Check if you need to send a tax return

Check if you need to send a tax return

If you normally file a Self-Assessment tax return, you will need to send it to HM Revenue & Customs (HMRC) for the tax year 2022 to 2023 and pay any tax you owe by 31 January 2024.

Once you have registered for Self-Assessment, you must file a return by law, even if you have already paid all the tax you owe or think you don’t owe any tax.

Not sure if you need to file a tax return?

Use this online tool to check if you need to complete a Self-Assessment tax return.

If you have already sent a tax return for the 2022 to 2023 tax year, or HMRC has been in contact to tell you that you don’t need to send one, you don’t need to do anything else just now.

If you no longer need to send a tax return, you need to let HMRC know. If you don’t, you may have to pay a penalty.

How to tell HMRC if you don’t need to send a return:

  • if you were self-employed but have stopped working for yourself, use HMRC’s online form; or
  • if you’re not self-employed, HMRC has created some guidance and an online form you can use.

See: Check if you need to send a Self Assessment tax return – GOV.UK (www.gov.uk)

SME Loan Scheme with cash back while funds last​

SME Loan Scheme with cash back while funds last

The SME Loan Scheme offers small and medium-sized enterprises based in Scotland unsecured, interest-free loans of up to £100,000 for renewable or energy efficiency projects. You may be able to get up to £30,000 as cash back. This is on a first come basis. The loan funding is provided by the Scottish Government. 

The funding is available to help you pay for energy and carbon-saving upgrades in your business.

This could include:

  • heating, ventilation, and air conditioning upgrades;
  • renewable technologies such as replacing a boiler to one with an air source heat pump;
  • improving insulation, draught-proofing, double or secondary glazing; and
  • installing LED lighting.

Cashback – while funds last:

Through the scheme, SMEs installing eligible equipment could receive a 75%
cashback grant up to £10,000 for renewable heat measures and a 75% cashback
grant for energy efficiency measures up to £20,000.

See: SME Loan Scheme · Business Energy Scotland

Changes to the VAT online account

Changes to the VAT online account

From Monday 15 May 2023, unless you are already using Making Tax Digital (MTD)
compatible software, you will no longer be able to use your existing VAT online
account to file manual VAT returns. That is because by law, all VAT-registered
businesses must now use Making Tax Digital (MTD) compatible software to keep
their VAT records and file their VAT returns.

What businesses need to do now to avoid a penalty
  • Step 1. Choose MTD-compatible software that’s right for your business – talk to us immediately!
  • Step 2. Check the software permissions to allow it to work with MTD. Go to GOV.UK and search 'manage permissions for tax software; for information on how to do this.
  • Step 3. Keep digital records for current and future VAT returns – more information about what records must be kept digitally is on GOV.UK.
  • Step 4. File your future VAT returns on time using MTD-compatible software. You can find out how to submit your VAT returns on GOV.UK.

You may receive a penalty if you don’t file on time via compatible software. For VAT accounting periods starting on or after 1 January 2023 HMRC introduced new penalties for VAT returns that are submitted late and VAT which is paid late. The way interest is charged has also changed.

At James Anderson + Co, we specialise in assisting our clients with Making Tax Digital. If you believe your company needs advice on MTD, we invite you to reach out to us via our contact page or by calling 0131 440 1373. We are more than delighted to lend a hand!

For more information about new VAT penalties, you can visit GOV.UK or watch a recorded webinar specifically designed for businesses.

UK Budget Summary – March 2023

UK Budget Summary – March 2023

Here are some of the key measures announced in the Spring Budget that will affect businesses and individuals across the UK:

• The Main rate of corporation tax, paid by businesses on taxable profits over £250,000 has been confirmed to increase from 19% to 25%. Companies with profits below £50,000 will pay at 19% and companies with profits between £50,000 and £250,000 will pay at an effective marginal rate that is between 19% and 25% from 1 April 2023.

