fpdteam, Author at Bennetts Accountancy

Changes to Scottish Income Tax rates 2024-25

18th April 2024 by fpdteam

A reminder of the changes to Scottish Income Tax rates for the 2024-25 tax year. It was announced as part of the Scottish Budget measures that a new tax band called the advanced rate band will apply a 45% tax rate on annual income between £75,000 and £125,140 and would come into effect from 6 April 2024.

In addition, 1p was added to the top rate of tax and the starter and basic rate bands were increased in line with inflation (6.7%, based on Consumer Price Index from September 2023). There were no changes to the Starter, Basic, Intermediate and Higher tax rates and the Higher rate threshold was maintained at £43,662. The measures are expected to raise an additional £1.5 billion in Income Tax revenue.

The Scottish rates and bands for 2024-25 are as follows:

Starter rate – 19%	£12,571 – £14,876
Basic rate – 20%	£14,877 – £26,561
Intermediate rate – 21%	£26,562 – £43,662
Higher rate – 42%	£43,663 – £75,000
Advanced rate – 45%	£75,001 – £125,140
Top rate – 48%	Above £125,140

The standard personal allowance for 2024-25 remains frozen at £12,570.

Source:The Scottish Government| 15-04-2024

Payrolling employee expenses and benefits

18th April 2024 by fpdteam

Employers can register on a voluntary basis (before the start of the tax year) to report and account for tax on certain benefits and expenses via the RTI system. This is known as payrolling and removes the requirement to complete a P11D for the selected benefits at the tax year end.

The deadline for submitting the 2023-24 forms P11D, P11D(b) and P9D is 6 July 2024. These forms can be submitted using commercial software or via HMRC’s PAYE online service. HMRC no longer accepts paper P11D and P11D(b) forms. Employees must also be provided with a copy of the information relating to them on these forms by the same date. P11D forms are used to provide information to HMRC on all Benefits in Kind (BiKs), including those under the Optional Remuneration Arrangements (OpRAs) unless the employer has registered to payroll benefits.

It should be noted that a P11D(b) is still required for Class 1A National Insurance payments regardless of whether the benefits are being reported via P11D or payrolled. The deadline for paying Class 1A NICs is 22 July 2024 (or 19 July if paying by cheque).

Where no benefits were provided from 6 April 2023 to 5 April 2024 and a form P11D(b) or P11D(b) reminder is received, employers can either submit a 'nil' return or notify HMRC online that no return is required. Employers should ensure that they complete their P11D's accurately, including all the details of cars and loans provided. There are penalties of £100 per 50 employees for each month or part month a P11D(b) is late. There are also penalties and interest if late payments are made.

Source:HM Revenue & Customs| 15-04-2024

Tax Diary May/June 2024

18th April 2024 by fpdteam

1 May 2024 – Due date for corporation tax due for the year ended 30 July 2023.

19 May 2024 – PAYE and NIC deductions due for month ended 5 May 2024. (If you pay your tax electronically the due date is 22 May 2024).

19 May 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2024.

19 May 2024 – CIS tax deducted for the month ended 5 May 2023 is payable by today.

31 May 2024 – Ensure all employees have been given their P60s for the 2023/24 tax year.

1 June 2024 – Due date for corporation tax due for the year ended 31 August 2023.

19 June 2024 – PAYE and NIC deductions due for month ended 5 June 2024. (If you pay your tax electronically the due date is 22 June 2024).

19 June 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2024.

19 June 2024 – CIS tax deducted for the month ended 5 June 2024 is payable by today.

Source:HM Revenue & Customs| 14-04-2024

Settling energy disputes

16th April 2024 by fpdteam

Business owners that are in dispute with their energy suppliers will be interested in the free support on offer from the Energy Ombudsman.

In a recent press release the Department for Energy Security and Net Zero confirmed the following:

“Businesses will get free support to resolve issues with their energy contracts, as part of government and Ofgem changes to tackle cowboy practices like hidden fees, inaccurate energy bills and pressurising sales tactics for energy contracts.

“Small organisations with fewer than 50 employees will be entitled to free support from the Energy Ombudsman on disputes with their energy supplier. It will extend the service to cover 99% of all businesses in Great Britain, giving them the confidence to grow – as part of the government’s long-term plan to boost the economy and improve economic security for all.

“The Ombudsman has the power to order suppliers to provide compensation of up to £10,000 or take action to resolve issues – such as raising standards for their customers, or to credit or amend customer accounts.

“The move will also enable businesses and other organisations to settle disputes with their energy broker via the Ombudsman, without the need for costly legal proceedings – as part of changes set out by the government and Ofgem today. It is a first step in a crackdown on rogue energy brokers targeting small organisations with thousands of pounds in hidden fees.

