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What you need to know about the Spring Budget 2024

It’s the time of year again when the Chancellor of the Exchequer has unveiled the much-anticipated Spring Budget, outlining the Government’s plans for taxation and spending. Let’s dive into the highlights of the 2024 Budget to help you understand what it means for you.

National Insurance Cuts

One of the headline announcements in this year’s Budget is the reduction in the main rates of National Insurance contributions (NICs) for both employees and the self-employed. Effective from April 2024, the Class 1 employee NICs will see a significant cut from 10% to 8%, while Class 4 employee NICs will drop from 8% to 6%. This move aims to put more money back into the pockets of workers and self-employed individuals.

High-Income Child Benefit Charge (HICBC)

Families across the UK will welcome the changes to the High Income Child Benefit Charge (HICBC). The threshold for HICBC will rise from £50,000 to £60,000 starting in April 2024. Also, the rate at which this charge is applied will be halved, making sure that Child Benefit is not entirely withdrawn until individuals earn £80,000 or more. These changes give families some relief while ensuring that benefits are taken away more fairly.

Taxation of Non-Doms

A big change in the Budget is the end of the tax rules for those not from the UK (‘non-doms’). From April 2025, a new residence-based tax regime will be introduced, making sure that all UK residents pay the same tax on their foreign income and gains after living in the UK for over four years. This move aims to simplify the tax system and promote fairness for everyone living here.

Capital Gains Tax and Stamp Duty Land Tax

Great news for property owners. The Budget is cutting the higher rate of Capital Gains Tax for selling residential properties from 28% to 24% starting in April 2024. And if you’re into buying multiple properties, get ready because Multiple Dwellings Relief in the Stamp Duty Land Tax system is being axed from June 2024. These changes are all about boosting the property market and encouraging people to invest.

Furnished Holiday Lettings

For landlords, changes are on the horizon concerning furnished holiday lettings. From April 2025, the Government will end a tax advantage for landlords who let short-term furnished holiday properties over those who let residential properties to longer-term tenants. This aims to create a level playing field in the rental market.

Fuel Duty and Alcohol Duty

Good news for motorists and drinkers alike – not to be done at the same time, obviously! Fuel duty will remain frozen for another year, extending the temporary 5p cut and making sure that duty rates are not increased with inflation. Similarly, alcohol duty will be frozen from August 2024 until February 2025, providing relief for consumers.

Tobacco and Vaping Duties

In a bid to incentivise healthier choices, a new duty on vaping products will be introduced from October 2026. Tobacco duty will be increased from the same date, maintaining the financial incentive to choose vaping over smoking.

Air Passenger Duty and VAT Threshold

Passengers flying premium economy class, business, and first class, and those travelling by private jet, will see increased rates in Air Passenger Duty from 2025/26 to account for recent high inflation. What’s more, the VAT threshold will be increased from £85,000 to £90,000 in April 2024, providing relief for small businesses.

Energy Profits Levy and Household Support Fund

The Energy Profits Levy, introduced in response to the rise in oil and gas company profits, will be extended to 2028/29. Also, the Household Support Fund, aimed at helping those most in need with rising costs of living, has been extended to September 2024.

Spring Budget 2024: A Diverse Mix of Tax Measures

The Spring Budget 2024 presents a mixed bag of tax measures and announcements aimed at encouraging economic growth, supporting families, and ensuring the tax system is fair for everyone. From cuts in National Insurance contributions to reforms in property taxation and incentives for healthier choices, the Budget sets the stage for a more inclusive and fruitful future. As these changes occur, it’s important to remain up-to-date and adjust to the shifting world of taxes and government spending.

Get Expert Guidance

If you’re eager to optimise your tax strategy, don’t miss out on this chance to make a difference. Reach out to us today for expert advice and support. Whether you prefer a personalised phone call or the convenience of filling out our user-friendly online form, we’re here to help you every step of the way. Call 01603 630882 now to connect with our team or simply complete our online form to kickstart the process. Let’s work together to transform your tax strategy into a powerful catalyst for growth post-budget and beyond. 

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Salary Sacrifice Arrangements for Employers Explained

We’re diving deep into the world of salary sacrifice arrangements. If you’ve ever wondered what they are, how they work, and what benefits they can bring to your business, you’ve come to the right place. Salary sacrifice arrangements can be a great tool to attract and retain talent, all while saving you and your employees some money. 

What is a Salary Sacrifice Arrangement?

In simple terms, it’s an agreement between you as an employer and your employees to exchange part of their cash pay for non-cash benefits. These non-cash benefits include things like childcare vouchers, pensions, or even cycle-to-work schemes. The key here is that employees willingly agree to this arrangement.