• There are changes to Research and Development Expenditure Credit (RDEC) available and, for non-SME companies, RDEC will be increased from 13% to 20%. For many SME companies, the R&D tax relief enhancement will be reduced from 230% to 186%.

• The Annual Investment Allowance (AIA), giving 100% tax relief to unincorporated businesses and companies investing in qualifying plant and machinery, is now permanently set at £1million. The super-deduction, which gives enhanced 130% relief for new qualifying plant and machinery acquired by companies, will end on 31 March 2023.

• From 1 April, companies can fully deduct investment in new qualifying plant and machinery to lower their taxable profits. In addition, a 50% first year allowance will be available for integral features.

• From 6 April 2023, the Company Share Option Plan (CSOP) employee share options limit will increase from £30,000 to £60,000. Additionally, restrictions on the types of shares eligible for CSOP options will be lifted.

• The Government will establish 12 ‘Investment Zones’ across the UK, including a promise to have at least one each in Scotland, Northern Ireland, and Wales.

• The Government is increasing the availability of the Seed Enterprise Investment Scheme for start-up companies. The amount of investment that companies will be able to raise under the scheme will increase from £150,000 to £250,000. The gross asset limit will be increased from £200,000 to £350,000 and the investment must be made within 3 years (increased from 2 years) of trade commencing. In a bid to support these changes, the annual investor limit will be doubled to £200,000. The changes take effect from 6th April 2023.

• Fuel duty freeze – A freeze on fuel duty and the 5p reduction will remain in place for another year.

• Alcohol taxes are to rise in line with inflation from August, with new reliefs for beer, cider and wine sold in pubs.

• Pension tax reform – The pensions annual tax-free allowance will increase from £40,000 to £60,000 and the Lifetime Allowance will be abolished to encourage highly skilled individuals to continue working for longer.

• The Energy Price Guarantee which caps how much suppliers can charge per unit of energy used will stay in place until June 2023

Are you a business owner or individual affected by the UK Spring Budget 2023? Do you need help navigating the changes and making the most of new opportunities? James Anderson + Co is here to help. With expertise in tax planning, R&D tax relief, and more, we can provide the guidance you need to thrive in this new landscape. 

Contact us today or give us a call on 0131 440 1373 to learn more about how we can help you take advantage of the changes and achieve your financial goals.

Retiring soon? Check your entitlement to the State Pension now!

Retiring soon? Check your entitlement to the State Pension now!

If you are planning to claim the UK state pension you should check your national insurance (NI) record before 5 April 2023. At present, voluntary contributions can be made to plug gaps back to April 2006, but this will be curtailed from April.

National insurance (NI) contributions are made by employed and self-employed
individuals based on their earnings. To qualify for the maximum ‘new state pension’
(received by those retiring on or after 6 April 2016) a person must have 35 qualifying
years of NI contributions. For part payment of the ‘new state pension’ a person must
have contributed for at least 10 years. For those whose NI record started before 6
April 2016, different rules may apply; the number of required years of NI
contributions/credits to obtain the full state pension may be higher.

If a person has not contributed enough before reaching state pension age, they may
not be able to claim state pension, or receive the full state pension amount.

To help protect state pensions and other benefits it may be beneficial for people to
make voluntary NI contributions to top up their contribution history, potentially
increasing the amount of state pension they will receive. We recommend you take
financial advice when making that decision as, amongst other factors, it requires
predicting what contributions will be made before state retirement.

Normally, it is only possible to make voluntary contributions for the past six tax years.
Currently there is an extension in place. Individuals can fill gaps in their NIC history
from 6 April 2006 to the present date by making voluntary contributions.

From 6 April 2023, the timeframe for making voluntary contributions will revert to the
normal six years. This means that in the 2023/24 tax year, it will be possible to make
contributions going back to the 2017/18 tax year only.

See: Check your national insurance record before 5 April 2023 | ICAEW

Pre-April tax planning reminder

Pre-April tax planning reminder

The new tax year starts 6 April 2023, so you have a couple of months to consider your options, once we pass this date the majority of the tax planning options for Income Tax and Capital Gains Tax purposes will cease unless actioned before the 6 April.

