Applying for a Mortgage? SA302’s are no more. A Tax overview is what you need.

HMRC’s form SA302 is a tax calculation produced when you have filed your Self-Assessment Tax Return online.

It is a calculation for a particular tax year showing your income, your tax allowances, the amount of tax you’ve already paid and what tax, if any, you still owe or which should be repaid to you.

If your Tax Return has to be amended and it affects the tax payable, HMRC will send you a revised SA302 showing the up to date position for that particular year.

If you are asked to provide evidence of your income, for example if you’re applying for a mortgage, and you have been paying through self-assessment, you are likely to be asked for an SA302 for one or more tax years.  Another document you may also be asked to produce is a tax year overview.  This is a simple summary or statement of the tax due and tax you’ve paid during the tax year.

If you have filed your own tax return online, you can access your HMRC account and print off both the SA302 and tax year overview as required.

HMRC have been encouraging taxpayers to obtain a copy of the ‘Tax overview’ and ‘Full Calculation’ from the online service for some time and, from 4 September 2017, they have confirmed that they will no longer send paper SA302s to agents on behalf of their clients.

There are a number of lenders that will accept the tax overview and printed calculation in place of a paper SA302 and HMRC are working on educating other lenders to increase acceptance so that, once the SA302’s are no more, mortgage advisors will be happy with these documents instead.

If you don’t know where to start getting your tax year overview or tax calculation, most accountants, including torrwaterfield, use commercial software to produce tax returns for their clients.  This automatically generates a tax calculation which is roughly equivalent to a form SA302.  The majority of mortgage providers have agreed with HMRC to accept this Tax Calculation and the Tax Year Overview which your accountant can print off for you.

For a complete list of mortgage providers and lenders who accept Tax Year over views please click here. 

If you would like any assistance on this, then please contact the office on 0116 242 3400.

James Yarnall, Accounts & Tax 

Have you been mis-sold PPI over the years?

There are millions of people who have already successfully claimed for mis-sold PPI, so make contact with your banks to make a claim; you could be owed thousands.

It has been estimated that the banks have paid out over £20billion so far.

The Financial Conduct Authority has confirmed you have until 29 August 2019 to make your claim.

What is PPI?

PPI is Payment Protection Insurance which was introduced to customers to cover payments on loans or credit cards if you became ill or unemployed.  This would ensure that you didn’t fall behind on installment payments.

If you have taken out a loan or credit card, or even mortgage, there is a strong chance that you may have PPI on the loans.

You now need to ask yourself whether you were mis-sold this insurance or whether this was correctly added.

Were you asked the correct questions on completing your loan agreement?

  • Were you told it was compulsory? It was a condition of that particular product to purchase the PPI.  You could only have the overdraft/loan if PPI is bought.
  • Didn’t realise you had cover? You have been paying the PPI with your loan repayments and weren’t even aware of this extra cost.
  • Were you told or sold the wrong thing? Having being sold PPI you were ultimately covered elsewhere on an existing policy, hence no requirement for this PPI policy.
  • Self-employed, unemployed or retired? PPI would have been worthless to you as it wouldn’t cover if your own business ceased or went bankrupt.
  • Had any medical problems in the past? If so, PPI may have been exempt as it would not cover against pre-existing medical conditions.
  • Has your provider already been fined? Than this would confirm that a certain amount of liability lies with them.

There is no time limit on how far back you can go.

Attached is a template: Template letter PPI for you to complete and send off to the financial institutions that may apply to you.  Complete the personal details including your name and address.

You could hear back from your bank with a refund of your PPI premiums, this may also include compensation and interest on the payments you have made.

If you are unsuccessful in seeking a refund, you have an opportunity to take your complaint to the Financial Ombudsman Service, if necessary. 

If you wish to discuss this further or need any other business advice then please contact us 0116 2423400

Sarah Knight – Bookkeeper 

The Employment Allowance

What is employment allowance?

Employment Allowance is a National Insurance credit that is offset against Class 1 Employer’s NI. The maximum amount that can be claimed in each tax year is £3,000, although you can still claim if you pay less than £3,000. When it was first introduced in 2014 you could claim up to £2,000 but it increased to £3,000 in April 2016.

Eligibility

You can claim if:

  • You are a business, including sole traders and partnerships, or charity paying Employers Class 1 NI.
  • You can claim if you employ a care or support worker.

