The following Tax Events are due on 19th April 2018.

The following Tax Events are due on 19th April 2018:

Business Tax Events

PAYE quarterly payments are due for small employers for the pay periods 6th January 2018 to 5th April 2018.

This deadline is relevant to small employers and contractors only. As a small employer with income tax, national insurance and student loan deductions of less than £1,500 a month you are required to make payment to HMRC of the income tax, national insurance and student loan deductions on a quarterly basis.

Postal payments for month/quarter ended 5 April should reach your HMRC Accounts Office by this date.

Where the payment is made electronically the deadline for receipt of cleared payment is Friday 20th April 2018 unless you are able to arrange a ‘Faster Payment’ to clear on or by Sunday 22nd April.

Penalties apply if payment is made late.

PAYE, Student loan and CIS deductions are due for the month to 5th April 2018.

This deadline is relevant to employers who have made PAYE deductions from their employees’ salaries and to contractors who have paid subcontractors under the CIS.

Employers are required to make payment to HMRC of the income tax, national insurance and student loan deductions. Contractors are required to make payment to HMRC of the tax deductions made from subcontractors under the CIS.

Postal payments for month/quarter ended 5 April should reach your HMRC Accounts Office by this date.

Where the payment is made electronically the deadline for receipt of cleared payment is Friday 20th April 2018 unless you are able to arrange a ‘Faster Payment’ to clear on or by Sunday 22nd April.

Penalties apply if payment is made late.

Automatic interest is charged where PAYE tax, Student loan deductions, Class 1 NI or CIS deductions for 2017/18 are not paid by today. Penalties may also apply if any payments have been made late throughout the tax year.

This deadline is relevant to employers who have made PAYE deductions from their employees’ salaries and to contractors who have paid subcontractors under the CIS.

Deadline for employers’ final PAYE return to be submitted online for 2017/18.

This deadline is relevant to employers.

This is the last day by which your final Full Payment Summary (FPS) for the 2017/18 tax year should be sent to HMRC.

You will not be able to file an FPS relating to 2017/18 after 19th April. If you need to make an amendment or correction to the details reported on a 2017/18 FPS you will need to submit an Earlier Year Update (EYU).

Please be aware that if we deal with the payroll on your behalf that we will ensure that this matter is dealt with on a timely basis.

If you would like to discuss this any further then please get in touch 0116 2423400 or info@torrwaterfield.co.uk 

We send monthly reminders about all upcoming tax deadlines and other important business related deadlines. If you would like to receive these email notifications please register here https://www.torrwaterfield.co.uk/registration/register 

 

 

How do you complete a Monthly CIS Return?

What is CIS?

The Construction Industry Scheme is a method of deducting tax from subcontractors in the building sector. Contractors deduct a percentage of the money owed on their payments to subcontractors and pass it over directly to HMRC. The amounts are effectively taxed at source as the sub-contractor does not get the money.  The deducted CIS tax counts as advance payments towards the tax and National Insurance contributions that will be calculated upon completion of the subcontractor’s self-assessment tax return.

What do I need to complete a return?

Monthly CIS returns need to be submitted by the contractor to HMRC to disclose the amount of CIS which has been deducted and is therefore due to be paid over to HMRC.

The contractor needs from the subcontractor an invoice which states the money they are owed.

The invoice should split out the materials and labour with CIS only being deductible on the labour element of the invoice. CIS is deducted at 20% providing the subcontractor has a UTR (unique tax reference) number which should be displayed on the invoice. If there is no UTR number then CIS will be deducted at 30%.

How do I do it?

CIS periods run from the 6th of the month to the 5th of the month following – for example, 6th March – 5th April. The CIS return then needs to be submitted and the liability paid over within two weeks of the period end – 19th April for example in order to avoid facing late filing charges. The return can be manually entered under the contractor’s logon on the HMRC website or it can be submitted via numerous accounting software programmes. The CIS is payable to HMRC upon payment of the invoice and not the date the invoice is issued, so it should only be included on the CIS return at this point. Once the return has been submitted to HMRC, statements should be sent out to all subcontractors for their own records.