Do you fall into any of these categories?
  • You have or are thinking about a change in your personal status (single, married, separating, joining or dissolving a civil partnership).
  • You are thinking about selling a capital asset, such as shares or a property. From 6 April 2023 the Capital Gains Tax annual exempt amount reduces from £12,300 to £6,000.
  • You or your child’s other parent claims Child Benefit and the income of either parent is likely to exceed £50,000 for the first time during tax year 2022-23;
  • Your annual income is approaching or above £100,000;
  • You have not yet topped up your pension contributions for tax year 2022-23;
  • You are self-employed with a 31 March 2023 year-end;
  • You are self-employed and are thinking about the purchase of equipment or vehicles; or
  • You are the director and/or shareholder of a limited company and have not yet considered voting final dividends or bonuses for 2022-23.

If you do we can help you discuss your options ahead of the 6 April deadline!

The above list is not comprehensive, and at James Anderson + Co we specialise in helping clients with all taxes including PAYE, NIC, VAT, Corporation, Capital Gains, Income and Inheritance tax. Please get in touch through our contact page, or give us a call on 0131 440 1373, we’d be happy to help! 

Making Tax Digital Update

More time to prepare for Making Tax Digital for Income Tax Self-Assessment

The mandatory use of software for Making Tax Digital for Income Tax Self- Assessment is being phased in from April 2026. 

Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) was due to be phased in from April 2024. However, the government, recognising the current economic environment and the significant change that a transition to Making Tax Digital represents, has pushed this back to April 2026. In addition, the previously announced £10,000 threshold for self-employment and property income has been raised, as detailed below. 

Under MTD for ITSA, businesses, self-employed individuals, and landlords will keep digital records, and send a quarterly summary of their business income and expenses to HMRC using MTD-compatible software. In response, they will receive an estimated tax calculation based on the information provided to help them budget for their tax. At the end of the year, they can add any non-business information and finalise their tax affairs. This will replace the need for a Self-Assessment tax return.

Making Tax Digital from April 2026

From April 2026, self-employed individuals and landlords with an income of more than £50,000 will be required to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software.

Making Tax Digital from April 2027

Those with an income of between £30,000 and £50,000 will need to do this from April 2027. Most customers will be able to join voluntarily beforehand, meaning they can eliminate common errors and save time managing their tax affairs.

Income below the £30,000 threshold

The government has also announced a review into the needs of smaller businesses, particularly those under the £30,000 income threshold. The review will consider how MTD for ITSA can be shaped to meet the needs of these smaller businesses and the best way for them to fulfil their Income Tax obligations. It will also inform the approach for any further rollout of MTD for ITSA after April 2027.

Mandating of MTD for ITSA will not be extended to general partnerships in 2025 as previously announced.

See: Government announces phased mandation of Making Tax Digital for ITSA – GOV.UK (www.gov.uk)

At James Anderson + Co we specialise in helping our clients digitalise their taxes, and we have teams experienced in Making Tax Digital for all business sizes.
 
If you think this is a service your company would benefit from, please get in touch through our contact page or call us at 0131 440 1373; we’d be happy to help.

HMRC assessment changes

HMRC is changing how they assess profits for some sole traders and partnerships

How HMRC assesses profits for sole traders and partnerships who use an accounting date between 6 April and 30 March will change from 6 April 2023. This change will not affect companies.

Your accounting date is the last day of the period that you prepare your accounts for. You choose your accounting date when you set up your business and will normally make your accounts up to that date every year. Under the current rules, you are taxed on profits for the accounting date that ends in a given tax year. For example, if your accounting date is 30 November, for the 2022 to 2023 tax year you will be taxed on profits in your 30 November 2022 accounts.