You can’t claim if:

  • You are a director and the only employee.
  • You employ someone for domestic work e.g. Cleaner or Gardener
  • You are a business that does more than half of your work in the public sector, for example the NHS.
  • If you have more than one employer PAYE reference, you can only claim against one of them.

How to claim Employment Allowance?

You would claim through your Payroll software and tick the box next to the “Eligible for Employment Allowance”. This will then send an EPS (Employer Payment Summary) to HMRC to let them know you’re eligible and to start claiming it.

In Sage 50 Payroll:

  • Go to “Company” on the left hand menu.
  • Then “Settings”.
  • Tick the box as shown.

If you use HMRC’s Basic PAYE tools:

  • Select the relevant Employer in the menu on the homepage.
  • Then select “Change employer details”.
  • Tick “Yes” in the “Employment Allowance indicator”.
  • Send an EPS as normal.

Stopping your claim:

You only need to stop your Employment Allowance claim if you stop being eligible. You do not need to stop your claim manually if you reach the £3,000 limit before the end of the tax year, this doesn’t make you ineligible. If you do stop this claim before the end of the tax year, any credit you have already been given will be removed and you will have to pay any Class 1 NI due.

When to claim?

You can claim at any time in the tax year. If you claim late and you don’t use your Employment Allowance against Class 1 National Insurance you have already paid to HMRC you can ask them to offset it against other liabilities e.g. Corporation Tax and VAT. If you have no outstanding liabilities you can also ask them to refund it directly to you.

If you were eligible, you can claim unused Employment Allowance for up to 4 previous years. Currently you can claim back the allowance from when it was first introduced in 2014.

If you need any further guidance HMRC’s employer guide to Employment Allowance is a very useful resource https://www.gov.uk/government/publications/employment-allowance

If you have any questions on the above or would like any more information, please feel free to contact us on 0116 242 3400.

Polly Dennis, Payroll Apprentice

Changes to information requirements about people with significant control

In 2016 UK companies and UK limited liability partnerships (LLPs) were required to keep a register of people with significant control (PSC register) and to file relevant information at Companies House.

New rules have now been introduced as part of the UK’s programme implementing the EU Fourth Anti-Money Laundering Directive and tackling money laundering and the financing of terrorist activity. Effectively, businesses are required to help police the system – in this case by supplying information about people with significant control (PSCs).

The new rules potentially affect companies and LLPs. There are also changes for Scottish limited partnerships and certain Scottish general partnerships (collectively referred to as ‘eligible Scottish partnerships’).

Most of these changes come into force from 26 June 2017, with some coming into force from 24 July 2017.

Overview of changes

There are three main areas of change:

  • how companies and LLPs report PSC information to Companies House
  • changes to exemptions
  • bringing some partnerships governed by the law of Scotland into the regime.

There is information on each of these areas of change below.

Changes in reporting

There are new timescales and new forms. Previously, PSC information was updated annually on confirmation statement CS01. Change is now event-driven and must be reported to Companies House whenever it occurs. It can no longer wait until the end of the year.

From now on, companies will need to use forms PSC01 to PSC09. LLPs and eligible Scottish partnerships will use an equivalent range of forms.

When the annual confirmation statement is made, confirmation will be required that PSC information which Companies House already holds is accurate.

There are 14 days to update the PSC register, and another 14 days to send the information to Companies House. That gives 28 days to notify Companies House of changes to the PSC register.

Exemptions

Under the old rules, some companies were exempt from the PSC rules. These were DTR5 companies which are not on a regulated market.

Under the new rules, such companies may have to comply. This could affect Alternative Investment Market companies (AIM) and ISDX (ICAP Securities and Derivatives Exchange) companies.

If the company has traded on an EEA or Schedule 1 specified market, it is still exempt from providing PSC information.

Partnerships governed by Scots law

The new rules apply a modified form of the PSC regime to limited partnerships governed by the law of Scotland and also to qualifying general partnerships governed by the law of Scotland. A qualifying general partnership is a partnership in which all partners are corporate bodies.

These partnerships do not have to keep their own PSC register, but do now have to report PSC information to Companies House. They have to identify their PSCs and return this information to Companies House within 14 days of 24 July 2017.

Any further changes to PSC information must be notified to Companies House within 14 days of the change.

Confirmation that details are still current and accurate will be required annually.

Is further guidance available?

The Department of Business, Energy and Industrial Strategy has updated its guidance on the PSC register. There is draft statutory guidance on what ‘significant influence or control’ means for eligible Scottish partnerships, and guidance for people with significant control.

All the guidance can be obtained from www.gov.uk/government/organisations/companies-house.

