Thousands of higher rate taxpayers that have failed to submit Self Assessment tax returns are about to receive a letter from HMRC reminding them that they have less than three weeks to get their affairs in order. click here for the full story
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When RTI comes into force in October 2013, employers will be required to send HMRC payroll payment information that includes information on the amounts paid and the number of hours. The submissions are made when the payroll is processed, which will have to be weekly or monthly to allow the Department of Works and Pension to use the information to calculate Universal Credits payments. The monthly reporting to HMRC will be a problem for small companies which pay a small salary below or equal to the personal allowance (£8105) as there is a requirement to log hours worked, which could breach national minimum wage rules Before RTI it was possible to declare a low salary as an annual payment, however under RTI if a monthly salary is taken this will need to be reported monthly even if there is no tax payable. This scheme is going to be an administrative burden on accountants and owner businesses, the scheme is already being piloted and planned to be online by 6th October 2013 HMRC have prepared a webinar on RTI which can be found at http://www.hmrc.gov.uk/webinars/pre-recorded.htm Sole Trader Vs Limited Company Corporation tax is currently 20%, for profits under £300,000 and 24% for profits above £1,500,000. Therefore conversion of your business into a limited company is more beneficial than before. You will enjoy a marginal rate tax saving of 9% from 1 April 2011, compared to 8% previously. This is compared to running your business under self assessment where Income Tax is 20% and Class 4 National Insurance is 9% for profits up to £42,475, profits up to £150,000 will be subject to 40% Income Tax and 2% National Insurance. Profits over £150,000 will be taxed at 50%. There are other factors to consider before incorporation its best to get in touch with us first. Annual Investment Allowance Where a business currently purchases plant and machinery, the first £25,000 of the expenditure qualifies for 100% tax relief in the year of the expenditure. VAT Flat Rate Scheme If you are mainly working for commercial customers it may suit your circumstances to register for VAT under Flat Rate Scheme voluntarily, even if your turnover is below the new VAT turnover threshold of £77,000 per annum. This is on the basis that you do not have much input VAT to reclaim (i.e. service companies). The scheme allows you to charge 20% to your customers, but only pay a smaller percentage of the gross turnover to HMRC. For example a computer consultant with a turnover of £50,000 would charge his customer 20% VAT and therefore receive £60,000, the additional £10,000 would be paid to HMRC, however under the Flat Rate Scheme only 14.5% of the gross turnover needs to be paid i.e. £60,000 x 14.5% = £8,700. Therefore a VAT saving of £1,300, which is taxable. You will also enjoy a 1% discount during the first 12 months from date of VAT registration under the Flat Rate. N.B - each industry has its own specific flat rate percentage. HMRC has a number of task forces to investigate certain business sectors, A summary of the current work of those task forces can be found below, each task force will move on to a new geographical area once the first area has been investigated.
London Properties This task force is investigating commercial property deals in Greater London, where the VAT rules may not have been applied correctly. Where they find this is the case, the HMRC officers will review the entire tax compliance of the property owner, across all taxes. Landlords HMRC are targeting landlords with three or more let properties in the North West of England and North Wales. Have you or your family correctly declared all of your rental income? Construction Industry The targets are self-employed builders (including small companies) in the North West of England and North Wales. The task force is looking for under-declared sales (such as cash jobs) and over-claimed expenses (where there are no supporting invoices). Remember to keep every receipt for purchases and keep a log of all business mileage. We can help you by advising what expenses are allowable to claim against your income. No Tax Return Submitted This task force is operating in the South East of England, looking for businesses who have not submitted tax returns for corporation tax, VAT, PAYE or income tax. In April 2013 HM Revenue & Customs (HMRC) is introducing a new way of reporting PAYE: Real Time Information, or RTI.
Using RTI, employers and pension providers will tell HMRC about PAYE payments at the time they are made as part of their payroll process. Payroll software will collect the necessary information and send it to HMRC Online. So you will submit information about PAYE payments throughout the year as part of your payroll process, rather than at the end of the year as you do now. RTI only affects the submission of PAYE information – payment arrangements will remain unchanged. Most employers will be legally required to use RTI from April 2013 with all employers submitting RTI by October 2013. HMRC will tell you when your business needs to make this move http://www.hmrc.gov.uk/rti/index.htm Small businesses have been reminded of changes to the UK's VAT systems. HM Revenue & Customs (HMRC) has issued a notice urging such enterprises to be prepared for the changes, which mean that from April 1st this year all VAT returns must be filed online. Those yet to have made the necessary adjustments to cope with online filing could be tempted to seek the assistance of a specialist accountancy service to ensure their financial affairs are in order. "Previously, only newly-registered businesses and those with turnovers of more than £100,000 had to submit their VAT online, as well as pay electronically. Anyone else could send HMRC a paper VAT return, but this will no longer be an option," the department explained. Business owners have also been urged to register for online filing in plenty of time ahead of the changeover to avoid the risk of incurring any late filing penalties. |
AuthorLicenced Accountant in Brighton Archives
May 2020
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