If you wish to discuss any of this further then please get in touch 0116 2423400 or info@torrwaterfield.co.uk

Brook Lucas, Accounts & Tax 

Tax Free Allowances – Are you making the most of them?

With the self-assessment tax return deadline now well passed, we can start to look forward to 2017-18’s income and consider whether you are fully utilising your tax free allowances.

Using the following to their full potential can often be the most tax efficient way of accessing the income in your company or savings.

Personal Allowance

This is a tax free amount that everybody starts with which can be used against any type of income. For 2017-18 the personal allowance is £11,500, however, this figure may be reduced should your income go above £100,000.

If you are not using the entire personal allowance, then it may be an option to transfer 10% of this to your spouse under the marriage allowance. This can only be done though if they’re a basic rate tax payer. It means that they would receive an additional £1,150 of personal allowance thus saving them £230 in tax.

Starting Rate

For those that have a fairly minimal salary but a lot of savings income, the starting rate is something that can be used. It is an additional 0% rate band if the first £5,000 of taxable income (i.e above the personal allowance) is savings. This could be especially useful for those with large credit balances on director’s loans in limited companies as they can charge interest on this which would not only be tax free for the individual but tax deductible for the company.

Dividend Allowance

Changes in the 2016-17 tax year meant that the traditional method of receiving tax credits on dividends were scrapped and replaced instead with the ‘Dividend Allowance’. This is a £5,000 tax free band on dividends for everyone regardless of their other income. For those with a limited company this could be utilised by a spouse shareholder, regardless of if the work elsewhere, to get an additional £5,000 tax free income.

Personal Savings Allowance

The final tax free allowance is the personal savings allowance which you receive regardless of if you earn from other sources. These do however vary based on the tax band you are in as follows:                   

Basic rate £1,000
Higher rate £500
Additional rate Nil

These could potentially be utilised in the same way as the starting rate by charging a limited company interest on credit director’s loan account balances.

As each case is different, please contact us on 0116 242 3400 if you wish to discuss tax free allowances any further.

Sam Jefferson, Accounts & Tax 

Deadline: March 3rd 5% late payment penalty on any 2016/17 outstanding tax

5% late payment penalty on any 2016/17 outstanding tax which was due on 31st January 2018 and still remains unpaid.

This deadline is relevant to individuals who need to complete a self assessment tax return and make direct payments to HMRC in respect of their income tax, Classes 2 and 4 NI, capital gains tax or High Income Child Benefit Charge liabilities.

The balance of any outstanding income tax, Classes 2 and 4 National Insurance, capital gains tax and High Income Child Benefit Charge for the year ended 5th April 2017 was due for payment by 31st January 2018. Where the payment is made late interest will be charged. On 3 March 2018 a late payment penalty of 5% will be added to the outstanding liability.

If we have already dealt with this matter on your behalf you need take no action.

If you would like to discuss any of this further then please contact us 0116 2423400

A GUIDE TO ACCOUNTING REFERENCE DATES AND PERIODS

I am sometimes asked, “What date should my company accounts be made up to?”. It’s a very important question because there are deadlines connected to the filing of accounts with both Companies House and HM Revenue and Customs.  Automatic penalties are issued to companies where their accounts have been filed late.  Being aware of your accounting period will help you to organise your accounting records in a timely manner and give you a chance to avoid missing these very important deadlines.

How to determine an accounting period

Every company must prepare accounts that report on the performance and activities of the company during the financial year. The financial year starts on the day after the previous financial year ended or, in the case of a new company, on the day of incorporation. Financial years are determined by reference to an Accounting Reference Period (ARP). The financial period ends on the accounting reference date.