How to Set Up a Salary Sacrifice Arrangement

To set up a salary sacrifice arrangement, you’ll need to change the terms of your employee’s employment contract. This change should be made clearly, and your employee must consent to it. It’s important to note that a salary sacrifice arrangement should never drop an employee’s cash earnings below the National Minimum Wage (NMW) rate. As an employer, it’s your responsibility to ensure this doesn’t happen and to cap salary sacrifice deductions if needed.

When to Alter a Salary Sacrifice Arrangement

Life happens, and circumstances change. Sometimes, you might need to adjust a salary sacrifice arrangement due to life events like marriage, divorce, or changes brought about by unforeseen events like the COVID-19 pandemic. These changes can affect an employee’s financial situation, and salary sacrifice arrangements can be flexible enough to adapt to these circumstances. Always remember to update the employment contract when changes happen.

Exceptions and Considerations

While flexibility is great, there are some rules to follow. If employees constantly switch between cash earnings and non-cash benefits, the expected tax and National Insurance contribution advantages may not apply. But, there are exceptions to this, detailed in the Employment Income Manual 42755.

Calculating the Impact on Tax and National Insurance Contributions

One of the key aspects of salary sacrifice arrangements is understanding their impact on taxes and National Insurance contributions. This depends on the mix of cash and non-cash benefits within the arrangement. For the cash part, make sure you’re correctly operating the PAYE system through your payroll.

For non-cash benefits, you’ll need to calculate their value. If it’s a new salary sacrifice arrangement, calculate the value by using the higher amount of salary given up or the earnings charge under the usual benefit-in-kind rules. It’s worth noting that some non-cash benefits, like pension scheme contributions and workplace nurseries, are exempt from valuation and reporting.

Reporting Requirements

Reporting non-cash benefits differs from cash earnings. Generally, you’ll need to report benefits to HMRC at the end of the tax year using the end-of-year expenses and benefits online form. Plus, you can use the payrolling benefits and expenses online service to show that you’re collecting taxes and benefits through your payroll.

Consulting with HMRC

If there’s any legal uncertainty or you’re unsure about a particular salary sacrifice arrangement, you can contact HMRC’s clearance team.  Bear in mind that HMRC won’t comment on a proposed arrangement before it’s implemented. To keep HMRC happy, be prepared with evidence of the variation of terms and conditions, payslips before and after the variation (if there’s a written contract), and any other relevant documentation.

Examples of Salary Sacrifice

To make things more tangible, let’s look at a few examples. 

  • Employee A sacrifices £50 of their £350 weekly salary for childcare vouchers of the same value. In this case, only £300 is subject to tax and National Insurance contributions, as childcare vouchers are exempt up to a limit of £55 per week.
  • Employee B sacrifices £100 of their £350 weekly salary for childcare vouchers. Here, £295 is subject to tax and National Insurance contributions, and £45 is reported as a non-cash benefit at the end of the tax year.
  • Employee C receives a £5,000 bonus and decides to sacrifice the full amount for an employer contribution to a registered pension scheme. In this case, no employment income tax or National Insurance contributions are charged to the employee, and the total amount goes into the pension fund.

Other Considerations

Remember, salary sacrifice can affect various aspects of your employees’ financial lives. This includes earnings-related payments, benefits, contribution-based benefits, statutory payments, and workplace pension schemes. Always communicate any changes clearly to your employees so they understand the impact on their finances.

Unlocking mutual benefits

Salary sacrifice arrangements can be a win-win for both employers and employees. They offer flexibility, potential tax benefits, and the chance to provide valuable non-cash benefits to your team. It’s important to navigate these arrangements carefully, following legal guidelines and ensuring employees’ cash earnings stay above the National Minimum Wage. With the right approach and communication, salary sacrifice arrangements can be a valuable tool in your organisation’s toolkit. 

Get expert guidance 

If you want to explore the benefits of salary sacrifice arrangements for your business and discuss your options, get in touch today by calling us on 01603 630882. You can also fill out our online form to get started. Let’s improve your employee benefits and financial flexibility together.

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Guidance on Selling Online and Paying Taxes

If you’ve ever dabbled in selling goods or services through an online marketplace in the UK, this blog is for you. We’ll break down the ins and outs of paying taxes on your online earnings in an easy-to-follow way so you can confidently navigate the tax world.

Understanding the Basics: Are You Trading or Making a Capital Gain?

First things first, when paying taxes on your online sales, you need to determine whether you’re trading or making a capital gain.