How can we help?

This is a complex area, especially if you are coming into the regime for the first time. It can also be a risky area, as failure to comply with the rules could lead to the business, its directors or partners, or identified PSCs committing a criminal offence.

If you would like to discuss these new requirements in more detail, or require assistance with this or other company secretarial requirement please contact us on 0116 2423400

Mike Waterfield

DirectorDSC_2398.JPG

Are you due a tax refund, or is it a fake HMRC email / phone call?

In the current cyber-world attempted fraud is always increasing and taxpayers need to watch out not only for scam emails and texts but phone calls too.

Phishing emails are designed to steal personal or financial details and may also deliver malicious software.  Some of the most common examples involve HMRC and an email advising a taxpayer about a “tax refund notification”.  It asks the recipient to click on a link, which then requests personal banking details – leading individuals unwittingly to compromise their financial security.  HMRC scam emails often contain the taxman’s logo and official style reference numbers and increasingly appear to be genuine communications.  Scammers often sign off using the name of an actual member of HMRC staff.  These criminals are getting cleverer all the time sending their emails at peak times i.e. January, when it’s the deadline for completing your self-assessment return, and July, being the deadline for your tax credits submission.

Tax payers please take note that HMRC do not make contact by email or phone to advise you of a refund and never give personal information over the phone to someone you do not know.  If you are in any doubt contact your accountant/advisor immediately.

An example of a typical phishing email purporting to be from HMRC is shown below:

HMRC SCam

If you think you may have received something that isn’t legitimate or you’re unsure then please contact us on 0116 2423400

Mark Cunnold, Client Manager 

Thinking of an Upgrade?

If the seemingly endless adverts are to be believed then if you subscribe to online bookkeeping software such as QuickBooks or Xero then your bookkeeping will become effortless, will probably be done in a coffee shop or on the go and will leave your accountant kissing an iPad with glee.

Whilst new software isn’t going to change your life, there is a lot to be said for having access to your records from any laptop/tablet/phone and from anywhere with a decent internet connection.

Online bookkeeping software allows you to send invoices and quotes to potential customers from your phone, enter purchase invoices from the sofa and even have bank transactions feed directly from your bank into the software to reduce the time taken to reconcile your bank.

The software can often be used by multiple users simultaneously, are compatible with Windows, Apple & Android operating systems and have a range of add-ons to allow data to be linked with third party software such as GoCardless or iZettle.

Cloud based software is constantly backed-up and saved by the software provider, and you can grant us direct access so there is no more need for taking and sending over backups. The software is constantly updated too so there’s no need to upgrade every few years.

If you’d like to discuss the packages available for your bookkeeping needs, or if you’re a Sage user and looking to upgrade to one of their subscription based products, please contact us and we can find the best option for you – we might even be able to obtain a lower subscription cost compared to going direct.

 

Matt Smith, Accounts Audit & Tax  

0116 24243400

Tax Calendar

The following Tax Events are due on 19th July 2017:

Business Tax Events

PAYE quarterly payments are due for small employers for the pay periods 6th April 2017 to 5th July 2017.

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.

Where the payment is made electronically the deadline for receipt of cleared payment is Friday 21st July 2017 unless you are able to arrange a ‘Faster Payment’ to clear on or by Saturday 22nd July. In year interest will be charged if payment is made late. Penalties also apply.

PAYE Student loan and CIS deductions due for the month to 5th July 2017.

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.  

Where the payment is made electronically the deadline for receipt of cleared payment is Friday 21st July 2017 unless you are able to arrange a ‘Faster Payment’ to clear on or by Saturday 22nd July. In year interest will be charged if payment is made late. Penalties also apply.

Class 1A NIC due for 2016/17.

This deadline is relevant for employers who have provided their employees with benefits for 2016/17. These benefits should have been reported by the 6th July and the amount of the Class 1A employer only NI liability due calculated on the form P11D(b).

Where the payment is made electronically the deadline for receipt of cleared payment is Friday 21st July 2017 unless you are able to arrange a ‘Faster Payment’ to clear on or by Saturday 22nd July. Interest will be charged if payment is made late. Penalties may also apply. 

We have a Tax Calendar on our website so you never miss a deadline to see future deadlines please visit our calendar  https://www.torrwaterfield.co.uk/resources/tax-calendar 

RESTRICTION ON INTEREST RELIEF ON RESIDENTIAL BUY TO LET PROPERTIES

As many owners of rental properties will be aware, from 6 April 2017 there is a restriction on the tax relief available on mortgage interest on residential Buy to Let (BTL) loans. The restriction, which is being phased in over 4 tax years to 2020/21, will eventually limit tax relief to the basic rate of income tax, currently 20%.