For all new companies, the first accounting reference date is set as the last day in the month in which its first anniversary falls.  For example, if a company was incorporated on 7 January 2017 the first accounting reference date would be 31 January 2018.  The subsequent accounting reference dates will automatically be on the same date each year.  It is worth bearing in mind that a company may make its accounts up to 7 days either side of their accounting reference date which will be of interest to companies that organise their accounting records weekly, such as bars and restaurants.

Can the accounting reference date be changed?

The accounting reference date can be changed by using the appropriate form AA01. You can change the current or previous accounting period; periods can be shortened as many times as you like, but you can only extend once in five years (with exception in certain circumstances).  The minimum you can shorten a period by is 1 day and you can lengthen a period to a maximum of 18 months (or longer if your company is in administration).

The form AA01 must be received at Companies House within the delivery time of the accounting period if you wish to change the date and you cannot change it if the accounts are already overdue.

Basic delivery times for filing accounts:

 Deadline for first accounts (if covering a period of 12 months or more)
Private company/Limited Liability Partnership 21 months from the date of incorporation*
Public Limited Company 18 months from the date of incorporation*
 Normal deadline (after your first year)
Private company/Limited Liability Partnership 9 months after the end of the accounting period*
Public Limited Company 6 months after the end of the accounting period*
*or 3 months from the accounting reference date (ARD), whichever is longer.

 

It is important to note that changing the accounting reference date will also change the filing deadline date, unless the first financial year is being lengthened.  This can be particularly noticeable for shortened accounting periods where the deadline may be unexpectedly brought forward because the filing date becomes 9 months after the end of the new accounting period, or 3 months after the date the change was made, whichever comes later.

We always recommend that you send your accounting records to us well before the company accounts delivery date as this enables us to prepare your accounts in time to meet the filing deadline and avoid penalties. 

What should I do if I am unsure?

The above guide is only a summary, so please contact us on 0116 2423400 if you would like any further advice and remember, you can always check your accounting reference.

Beth Judd, Accounts & Tax 

National Minimum Wage – where are we now?

Falling foul of the National Minimum Wage rules can be expensive – as well as having serious implications for employer reputation. Many firms have been named and shamed for getting it wrong – are you compliant?

Employer errors

The National Minimum Wage (NMW) keeps appearing in the headlines. Recently the Department for Business, Energy and Industrial Strategy (BEIS) announced that some 230 employers had been named and shamed for failing to pay NMW and National Living Wage (NLW). The retail, hairdressing and hospitality sectors were among the most non-compliant. Because of BEIS intervention, more than 13,000 low-paid employees were due to receive £2 million in back pay.

But the final price tag for employers who hadn’t kept the rules was much higher. Between them, they were also fined a record £1.9 million. Business Minister Margot James said there was a clear message to employers. ‘The government will come down hard on those who break the law.’

BEIS report that common employer errors include deducting money from employees to pay for uniforms, not accounting for overtime and wrongly paying apprentice rates to workers. So, what is the latest on NMW and how do employers keep on the right side of the law?

NMW and NLW – the basics

NMW is the least pay per hour most workers are entitled to by law. The rate is based on a worker’s age and whether they are an apprentice. NLW applies to working people aged 25 and over. From 1 April 2017, the rate ranges from £7.50 per hour for those aged 25 and over, to £3.50 per hour for apprentices under 19, or for those aged 19 or over who are in the first year of an apprenticeship. Changes to NLW rates are in the pipeline from April 2018, so employers may need to plan for these now.

NMW/NLW rates are reviewed by the Low Pay Commission, but it is HMRC who police the system. Employers can be faced with court action if they don’t pay NMW/NLW. Penalties for non-compliance stand at 200% of the back pay due to workers. The maximum penalty per worker is £20,000. There is a provision to reduce a penalty by half if unpaid wages and penalty are both paid within 14 days.

Not everyone qualifies for the NMW/NLW. These include people who are self-employed: volunteers: company directors: family members, or people who live with an employer and carry out household tasks eg au pairs.

But most other workers are entitled to NMW/NLW, including pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers. There are also rules regarding agricultural and horticultural workers, with slightly different small print for England, Scotland and Wales.