  • Selling Unwanted Items: If you’re just clearing out your attic or garage and selling personal possessions you no longer need, you’re probably not considered a trader. For example, if you’re like Sally, who sold some items from her attic for about the same price she bought them, you likely won’t have to pay tax on those sales.
  • Buying for Resale: On the flip side, if you’re actively buying items intending to sell them at a profit, like Josh, who hunts around car boot sales and charity shops, you’re in the trading game, and those profits are taxable.
  • Creating and Expanding: Now, if you’re like Gina, who started by making greeting cards for friends and family but expanded to sell them online with the intent of making a profit, you’re likely considered a trader. Gina’s profits would be subject to tax because she’s running her activities like a business.
  • Collecting with Purpose: Even collectors like David, who buys and sells model cars to complete sets for profitable resale, are often classed as traders because they’re buying and selling for profit.
  • Importing for Profit: If you’re importing goods like Steve and selling them online for a profit, you’re probably trading, too.
  • Offering Services: And then there’s Adam, who offers online language tuition. If you’re promoting and organising your services like a business, it’s likely considered trading, and you’ll need to pay taxes on your earnings.

Trading and Miscellaneous Income Allowance

Now, here’s a little ray of sunshine for those of you with a small online income. If your total earnings from online trading or providing services amount to less than £1,000 (before expenses) in a tax year, you won’t need to inform HMRC or pay any tax on the profits. This is thanks to the Trading and Miscellaneous Income Allowance. So, if you’re just getting started or selling on a smaller scale, you have some breathing room.

The Role of Online Marketplaces

In recent years, tax regulations have evolved to adapt to the digital age. From the 1st of January, 2024, digital platforms, like websites and mobile apps, have been required to collect and report seller information and income to HMRC. They must report this information by January 2025, in line with international agreements.

So, what does this mean for you as a seller? You’ll receive a copy of this information, which can help work out your income and expenses incurred through these platforms. This data can help you calculate whether you owe any tax on your profits.

Registering and Paying Taxes

If you have to pay taxes on your online earnings, you might wonder how to get started. Well, it’s not as daunting as it may seem.

  • Self Assessment Tax Return: For starters, if you’ve never declared income through a Self Assessment tax return, you’ll need to register. Don’t worry; it’s a straightforward process, and you can find all the information you need on the HMRC website.
  • Using the HMRC App: Once registered, you can easily check what you owe and pay your Self Assessment bill using the HMRC App. It’s available for both iOS and Android devices, making it super convenient.

Mastering Online Sales: Navigating Taxes with Confidence

In a nutshell, selling goods or services online can be a great way to earn extra income, but it’s important to be aware of your tax obligations. Whether you’re selling vintage treasures, crafting homemade goods, or providing services, it’s important to understand when you need to pay taxes.

Remember, if you’re selling a few items here and there for a bit of pocket money, you may not need to worry about taxes. But if you’re actively trading and making a profit, it’s time to consider your tax responsibilities.

Stay informed, keep track of your income and expenses, and make good use of the information provided by online marketplaces.  If you’re unsure about your tax situation, it’s a good idea to consult a tax professional who can provide personalised guidance.

Selling online can be rewarding, and with a bit of tax knowledge under your belt, you can navigate this digital marketplace confidently. Happy selling, and remember to pay your taxes on time.

We’re here to help
If you’re ready to take control of your online business taxes, give us a call today on 01603 630882, or take a moment to fill out our online form. Let’s make sure your online ventures are tax-savvy and hassle-free. Your financial peace of mind is just a call or click away.

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Guidance On Recent Changes In Reporting Self-Employment Income

If you’re self-employed or running a trading partnership, navigating tax regulations can be daunting. The UK’s tax reporting system has had some recent changes, which began with the 2023 to 2024 tax year, so it’s important to stay informed and be prepared. This blog will walk you through these new changes, especially if your business’s financial year doesn’t align with the usual tax year (from the 31st of March to the 5th of April).

This year is a transitional phase. You’ll report profits from just after your last financial year-end in 2022 to 2023, to 5th April 2024. This could mean considering two financial years to figure out your taxable income.

If you end up with profits for more than 12 months, that’s your ‘transition profit’. You can shrink this down with Overlap Relief, and the remaining profit gets spread out until the tax year 2027 to 2028.

Here are the steps you’ll need to take: 

  1. Calculate your overlap relief
  2. Work out your transition profit
  3. Include these figures in your 2023 to 2024 self-assessment tax return

Specific Cases

If your financial year ends close to the tax year, between the 31st of March and the 4th of April, you can treat it as ending on the 5th of April, saving you the hassle of splitting profits for a few days.

Reporting Profits from the 5th of April 2024

From the 2024 to 2025 tax year onwards, your profit reporting will align with the tax year (the 6th of April to the 5th of April the following year). This involves combining profits from the 6th of April up to your financial year-end and the start of your new business year to the 5th of April the following year. In a leap year, count 366 days instead of 365.