For a 40% tax payer (usually taxable income over £44,000) the staggering of the restriction means that over the next 4 years, tax relief on interest will be reduced by 1/8 each year to 50% of its 2016/17 level by 2020/21. For example, a 40% taxpayer paying £2,000 in BTL mortgage interest each year will currently be entitled to £800 of tax relief; this will reduce by £100 a year to £400 by 2020/21. As income is assessed before interest is deducted, more people will find themselves in the 40% tax bracket.

This, combined with the extra 3% Stamp Duty applying to additional residential homes being purchased, amounts to a significant increase in the tax burden relating to owning residential rental property.

The tax relief restriction does not apply to companies letting residential properties, so we are experiencing an increase in requests by individuals and couples wishing to set up a limited company to acquire properties they would like to buy for rental purposes. However, the increase in Stamp Duty still applies and commercial BTL mortgage rates tend to be higher than personal rates.

In some very restricted circumstances, it is possible to transfer existing rental properties into a limited company, taking advantage of incorporation relief to hold over Capital Gains, and in even more limited cases, to avoid payment of Stamp Duty on such a transfer.

If you would like to know more, please email peter.morris@torrwaterfield.co.uk or call 0116 2423400

Tax investigations: What to do when HMRC comes knocking

Your business could be picked out of a hat for a tax investigation.  However, the Taxman now has extremely sophisticated software and tools to analyse your accounts and tax returns.  These days it is more likely that a business will be quickly and easily targeted for an investigation if it stands out for any of the following reasons:

  • Late filing of tax returns
  • Unpaid tax liabilities
  • Errors or omissions on tax returns
  • Fluctuations in tax returns (a drop in income, or increased costs)
  • You receive a tax refund (common for VAT returns where sales are zero rated)
  • Your income levels do not match the ‘norm’ for your business sector
  • Exceeding turnover thresholds for various tax schemes and not acting accordingly
  • You work in a high risk industry that has been targeted by HMRC
  • Your income levels are not consistent with your standard of living
  • HMRC receives a tip-off

HMRC could investigate your business in relation to its CIS, PAYE, VAT, Corporation tax or Self-Assessment Tax Returns.

Don’t Panic

Whilst HMRC may have found an inconsistency in your tax returns, or highlighted a risk area, there could be any number of legitimate reasons for this.

In most cases we find that providing HMRC with full answers to their questions, and sending them the necessary documents and evidence, will lead to them simply agreeing with your tax calculations and moving on.

What to do

  • Keep high quality accurate records
  • File returns on time
  • Pay your tax on time
  • Seek advice from TorrWaterfield

Contact TorrWaterfield – 0116 2423400

If you do receive a letter from HMRC, contact us straight away.  We can assist you throughout the entire tax investigation. 0116 2423400

We will:

  • Offer help and advice
  • Contact HMRC on your behalf, replying to their correspondence by post, email and telephone
  • Use our premises for meetings with HMRC
  • Appeal against HMRC’s decisions if necessary
  • Keep you updated throughout the whole process

Fee Protection

Many investigations are concluded after one letter, meeting or phone call.  But some can be on-going for months or years.

We encourage all of our clients to take out our fee protection.  ThStuart Caney April 2012is typically costs £190 per year.  We can then recover our cost from a third party, rather than charge you for our services. 

Stuart Caney, Accounts & Tax 

If like many of our clients you wish to benefit from this please contact Hollie Crown now for a personalised quote.

Construction Industry – Subcontractor verification changes from 6 April 2017

Construction Industry – subcontractor verification’s

HMRC have confirmed in the latest Employer Bulletin that changes will be made to the verification of subcontractors in the construction Industry Scheme (CIS) from 6 April 2017.

From 6 April 2017, contractors must use an approved method of electronic communication to verify their subcontractors. So from 6 April 2017 HMRC will no longer accept any telephone calls to verify subcontractors and from then contractors must verify subcontractors using:

  • the free HMRC CIS online service, or
  • commercial CIS software.

This change is one of a series made to CIS to increase HMRC efficiency and accuracy, and to reduce administration. HMRC are also reminding contractors that they have also introduced additional features of the online system including the ability to amend returns online, and the addition of an online message/alert service.

Please contact us for help with CIS issues. 0116 2423400