In calculating pay for minimum wage purposes, the starting point is total pay in a pay reference period – before deducting income tax and National Insurance. Some payments are not included, such as loans and pension payments.

To add to the complexity, there is also something called the Living Wage, which is an hourly pay rate, set independently by the Living Wage Foundation. This isn’t anything to do with the government, and any employer who pays this does so entirely voluntarily.

Latest guidance: social care workers

HMRC have updated their guidance to clarify how NMW applies in the social care sector for workers carrying out ‘sleepover shifts’, following confusion over whether such shifts qualified for NMW. BEIS had suggested sleepover shifts carried out before 26 July 2017 qualified for a flat rate allowance, not NMW. But the decision is that NMW does apply, and applies retrospectively.

This could have left employers with bills of up to six years in back pay and penalties. But from 26 July, enforcement activity for sleepover shift pay is suspended until November, with retrospective penalties for sleepover shifts before 26 July 2017 waived. The actual back pay is still due, unless employers can show they can’t pay. Although it is envisaged that underpayments will be pursued from this date, the government says it is committed to minimising the impact of future minimum wage enforcement in the social care sector.

If you would like to discuss any of this further then please get in touch 0116 2423400

Running a payroll can be time consuming and complicated and divert resources from the core activities of your business. We can address this by installing payroll software and training your staff. Outsourcing this activity also helps relieve the pressure and we can offer cost-effective solutions. We are able to provide the complete service, what ever the size or complexity of your business, or simply provide support when needed. If you would like a quote then please call 0116 2423400 or email info@torrwaterfield.co.uk

14 Days left to submit your 2016/17 self assessment return

The following Tax Events are due on 31st January 2018:

Personal Tax Events

Deadline for submitting your 2016/17 self assessment return (£100 automatic penalty if your return is late) and the balance of your 2016/17 liability together with the first payment on account for 2017/18 are also due.

This deadline is relevant to individuals who need to complete a self assessment tax return and make direct payments to HMRC in respect of their income tax, Classes 2 and 4 NI, capital gains tax and High Income Child Benefit Charge liabilities. 

There is a penalty of £100 if your return is not submitted on time, even if there is no tax due or your return shows that you are due a tax refund.

The balance of any outstanding income tax, Classes 2 and 4 NI, capital gains tax and High Income Child Benefit Charge for the year ended 5th April 2017 is due for payment by 31st January 2018.  Where the payment is made late interest will be charged.

The first payment on account for 2017/18 in respect of income tax and any Class 4 NI or High Income Child Benefit Charge is also due for payment by 31st January 2018.

If we have already dealt with your self assessment return on your behalf you need take no action.

If you haven’t completed your self assessment return yet please contact us, we can help. 0116 2423400 or send us an email info@torrwaterfield.co.uk

Why do I need to keep my bookkeeping up to date?

Happy New Year! This is the 1st post of the year & hopefully it will help you to start thinking about how to organise your business over the next 12 months. 

As we are all aware, Making Tax Digital is fast approaching meaning you need to have bookkeeping software in place for your business that you like! 

It may take quite some time to find bookkeeping software that you get along with and understand. There are many out there including: Xero, Sage One and Iris Kashflow.

Keeping your bookkeeping up to date can be good for many reasons:

  • You can have an up to date profit and loss account to see how your business is doing and compare it to other periods
  • Review your VAT return to look at liabilities
  • You can make your own sales invoices on most bookkeeping software which can save a lot of time
  • You can also keep track of your creditors and debtors which will lead to better cash control and more reliable forecasting

In my experience the bookkeeping software that I have personally found best, and clients who have no bookkeeping experience have seemed to like the most, is Xero. This is for many reasons, some of them being the following:

  • Bank feeds – We all know that typing up your bank can be very time consuming and then you come to reconcile it you’re 1p out! This is why I love bank feeds. Everything is pulled through from your online banking, meaning you do not need to worry about that 1p; all you have to do is match the bank receipts against sales invoices and payments to purchase invoices. Xero also has the function of ‘rules’ meaning if you have a standing order set up for example £25.00 to Vodafone every month, you can create a rule to routinely post this bank payment to telephone expenses with the specified VAT treatment.