Examples of Dividing Up Your Profits

You can split up your profits daily, monthly, or in any way that makes sense. Let’s look at a couple of examples:

  • Daily Splitting: Say your business year is from the 1st of October 2025 to the 30th of September 2026, with a profit of £45,000, and then from the 1st of October 2026 to the 30th of September 2027, making £75,000. For the 2025 to 2026 tax year, you’ll calculate profit from the 1st of October 2025 to the 5th of April 2026, and so on.
  • Monthly Splitting: If your business runs from the 1st of January 2026 to the 31st of December 2026 (making £50,000), and then from the 1st of January 2027 (earning £15,000), you’d divide the profits based on the months in each tax year.

Estimating Profits

Sometimes, you might not know your exact profit for the entire tax year when you file your return. In that case, use provisional figures and update your return when you get the exact numbers. Doing it this way keeps everything neat and accurate, ensuring your tax records truly mirror what’s happening in your business. 

Keeping Up With the New Tax Year Basis

These changes are fairly big for self-employed individuals and partnerships. It’s crucial to understand them, how they’ll impact your tax returns, and what you need to do. Staying informed and maybe even getting some advice can really help. Preparing for tax changes can make your life easier and avoid unwelcome surprises later on.

If you’d like to prepare for these changes, start now to make your future tax experience smooth sailing. You can call us at 01603 630882 or fill out our online form. Taking steps today will secure your financial future and keep you up-to-date with these evolving tax rules.

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Accurate Tax Payments: HMRC’s Compliance Checks Unveiled

HMRC’s compliance checks might sound daunting, but they’re a key part of how the UK tax system stays fair and on track. It’s not just about keeping an eye on things; these checks help make sure everyone’s paying what they should, so it’s fair for all of us. This guide is here to break down what these checks are all about, why they’re important, and give you some handy tips on handling them. Think of it as your go-to resource for navigating these checks with less worry and more confidence.

Understanding HMRC Compliance Checks

His Majesty’s Revenue and Customs (HMRC) conducts compliance checks to ensure that everyone pays the right amount of tax at the right time, claims the correct allowances and tax reliefs, discourages tax evasion, and maintains tax system fairness. These checks can be triggered by various factors, such as inconsistencies in tax returns or significant changes in your financial situation. You can find out more about what triggers an HMRC compliance check here

The Role of Tax Agents and Advisors

If you have a tax agent or advisor, it’s important to make sure they have formal agent authorisation to handle your compliance checks with HMRC. This authorisation allows them to communicate and deal with HMRC on your behalf. If they don’t have this authorisation, you must arrange temporary authorisation. If you’re an agent yourself, it’s important to apply for formal agent authorisation or arrange temporary authorisation for your clients to manage compliance checks efficiently.

Why Does HMRC Carry Out Checks?

HMRC may initiate a compliance check for reasons such as:

  • Figures entered on a return that appear incorrect.
  • A large VAT refund claim is made when turnover is low.
  • A small amount of tax is declared when turnover is high.

HMRC will contact you and your tax agent (if you have one) to explain what they wish to check and why. If you believe the check is unnecessary, you can communicate this directly with HMRC.

Continuing Your Tax Obligations

Even if a check is underway, it’s important to continue filing tax returns and paying taxes if they’re due. Compliance checks can also extend to tax credit claims to make sure you receive the correct amount.

Cooperation During the Checks

During the checks, HMRC might ask for information or documents, and they may ask to meet with you or visit your business premises. If you don’t think this is necessary or it is unreasonable, you can speak to the officer in charge. If an agreement can’t be reached, HMRC may use legal powers to get the information needed. HMRC does this by sending you an information notice. If you receive this, it is important to give HMRC what they’ve asked for; otherwise, you may be issued a penalty. 

The Importance of Accurate Information

You’re responsible for providing accurate information to HMRC. If you have a tax agent, make sure they’re fully informed about your financial situation. Cooperation can lead to a quicker resolution and potentially reduce any penalties if inconsistencies are found.

Need Help During the Checks?

HMRC understands that dealing with compliance checks can be challenging, especially if you face personal difficulties or health issues. If you communicate these to HMRC, they can work with you to put reasonable adjustments in place. Also, if you need more time for a valid reason, don’t hesitate to request it.

Appointing Someone to Speak on Your Behalf

You can appoint a friend, relative, or adviser to handle communications with HMRC. Just make sure to appoint them officially first.

Seeking Independent Help

There are charities and organisations available to help if you’re struggling with the compliance check process. If the checks are affecting your mental health, speak to your GP, or organisations like TaxAid, Mind, or Samaritans can offer support.

Outcomes of Compliance Checks

If the check finds everything is in order, HMRC will quickly close the case. If you have overpaid tax, you’ll receive a refund with interest. On the other hand, if you’ve underpaid, you’ll need to repay the amount, possibly with interest and penalties.

