Tag Archive for HMRC

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Reprieve for self-employed having to report tax quarterly

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By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs

Millions of self-employed will not have to start reporting their tax income quarterly to the taxman from April 2023 as planned.

Bowing to pressure, ministers have postponed overhauling personal tax for the self-employed for another year, in what has been called the biggest shakeup in 25 years.

Making Tax Digital was scheduled to make 4.3m self-employed and small business owners keep digital records and report their income to HMRC every quarter rather than annually from April 2023.

Instead, the measures will now come into place in April 2024, the Government announced on Thursday.

Self-employed tax burden

Ministers have bowed to pressure after complaints that rolling out Making Tax Digital to any self-employed person earning over £10,000 a year would be another administrative burden coming on top of coronavirus and the shaky recovery.

“The government recognises the challenges faced by many UK businesses and their representatives as the country emerges from the pandemic over the past year,” Lucy Frazer, newly appointed financial secretary to the Treasury, said in a written ministerial statement.

HMRC is pushing for the self-employed to complete their tax returns every quarter to reduce the number of inaccuracies – either

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Hot Business News Today

Reprieve for self-employed having to report tax quarterly

by  •  • 0 Comments

By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs

Millions of self-employed will not have to start reporting their tax income quarterly to the taxman from April 2023 as planned.

Bowing to pressure, ministers have postponed overhauling personal tax for the self-employed for another year, in what has been called the biggest shakeup in 25 years.

Making Tax Digital was scheduled to make 4.3m self-employed and small business owners keep digital records and report their income to HMRC every quarter rather than annually from April 2023.

Instead, the measures will now come into place in April 2024, the Government announced on Thursday.

Self-employed tax burden

Ministers have bowed to pressure after complaints that rolling out Making Tax Digital to any self-employed person earning over £10,000 a year would be another administrative burden coming on top of coronavirus and the shaky recovery.

“The government recognises the challenges faced by many UK businesses and their representatives as the country emerges from the pandemic over the past year,” Lucy Frazer, newly appointed financial secretary to the Treasury, said in a written ministerial statement.

HMRC is pushing for the self-employed to complete their tax returns every quarter to reduce the number of inaccuracies – either

Read more...

Hot Business News Today

Taxman could claw back up to 10% of furlough cash

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By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs

The taxman could claw back up to 10 per cent of all furlough cash from small businesses unaware they have overclaimed.

HMRC and the National Audit Office estimate between 5 per cent and 10 per cent of the total furlough money claimed could represent overclaims.

The Government is due to have spent over £70bn on furlough once the scheme ends on 30 September, nearly double the total UK defence spend in 2019/19.

>See also: This change to the furlough scheme could lead to more costly redundancies

At its peak 8.9m people were on furlough; the latest figure is 1.9m.

Nigel Morris, employment tax director at MHA, says innocent errors and incorrect claims will be pursued for many years by HMRC. He advises small businesses check their claims in detail, now that furlough is winding down. They should repay any overclaims through the Government’s own website before HMRC hits them with interest and penalties.

The most common administrative slip-up made by companies has been forgetting to work out claims for flexible furlough on calendar days (365 per annum) and have instead used working days (260 per annum), which they might use for

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Am I eligible for capital allowance?

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By Toby Cotton on Small Business – Advice and Ideas for UK Small Businesses and SMEs
Capital allowances are available on qualifying capital expenditure incurred on the provision of certain assets used in a company or individual’s trade. Not all assets qualify for a capital allowance and the rate of relief will vary. The allowances are deducted from trading profits effectively reducing the tax payable. This would be the income tax for a sole trader or partnership and corporation tax for a company.
In most cases, items purchased which are allocated as “plant and machinery” would achieve 100 per cent relief via the Annual Investment Allowance (AIA). The current AIA limit is £1,000,000 to the 31 December 2021 and then £200,000 from the 1 January 2022.
HMRC is generous in what it considers qualifying expenditure and includes:

Computer equipment and servers
Tractors, lorries, vans
Ladders, drills, cranes
Office chairs and desks
Electric vehicle charge points
Refrigeration units
Compressors

However, certain items, such as cars, and items owned before you started a business and items given to you or your business are ineligible for this AIA claim. You would only be able to claim writing down allowances via the main pool and special rate pool with a lower percentage claimed. The main

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Hot Business News Today

Taxman could claw back up to 10% of furlough cash

by  •  • 0 Comments

By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs

The taxman could claw back up to 10 per cent of all furlough cash from small businesses unaware they have overclaimed.

HMRC and the National Audit Office estimate between 5 per cent and 10 per cent of the total furlough money claimed could represent overclaims.

The Government is due to have spent over £70bn on furlough once the scheme ends on 30 September, nearly double the total UK defence spend in 2019/19.

>See also: This change to the furlough scheme could lead to more costly redundancies

At its peak 8.9m people were on furlough; the latest figure is 1.9m.

Nigel Morris, employment tax director at MHA, says innocent errors and incorrect claims will be pursued for many years by HMRC. He advises small businesses check their claims in detail, now that furlough is winding down. They should repay any overclaims through the Government’s own website before HMRC hits them with interest and penalties.

The most common administrative slip-up made by companies has been forgetting to work out claims for flexible furlough on calendar days (365 per annum) and have instead used working days (260 per annum), which they might use for

Read more...