From 6 April 2024, you will be assessed on your profits for each tax year that runs from 6 April to 5 April. This change will affect how you fill in your tax return if you use an accounting date between 6 April and 30 March. The way your profits are assessed if you use an accounting date between 31 March and 5 April will not change.

There will be a transition year from 6 April 2023 to 5 April 2024 to allow any overlap relief that you may be due to be used against your profits for that tax year. You may be due overlap relief from when you started to trade, or if you subsequently changed your accounting date.

How your profits for the 2023 to 2024 tax year will be assessed 

The changes will mean the amount of tax that you owe in the 2023 to 2024 tax year may change if you use an accounting date between 6 April and 30 March. You will be assessed to tax on both:

  • The 12-month accounting period you have previously been using (the one that ends in 2023/24).
  • The rest of the 2023 to 2024 tax year — minus any overlap relief that you may be due — spread over 2022/23 and the next 4 tax years. You can spread these ‘excess’ profits over a shorter period if you wish.

Example (assuming no overlap relief is available):

  • Your accounting period is from 1 January to 31 December.
  • Your assessable profit is £32,000 from 1 January 2023 to 31 December 2023.
  • Your assessable profit is £18,000 from 1 January 2024 to 5 April 2024.
  • The £18,000 profit is divided equally and assessed over the next 5 tax years at £3,600 a year (£18,000 divided by 5).
  • In the 2023 to 2024 tax year, your total assessable profits will be £35,600 (£32,000 plus £3,600).

Any increased profits from the 2023 to 2024 tax year will be treated in a special way to minimise the impact on benefits and allowances.

How overlap relief can be used

If you set an accounting date between 6 April and 30 March when you started your business, or if you subsequently changed your accounting date, you may have paid tax twice on some of your profits and be entitled to ‘overlap relief’. 

Usually, businesses can only use overlap relief to get this tax back when they stop trading or change their accounting date. However, HMRC will allow a business with unused overlap relief to use it in the 6 April 2023 to 5 April 2024 transition year. 

In the example above, any overlap relief would be deducted from the £18,000 in step 3, also thereby reducing the profits spread over the subsequent 4 tax years.

Please give us a call on 0131 440 1373 to speak to us about how much overlap relief you may be due in the future.

Changing your accounting period

You do not have to change your accounting period and can continue to use whatever accounting date suits your business.

However, you may want to consider changing your accounting date to 31 March or 5 April. If you do, this will align your accounting period with the end of the tax year, and you will not need to apportion profits on your tax return every year.

HMRC have confirmed that the restrictions on changing your accounting date that are currently in place will be lifted starting from the tax return for 2023 to 2024. If you change your accounting date in your tax return for a year before 2023 to 2024, you will not be able to spread any extra profits that arise in the tax year you made the change in.

Please give us a call on 0131 440 1373 because we will be able to clarify this change and discuss your options directly.

Declare your COVID-19 payments

Self-Assessment: Declare your COVID-19 payments

HMRC is reminding their Self-Assessment taxpayers that they must declare COVID- 19 payments in their tax return for the 2021 to 2022 tax year. More than 2.9 million people claimed at least one Self-Employment Income Support Scheme (SEISS) payment up to 5 April 2022. These grants are taxable and should be declared on tax returns for the 2021 to 2022 tax year before the deadline on 31 January 2023.

SEISS payments

The SEISS application and payment windows during the 2021 to 2022 tax year were:

  • SEISS Four: 22 April 2021 to 1 June 2021
  • SEISS Five: 29 July 2021 to 30 September 2021


Other payments

SEISS is not the only COVID-19 support scheme that should be declared on tax returns. If you received other support payments during the 2021 to 2022 tax year, you may need to report this on your tax return if you are;

  • Self-employed
  • In a partnership
  • A business

See: Reporting coronavirus (COVID-19) grants and support payments – GOV.UK(www.gov.uk)

At James Anderson + Co we specialise in helping our clients manage their tax returns. If you think this is a service that your company would benefit from, please get in touch through our contact page, or give us a call on 0131 440 1373, we’d be happy to he