Dispute Resolution and Appeals

If you disagree with HMRC’s decision, you can appeal. You usually have three options: providing new information, having your case reviewed by an unrelated officer, or arranging for an independent tribunal to hear your appeal.

Penalties and Criminal Investigations

If inconsistencies are found during the check, you may face penalties. However, the extent of your cooperation can influence the penalty amount. HMRC generally handles fraud through civil investigation procedures, reserving criminal investigation for particularly severe cases.

Compliance and Expert Help

Understanding HMRC’s compliance checks is important for every taxpayer. By maintaining accurate records, seeking professional advice, and cooperating with HMRC you can confidently navigate these checks. Remember, these checks are in place to ensure the tax system is fair and efficient for everyone. If you need help or have concerns about a compliance check, don’t hesitate to get in touch.

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What Triggers an HMRC Compliance Check

For the tax affairs of individuals and businesses in the UK, the HM Revenue and Customs (HMRC) is the governing authority that makes sure you’re toeing the line when it comes to tax laws. To maintain the integrity of the system, HMRC conducts compliance checks, also known as tax investigations. These can be daunting for anyone who finds themselves on the receiving end. Understanding what can trigger an HMRC compliance check is crucial for any taxpayer.

Common Triggers for HMRC Compliance Checks

  • Discrepancies in Tax Returns: The most common trigger is a discrepancy or anomaly in the tax return compared to previous years or similar businesses. This could include significant changes in income and expenses or making a large claim for a VAT refund when turnover is low. HMRC uses a sophisticated system to analyse returns, highlighting any that fall outside the norms for further inspection.
  • Late Filings and Payments: Consistently late filings or tax payments can raise red flags. This suggests to HMRC that there may be deeper issues with your financial management or a potential for incomplete or inaccurate reporting.
  • Informant Tips: Yes, HMRC receives tips, sometimes from disgruntled employees or competitors. If someone informs HMRC that a business or individual isn’t complying with tax laws, it may initiate a check.
  • Random Selection: Sometimes, there’s no specific reason; HMRC randomly selects tax profiles for investigation. It’s their way of keeping everyone on their toes and ensuring taxpayers maintain accurate records.
  • Sector-Specific Checks: HMRC periodically targets specific sectors where they believe tax avoidance or evasion is widespread. If your business operates within one of these sectors, your chances of a compliance check might increase during these campaigns.
  • Business Performance Inconsistencies: If your business shows markedly different performance metrics compared to others in your industry, HMRC might investigate to understand why. This doesn’t just apply to underperformance – unusually high success can also trigger a check.
  • International Transactions: With global transactions under increasing scrutiny, those who conduct a high volume of international business might find themselves subject to checks, especially if there are transactions from jurisdictions considered high-risk for tax evasion.

The Process of a Compliance Check

  • Initial Contact: A compliance check typically starts with HMRC notifying you, either through a letter or phone call. They will inform you of the check and what they need from you.
  • Gathering Information: HMRC will request specific documents, which could include personal or business bank statements, receipts, invoices, and accounting records. They may also want to look at your tax calculations and self-assessment returns in detail.
  • Meeting and Interviews: Sometimes, HMRC will ask to meet you or your accountant, or they may want to interview you to gather more information.
  • Outcome: Once HMRC has reviewed the necessary documentation and information, they will communicate their findings. If they find everything in order, they will close the investigation. If not, they may request additional payment of unpaid taxes, apply penalties, or, in severe cases, pursue criminal prosecution. In general, the more help you give, the lower the penalty will be.

How to Reduce the Risk of a Compliance Check

  • Accurate and Timely Filing: Ensure all tax returns are accurate and filed on time. Use professional accountancy services if you’re unsure about your ability to do this correctly.
  • Consistent Records: Maintain consistent and detailed financial records. This can make a compliance check much smoother and quicker.
  • Seek Professional Advice: If you’re in doubt about your tax affairs, it’s wise to seek advice from a qualified accountant or tax advisor. They can help you avoid pitfalls that might lead to a compliance check.
  • Disclose All Income: Declare all sources of income, including those from overseas. Full disclosure is always your safest bet.
  • Understand the Rules: Have a good understanding of the tax rules applicable to your business. If HMRC updates tax laws or guidance, make sure you’re following the new rules.
  • Report Changes: If there are legitimate reasons for changes in your income or business performance, report these proactively in your tax return.