Hot Business News Today

Am I eligible for capital allowance?

by  •  • 0 Comments

By Toby Cotton on Small Business – Advice and Ideas for UK Small Businesses and SMEs
Capital allowances are available on qualifying capital expenditure incurred on the provision of certain assets used in a company or individual’s trade. Not all assets qualify for a capital allowance and the rate of relief will vary. The allowances are deducted from trading profits effectively reducing the tax payable. This would be the income tax for a sole trader or partnership and corporation tax for a company.
In most cases, items purchased which are allocated as “plant and machinery” would achieve 100 per cent relief via the Annual Investment Allowance (AIA). The current AIA limit is £1,000,000 to the 31 December 2021 and then £200,000 from the 1 January 2022.
HMRC is generous in what it considers qualifying expenditure and includes:

Computer equipment and servers
Tractors, lorries, vans
Ladders, drills, cranes
Office chairs and desks
Electric vehicle charge points
Refrigeration units
Compressors

However, certain items, such as cars, and items owned before you started a business and items given to you or your business are ineligible for this AIA claim. You would only be able to claim writing down allowances via the main pool and special rate pool with a lower percentage claimed. The main

Read more...

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Make December 31 end of tax year, says small business

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By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs

Small business owners are overwhelmingly in favour of changing the tax year to the end of December to simplify the system.

In a survey of 500 small and medium-sized businesses, 91 per cent supported moving the date for filing tax affairs, according to accountancy firm BDO.

Companies said that the transition would have to be planned carefully, with longer deadlines to accommodate the change, but they supported the inevitable short-term disruption as it would make the UK tax system fit for the 21st century.

>See also: Nearly 300,000 sole traders face increased tax bills

The British Chambers of Commerce (BCC) told the Financial Times that moving the small business tax year could simplify the accounting process, but cautioned that care should be taken to ensure the adjustment did not encumber companies with extra bureaucracy.

Paul Falvey, a tax partner at BDO, told the Times: “Businesses are hoping that a rethink of the tax system can help them to flourish following the challenges of Brexit and Covid-19. Changing the tax year to December 31 is supported by businesses of all sizes and will be particularly helpful for those with international connections.”

The

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Hot Business News Today

Make December 31 end of tax year, says small business

by  •  • 0 Comments

By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs

Small business owners are overwhelmingly in favour of changing the tax year to the end of December to simplify the system.

In a survey of 500 small and medium-sized businesses, 91 per cent supported moving the date for filing tax affairs, according to accountancy firm BDO.

Companies said that the transition would have to be planned carefully, with longer deadlines to accommodate the change, but they supported the inevitable short-term disruption as it would make the UK tax system fit for the 21st century.

>See also: Nearly 300,000 sole traders face increased tax bills

The British Chambers of Commerce (BCC) told the Financial Times that moving the small business tax year could simplify the accounting process, but cautioned that care should be taken to ensure the adjustment did not encumber companies with extra bureaucracy.

Paul Falvey, a tax partner at BDO, told the Times: “Businesses are hoping that a rethink of the tax system can help them to flourish following the challenges of Brexit and Covid-19. Changing the tax year to December 31 is supported by businesses of all sizes and will be particularly helpful for those with international connections.”

The

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Hot Business News Today

Nearly 300,000 sole traders face increased tax bills

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By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs

Nearly 300,000 sole traders face bigger tax bills than expected next year, following the government’s proposal to change the date small businesses report profits.

The move, which also affects partners in accountancy and law firms, would generate billions of pounds for the Treasury years before it would otherwise have received the money.

The changes to tax bills will also eat into the amount of working capital sole traders have for five years as they now have to pay more tax earlier.

>See also: Why the Government’s new insolvency bill is bad news for sole traders

A consultation and draft tax bills legislation published last month revealed plans to alter the 12-month period sole traders use to calculate profits, to bring everyone in line with either March 31 or the end of the tax year on April 5.

What this means is that the date sole traders have to pay their tax bills – which small businesses are currently able to defer by having a later date for their end-of-accounting year – will be brought forward.

According to the Financial Times, the measure is expected to affect 280,000 sole traders, based on

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Hot Business News Today

HMRC to go easy on small business strangled with Covid debt

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Originally written by Timothy Adler on Small Business
Small businesses struggling with Covid debt will not be forced to pay overdue tax to HMRC immediately, says business secretary Kwasi Kwarteng.
HMRC had manoeuvred itself to be first in line to be payed-out should a small business go bust post-Covid. Being pressured into payment by tax collectors can be an extremely unpleasant experience for owner-directors of small businesses.
But Mr Kwarteng has told the Institute of Directors and business group R3, which represents insolvency and restructuring practitioners, that HMRC will go easy on small businesses unable to pay tax because of Covid-19 debt.
>See also: Small business owners who duck out of repaying Covid debt face ban
The government wants to avoid a tsunami of insolvencies this summer.
The news will come as a relief to small business owners, who already have enough to worry about with a stop-start reopening post-lockdown just as Covid-19 financial support such as Bounce Back Loans start having to be repaid.
Insolvency practitioners have warned that many small businesses will struggle to stay afloat from July when emergency Covid-19 financial support measures begin to be wound down.
In a letter, obtained by the Financial Times, Mr Kwarteng wrote that HMRC would be updating its

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