 

  • Submitting your VAT return online. Once you are happy with your VAT return on Xero you can ‘File it now’ meaning you just need to put your government gateway login information on to Xero and it will be submitted for you – unfortunately you still have to make the payment to HMRC!

 

  • Paperless record keeping – How many of us have an office full of the past 6 years of records? Everyone I’m hoping! This is a really handy feature with Xero, especially if you like a tidy office.  With Xero you can attach a pdf copy of the invoice online meaning there will always be a copy of that invoice and you will not have to keep a paper version of it.

 

If you are looking into starting your bookkeeping with online software and would like some advice on which one is best for your specific  needs, or would like some training, please get in touch with us on 0116 242 3400.

Georginda Hare, Bookkeeper 

VAT: Overseas sales

VAT: Overseas sales

Below are some very basic rules of how to deal with VAT on overseas sales. If you ever come across these, please contact us as there are a lot more details which should be reviewed before anything is submitted to HMRC.

The following are basic questions that need to be answered before being able to decide whether VAT should be charged or not:

Are you supplying goods or services?

Are you supplying to a business or a consumer?

Where are they located?

Are they VAT registered?

Goods

EU:

VAT Registered Business-

If the VAT number has been provided by the Business and there is a VAT number on the invoice as well as documentary proof of export, VAT can be charged at 0%.

Non-VAT Registered Business or Consumer-

If the customer is not VAT registered you will have to charge VAT at 20%. However this is only true until the distance selling threshold is exceeded, which depends on the country concerned.

 Outside the EU:

If the Customer resides outside the EU, VAT can be charged at 0%.

 Services

EU:

All VAT and Non-VAT Registered Businesses-

VAT can be charged at 0%, if the service is for business purposes.

Consumer-

VAT must be charged at 20%.

However, if it is an ‘e-service’ you would have to charge VAT at that country’s own rate.

Outside the EU:

All VAT and Non-VAT Registered Businesses-

VAT can be charged at 0%.

Consumer-

VAT can be charged at 0% for the following services:

Electronically supplied services

Advertising

Legal

Accountancy

Consultancy

Supply of staff

Hire of goods

Telecoms and broadcasting

 

VAT must be charged at 20% on all other services.

If you have any queries, or require any further information on this, please do not hesitate to contact us 0116 2423400

Jess Cooper, Accounts & Tax 

Important changes to HMRC payment methods.

Important changes to HMRC payment methods:

HMRC are making the following changes to the way you pay tax.

 Paying at the Post Office

HMRC are withdrawing this service from 15 December 2017.

 Paying by Personal Credit Card

HMRC will no longer accept payments of tax by personal credit card from 13 January 2018.

Please note that payments by company credit cards are still accepted.

The following methods of payment will continue to be accepted;

  • Direct Debit
  • Online or telephone banking, which includes Faster Payments, Bacs and CHAPS
  • Debit card online or by telephone

For further details please see;

https://www.gov.uk/pay-self-assessment-tax-bill

https://www.gov.uk/pay-corporation-tax

https://www.gov.uk/pay-paye-tax

Don’t overlook your December employer PAYE/NI payment

The December payment deadline is a little way off but will soon be upon us. Any electronic payment for the tax period ended 5 December 2017 must clear into the HMRC account by Friday 22 December 2017.

If you pay by cheque in the post, payment must reach the Accounts Office by 19 December.

If you shut down early for Christmas we want to remind you to pay on time or make arrangements to ensure your payment will be made on time.

If you pay the right amount at the right time and use your 13 character Accounts Office reference you won’t incur interest and Late Payment Penalties.

If you would like to discuss any of the above please contact us on 0116 2423400