Navigating Compliance Checks with Confidence

An HMRC compliance check can be a stressful experience, but understanding what can trigger an investigation is your first line of defence. Remember, most checks are initiated by anomalies or suspicions of incorrect tax reporting. By maintaining good records, submitting accurate and timely returns, and seeking professional guidance when necessary, you can minimise the chances of an HMRC compliance check disrupting your business or personal finances. If you need help keeping your records in order, don’t hesitate to reach out and speak to one of our tax return specialists. Our motto is ‘Tax Returns: Stress Deducted’ because we’re here to help keep your taxes on track, headache-free and hassle-free.

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What are the benefits of filing your company accounts early?

When it comes to business financial matters, there’s much to be said for getting ahead of the game. Although it’s probably not the most thrilling task on your business agenda, filing your company accounts early can provide huge advantages. 

Most UK businesses are required to prepare and file annual accounts at Companies House. But many leave this task until the last minute, rushing to meet their year-end deadline. However, an early filing strategy offers a range of benefits. Let’s explore some of them.

1. Reduced Stress

The financial year-end can be stressful, with businesses scrambling to get their finances in order and reconcile statements. By filing your accounts early, you eliminate the rush and the stress that goes with it. It ensures your business operates smoothly and efficiently, leaving no room for last-minute mistakes or oversights.

2. Better Planning and Decision Making

An early understanding of your financial position allows you to strategise for the year ahead. Knowing your tax liabilities or seeing areas of growth or potential concern can enable more informed decision-making. It allows you to allocate resources, invest wisely, or even consider business expansions with clarity and confidence.

3. Cash Flow Management

Tax obligations are often a source of worry for many companies. Finalising accounts early gives a clearer picture of any corporation tax due. This advanced knowledge can help with better cash flow management, ensuring you have sufficient funds to meet the tax bill when it’s due.

4. Mitigate Potential Issues

An early start means more time to identify and rectify any discrepancies or mistakes. If any issues need additional attention, such as discrepancies in financial statements or clarification from HMRC, you have ample time to address them without incurring penalties.

5. Enhanced Reputation

Timeliness is seen as a reflection of professionalism. Filing your accounts early can enhance your business’s reputation with stakeholders, including investors, banks, and customers. It signals that your company is well-organised, forward-thinking, and trustworthy.

6. Avoiding Penalties

Though this might seem obvious, it’s worth reiterating. Companies House imposes penalties for late filing. Missing your filing deadline could affect your credit score or access to finance. By ensuring your accounts are filed early, you avoid unnecessary fees and penalties. An early submission ensures you remain compliant and save money.

Why You Should Plan Early

At Norwich Accountancy, we always have our client’s best interests at heart. We recommend that our clients get prepared before the end of their financial year. Here’s why:

  • Personalised Attention

Coming in early allows us to provide a personalised, detailed service. It means we can spend quality time with each client, understanding their business nuances and offering tailored advice.

  • Strategic Tax Planning

We can assess potential tax reliefs, allowances, or even R&D tax credits you might be eligible for.

  • Addressing Concerns

If you have specific concerns or areas you’d like us to focus on, meeting early ensures we have ample time to delve deep. Whether that’s optimising expenses, considering new investments, or restructuring, we have the time to evaluate, suggest, and implement changes.

  • Peace of Mind

Finally, engaging with us early means one less thing on your to-do list as your financial year ends. You can focus on running your business, safe in the knowledge that your accounts are in capable hands.

It Pays to Stay Ahead

In business, as in life, it pays to have your proverbial ducks in a row. Filing your company accounts earlier than required isn’t just about compliance; it’s about harnessing the benefits that proactive financial management can bring. 

As qualified accountants and tax advisors, we’re here to guide, advise, and ensure your business financials are not just in order but optimised for growth and success. So, why wait? Let’s get a jumpstart on your accounts today.

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What is a SA302 form?

If you’ve ever sat down to sort out some tax matters or tried getting a loan, you might have heard about the SA302 form. If you’re feeling a little lost, read on for our simple guide to the what, why and when of the SA302 form. 

What is the SA302?

An SA302 form is a tax calculation produced by HMRC for those who file a Self-assessment tax return. It details your income for a particular tax year and the tax that you owe or are due. Think of this as a report card that shows your tax position and explains how it was calculated. If you’ve used an accountant to complete your return, you’ll get an SA302 (also known as a Tax Calculation) on the back of the return.

Why Would I Need an SA302?

There are a few primary reasons why someone might need an SA302:

  1. Proof of Income: If you’re self-employed or have several sources of income, proving your income can be slightly more complicated than just presenting a payslip. Many lenders or financial institutions will request an SA302 as evidence of earnings.
  2. Mortgage Applications: Mortgage lenders often ask for the SA302 form as it provides a detailed breakdown of income over the tax year. It’s not uncommon for lenders to ask for SA302 forms spanning several years to gauge consistency in earnings. It gives them an idea of how much you earn, helping them decide how much they can lend you.
  3. Renting a Property: Some landlords or letting agents might request an SA302 to ensure potential tenants have a stable income.
  4. Personal Records: It’s always good practice to keep a record of your earnings and taxes paid. The SA302 is a comprehensive document that can be part of your financial records.

