax returns each year. By getting these right, Uber drivers will minimise tax, keep on the good side of HMRC and fulfil their tax obligations. Doing so will also help them avoid a financial mess and, potentially, nasty penalties from HMRC.

Do Uber Drivers Need an Accountant?

As well as doing the job of driving, Uber drivers need to report their earnings and pay any taxes and National Insurance due to HMRC. This needs to be done accurately and on time in order to avoid HMRC penalties. This is more important than ever now because, since 1 January 2024, digital platforms like Uber will be legally required to report drivers’ income directly to HMRC. Professional drivers will therefore need to be 100% accurate in what they report and pay in terms of tax. Therefore, getting expert help from an Uber accountant is recommended — and the accountancy fees are tax-deductible.

“The regulations will support the government’s work to help taxpayers get their tax right first time, and to bear down on tax evasion.” (HMRC)

As part of the process, Uber drivers will need to submit an accurate self-assessment tax return each year. At the time of writing (July 2024), the next one they will need to file with HMRC is for the tax year 2023-24. The deadline is in January 2025 (or 3 months earlier if filing via the old-style paper tax return).

“Drivers remain self-employed for tax purposes and still have to complete an annual tax return.” (Uber.com)*

Tempted to Do Your Own Tax Return?

When Uber drivers log into their Uber account, they will have access to a tax report which shows their earnings and expenses. It may be tempting to use only this information to do their own Self-Assessment tax return. However, the information supplied via the Uber account will not include capital allowances on vehicles purchased and potentially many other claimable expenses like those that we highlight later in this guide. In other words, they could lose out — and pay more tax than they need to! That’s a major reason why employing an accountant like Taxfile makes sense for Uber drivers.

Taxfile: an Uber Driver Accountant in South London

Taxfile’s accountants and tax agents work with many professional drivers every year, including Uber drivers. We are therefore experts at working out income, expenses, National Insurance, income tax, and compliance with HMRC requirements and deadlines. This culminates in us submitting hundreds of self-assessment tax returns for drivers every year. For professional drivers working through digital platforms like Uber, we work out drivers’ income and help to reduce any tax liability by offsetting all eligible expenses. We also help drivers register for Self Assessment when they first start. This gives them a UTR number, which is needed in order to file a tax return.

What Expenses Can Uber Drivers Offset Against Tax?

There are several expenses that Uber drivers can potentially offset against income in order to reduce tax. As you might expect, many stem from the use of a vehicle for the business. Examples include:

  • The part of the driver fees paid to Uber;
  • Road tax;
  • The cost of MOT tests;
  • The cost of maintaining the vehicle e.g. servicing, cleaning and repairs;
  • Fuel costs/mileage (there are several different ways to approach this);
  • The cost of leasing or renting the vehicle;
  • Capital allowances on vehicles purchased;
  • Parking and any toll fees;
  • The cost of vehicle insurance;
  • Accountancy fees associated with running the business;
  • Bank loan interest;
  • Use of a phone, radio, and/or GPS system for the business;
  • Costs associated with marketing the business (advertising etc.);
  • And possibly additional costs not listed here.

Taxfile can advise on all of these to ensure that Uber drivers pay no more tax than they absolutely need to. Such expenses can usually be offset where they apply to business-related use (not personal). Uber drivers must keep comprehensive and accurate records, i.e. invoices and receipts etc., in order to claim.

So, if you are an Uber driver or are planning on becoming one, please get in touch with Taxfile. We’ll help to get you set up for Self-Assessment and subsequently work with you to ensure your figures are correct, your tax return is accurate, and that it is submitted to HMRC in good time before the deadline. By doing so, you’ll know your tax affairs are in order and be able to avoid any nasty HMRC penalties. With our help, you’ll pay no more tax than you need to. You’ll also get a more accurate picture of your finances and help avoid surprises that might otherwise adversely affect cash flow.

*Are Uber Drivers Employees, Workers, or Self-Employed?

In terms of employment status, Uber drivers in the UK are now legally classed as workers rather than self-employed contractors or employees. This follows a ruling by the UK Supreme Court in 2021 (∞), which gives them certain employment rights.

However, purely from a tax standpoint, Uber drivers are effectively self-employed, hence the requirement to submit a Self-Assessment tax return each year.

Do I Need to Register for Self-Assessment?

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Do I Need to Register for Self-Assessment?

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.

Reasons to Register for Self-Assessment

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:

  • You are self-employed — sole traders, freelancers, and consultants typically fall under this category.
  • You receive rental income — if you earn income from renting out a property, you need to register.
  • You have a high income — employees earning over £100,000 per year need to register as their tax calculations may become more complex. (From 2023-24 you are only required to register if your income is above £150,000).
  • You have other income sources — this includes income from abroad, dividends, and partnership profits.

If you are still unsure about registration, please contact HMRC or call Taxfile on 0208 761 8000.

Registering for UK Taxes is Important

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.

Do Directors Need to Do a Self-Assessment?

Not all directors need to do a Self-Assessment tax return, but some do. Here’s a breakdown:

Directors with only PAYE income

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.

Directors with additional income

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.

Learn more about director self-assessment here.

Why is Payroll Important for a Director?

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.

Contact Taxfile – Accountants & Tax Advisors

Tax and accountancy help for South Londoners

If you need any accountancy help for your limited company or small business, Taxfile is here to help:

020 8761 8000 Book Appointment Contact Us

Are you in the South East or London? Taxfile has offices in Tulse Hill, and Dulwich, in South London.

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.

Tax or Accounting Problems?

Taxfile — help when you need it for tax and accountancy issues across South London


020 8761 8000 Book Appointment Contact Us

Taxfile are accountants & tax advisors in Tulse Hill, and Dulwich, South London.

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.

Any Questions?

If you have any questions relating to the Spring Budget and how it might impact you or your business, please contact Taxfile today.


020 8761 8000 Book Appointment Contact Us

Taxfile are high-quality accountants and tax advisors in Tulse Hill, and Dulwich in South London.

 

Understanding Overpayment Relief – Types, Eligibility & How to Claim

Understanding Overpayment Relief

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Understanding Overpayment Relief – Types, Eligibility & How to Claim

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.

What is Overpayment Relief?

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.

Types of Overpayment

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.

Eligibility Criteria

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.

Claiming Overpayment Relief

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.

Claim Format

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.

Tax & Accountancy Help from 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:

020 8761 8000 Book Appointment Contact Us

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.

Boost Your State Pension with Voluntary National Insurance Contributions

Boost Your State Pension with Voluntary National Insurance Contributions

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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

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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.