What’s on the SA302 Form?

The SA302 form contains:

  • Your total income for the tax year.
  • Breakdown of sources of income (e.g. from employment, property rental, dividends).
  • Total tax owed or refunded.
  • Personal Allowance and other tax adjustments.

It’s worth noting that the SA302 reflects what has been reported to HMRC. So, ensure all your income sources are declared accurately on your Self-assessment tax return.

But There’s a Catch

Here’s where things can get tricky. A tax return can be created without sending it to the tax office (HMRC). So, it’s possible to bump up the profit to make it look like you earn more than you actually do. The idea is to make lenders think you’re a safe bet.

But there’s a system in place to catch this.

Enter: The Tax Year Overview

To make sure everything’s above board, lenders also ask for another document called the Tax Year Overview. This can be obtained online by your accountant or by you if you have an HMRC account.

What’s it for? It shows your tax position with HMRC. Lenders will compare the numbers on this overview with those on the SA302. If they match up, it means the tax return was sent off with the numbers shown on the SA302, and the tax office is okay with it. The lender can then move forward.

What If Things Don’t Add Up?

If the numbers on the SA302 and the Tax Year Overview don’t match, it could cause problems. There might be different reasons for this mismatch, and lenders might stop everything until it’s sorted out. They just want to be sure they have the right information.

How to Get Your SA302 Tax Calculation

You can get evidence of your earnings (your SA302) once you’ve submitted your Self-Assessment tax return. You can also get a tax year overview for any year. To access both, log in to your HMRC online account, go to ‘Self-Assessment’, then ‘More Self-Assessment details’. If you or your accountant use commercial software to do your return, you’ll need to use that software to print your tax calculation. It might be called something different in the software – for example, ‘tax computation’.

If you’ve used an accountant to handle your tax affairs, they can obtain and provide you with the SA302 form.

In Short

The SA302 is basically a snapshot of your tax situation. When teamed up with the Tax Year Overview, it makes sure everything is transparent and above board.

If all this tax talk is making your head spin, don’t hesitate to get in touch for help. It’s always better to be in the know, especially when money is involved.

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What Your Accountant Needs To File Your Individual Tax Return

Filing a tax return isn’t everybody’s idea of fun. But you must get it right and filed on time. While it can seem like a tedious task, you can choose to use an accountant to file your tax return if you don’t have time to do it yourself, you have complex financial arrangements, or you want to make sure that you’re taking advantage of all of the deductions and credits that you’re eligible for. That means you’re not tied up with tax and are free to spend time on the things you’d rather be doing.

If you choose to use an accountant, they’ll need a variety of information from you to file your tax return. This information will help them determine your taxable income and calculate your tax liability. And, perhaps most importantly, show you how to reduce your tax bill. 

Read on for a comprehensive guide to what your accountant needs from you to file your tax return successfully. From essential documents and financial records to specific details about your income and expenses, we’ll walk you through the key information that will enable your accountant to prepare your taxes accurately, maximise deductions, and minimise your tax liability. 

Information About You and Your Income

Identification information: Your accountant will need your name, address, National Insurance number, and date of birth. They may also need the identification information for your spouse and dependents.

Copy of your most recent tax return: This will help your accountant determine your filing status, income and deductions from previous years, and any credits you may be eligible for.

Wage statements: If you have any employment income on top of your self-employed earnings, you’ll need to provide your accountant with your wage statements from your employer(s). These statements will show your gross income, deductions, and your tax withholding. You’ll also need to provide your P60, or P45 if that employment income ceased during the year, together with your P11d, which outlines any benefits in kind you received from your employment.

Additional income statements: If you have any other sources of income, such as rental income, or investment income, you’ll need to provide your accountant with statements showing this. You must include any bank interest, dividends, and savings interest received during the year (excluding ISAs).  

Particulars of your rental property If you own property, you’ll need to provide your accountant with documents showing your rental income, mortgage interest, property taxes, and all expenses relating to the property. These include statements from your letting agent if you use one. Whilst previously there was mortgage rate relief, since April 2020, all buy-to-let landlords must pay tax on the entirety of their rental income. However, they can receive a tax credit worth 20% of their mortgage interest rates.

Private pension payments: You’ll need to supply details of any pension payments you’ve made in the previous year, as these can give you additional tax relief if you qualify.

Information About Your Business

All sales income: You’ll need to provide all your sales invoices for the year or details outlining your daily takings if, for example, you’re a shop that doesn’t issue invoices. One question we are often asked is whether you need to provide invoices that haven’t yet been paid. The short answer is yes; you must provide all the invoices issued in the given tax year. 

Proof of expenses: If you’re claiming any deductions or credits, you’ll need to provide your accountant with proof of these expenses. This proof could include receipts, invoices, or other documentation.

Bank statements: Providing bank statements for your business allows your accountant to cross-check everything going in and coming out and acts as evidence of these. While you may only have one business bank account, if you have a deposit account or reserve account, make sure to include these statements too.

Business credit card: You might put everything for your business on a business credit card, and you’ll need to give your accountant these statements. If you occasionally use a personal card to pay business expenses, include these with the business-related costs highlighted. 

Loan statements: If you have any business loans, your accountant will need to see the statements. This will mean that the closing balance is included in the accounts correctly and that the correct amount of interest has been included as a deductible expense.

Finance agreements: Provide copies of any new finance agreement contracts signed in the past year. The interest on the payments is tax-deductible, and the asset bought could qualify for the annual investment or other capital allowances.

Petty cash receipts: If your business carries cash, your accountant will need to know how much money is in cash at the end of the year. They need to balance your money, so these records are very important.

Payroll records: Your accountant may operate your payroll, but if not, you’ll need to supply copies of each month’s pay run. This is so your accountant can check to ensure all wage and national insurance amounts are included.

Stock value: If relevant, you must supply a valuation of any stock held at the year-end. This should include information about what it costs, or its value if lower.

Making Tax Digital

In the past, all information was sent to accountants on paper, which, unsurprisingly, was difficult to keep track of. Things would be lost, and a lot of time wasted. Most information can now be supplied online, and as we move closer to Making Tax Digital, you should consider moving to online bookkeeping software. This will automatically organise your records and keep them all in one place. As a result, you won’t need to worry about missing anything, and it also means you can give your accountant access to your online records throughout the year. 

At Norwich Accountancy, we offer clients access to and full training on Xero, the online cloud-based accounting software for small and medium-sized businesses.  

All in the timing 

The deadline for sending your online self-assessment tax returns to HMRC and paying any taxes owed is 31st January each year for the previous tax year. So, on the 31st of January 2024, you’ll have submitted all your information for the tax year from the 6th of April 2022 to the 5th of April 2023. 

If you have chosen to use an accountant to file your taxes, getting everything in order well ahead of these deadlines will give you plenty of time to plan for any tax liabilities. If you need help completing your tax return, get in touch or contact us online here. After all, we’re all about tax returns, stress deducted. 

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How Long Should You Keep Your Tax Records in the UK?

There are a few factors that determine how long you should be keeping tax records, from your income to your employment status and the type of records you have. Let’s look at the what, when and for how long in more detail.

Individuals

For individuals, it is recommended you keep your tax records for a minimum of 22 months after the end of the relevant tax year. For example, if you file your 2022/23 tax return by the filing date, you should keep your records until 2025.


However, in case you find yourself chasing a tax refund or are tackling a tax dispute, it’s a good idea to keep your records for even longer.

Businesses

For businesses, it’s recommended you keep your tax records for a minimum of five years following the end of the relevant accounting period. For example, if your accounting period ends on 31 December 2022, you should keep your records until 31 December 2027.


Like individuals, in case you should be faced with a tax dispute or want to claw back some tax through a refund, keep your records for longer.

What records should you keep?

The types of records you should be keeping to support your tax return include:


● Sales and income.
● Eligible business expenses.
● If you’re registered for VAT, then your VAT records.
● If you employ people, your PAYE records.
● Details about your personal income.
● Details of any grants you’ve claimed, such as COVID-19 business grant schemes.

If you’re self-employed, as well as the above, you should also keep records like:


● Travel expenses.
● Eligible meals and entertainment expenses.
● Business equipment expenses.
● Professional fees.
● Details of any grants you’ve claimed, such as the Self-Employment Income Support Scheme.

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Where should you keep your records?

Make sure you keep your records in a safe and secure place, whether that’s a safe deposit box, at home or even with your accountant in their office. (We’d advise against shoe boxes under the bed). It’s also a good idea to keep them organised to make it easy to find any evidence you may need in the future for tax purposes.

What if I lose my tax records?

If you lose your tax records, get in touch with HMRC as soon as possible. They may be able to help you reconstruct them for you.


You may also be able to get a copy of your tax records from your employer, bank or other financial institutions.

Work smarter, not harder

Keeping your tax records for the recommended length of time will help you avoid any penalties and interest if HMRC decides to audit your tax return. You can also make sure you’re claiming all the relevant tax reliefs and deductions you’re entitled to, as well as resolve any disputes if they arise.

Need somewhere safe and secure to keep your tax records? Get in touch with Norwich Accountancy today.

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