“Energy Affordability Minister Amanda Solloway has warned energy brokers to end these unacceptable practices, with the government planning to consult later this year on regulating brokers and other third-party intermediaries.”

Source:Other| 15-04-2024

COVID Bounce Back abuse

16th April 2024 by fpdteam

The Insolvency Service has recently published information confirming that a total of 831 company directors were banned in 2023-24 for Covid support scheme abuse, up more than 80% on the previous year, and that the average length of director disqualification for Covid misconduct in 2023-24 was almost 10 years.

The Covid Bounce Back Loan Scheme was introduced at the start of the pandemic in 2020. It helped small and medium-sized businesses borrow between £2,000 and £50,000 at a low interest rate, guaranteed by the government.

Businesses were entitled to a single loan of up to 25% of their turnover under the scheme.

Individuals could only use the loans for the economic benefit of the business and not for personal purposes.

Enforcement action taken against those that have abused the support schemes has ranged from companies being wound-up in court to criminal convictions, compensation orders and director disqualifications.

The Insolvency Service has successfully applied to have 1,430 directors banned for abusing Covid support schemes since it started investigating potential financial wrongdoing in this area in 2021.

Source:Other| 15-04-2024

Paying VAT on goods from EU to Northern Ireland

11th April 2024 by fpdteam

There are special procedures for moving goods in and out of Northern Ireland. Under the Northern Ireland Protocol, all Northern Ireland businesses continue to have access to the whole UK market.

There is specific guidance published by HMRC that should be followed for goods that are received into Northern Ireland from a supplier in the EU.

If you are registered for VAT in the UK and receive goods in Northern Ireland from countries in the EU, you will normally account for the VAT through your VAT Return. You will need to account for the VAT at the same rate that you would have paid if you had bought them from a UK supplier. This VAT is known as acquisition VAT, and you can normally reclaim some or all of this if the acquisitions relate to VAT taxable supplies that you make.
If you are not VAT registered and receive goods in Northern Ireland from countries in the EU, your supplier will charge VAT at the local rate in the EU country from which the goods are supplied. If you are not already registered for VAT in the UK and buy goods worth £90,000 (£85,000 prior to 1 April 2024) you may be required to register for VAT.

You may also be required to complete an Intrastat Supplementary Declaration if your acquisitions of goods from the EU exceed an annual amount. The delivery terms threshold for both arrivals and dispatches is currently £24 million.

Source:HM Revenue & Customs| 08-04-2024

VAT retail schemes

11th April 2024 by fpdteam

VAT retail schemes are a special set of schemes used by retail businesses to account for VAT. The schemes are used by businesses that sell a significant amount of low value and/or small quantity items to the public with different VAT liabilities.

The use of the schemes can save businesses a significant amount of time in calculating the amount of VAT due to HMRC on each sale. In many circumstances, it would be extremely difficult for these businesses to account for VAT using standard VAT accounting. By using the VAT retail scheme, retailers are able to calculate VAT due to HMRC at the standard, reduced and zero rates of VAT as a proportion of sales. Usually this is done on a day by day basis.

There are a number of standard VAT retail schemes:

the point of sale scheme
two apportionment schemes
two direct calculation schemes

There is also the option of using a bespoke scheme. The use of a bespoke scheme is obligatory for retailers with a turnover excluding VAT of £130 million or more.

The decision as to which retail scheme to be used is usually driven by a combination of looking at the scheme that provides the best result for the business in question combined with the cost of using the scheme with the important caveat that HMRC are of the opinion that the chosen scheme is fair and reasonable.

Source:HM Revenue & Customs| 08-04-2024

Termination payment clearance process

11th April 2024 by fpdteam

The tax treatment of termination payments has changed significantly over recent years. The changes have aligned the rules for tax and secondary National Insurance contributions (employer (NICs)) by making an employer liable to pay NICs on termination payments they make to their employees.

HMRC has announced that it is aligning its approach to providing advance assurance on certain termination payment enquiries.

HMRC guidance had previously committed HMRC to giving a binding answer if you made enquiries on termination cases involving:

the disability and injury compensation exception;
the foreign service exception;
how the £30,000 threshold applies to payments made by the third party and by the employer; and
non-cash provisions.

HMRC will no longer give a binding answer on these cases outside the normal Non-Statutory Clearance process, for example, where there is a genuine point of uncertainty on the correct treatment.

This means that any future enquiries from taxpayers and employers on termination payments should be dealt with through the existing Non-Statutory Clearance procedure. HMRC will no longer provide clearance outside of the Non-Statutory Clearance route.

Source:HM Revenue & Customs| 08-04-2024

HMRC continues to target till fraud

11th April 2024 by fpdteam

HMRC has, for many years, looked to target businesses that deliberately undertake electronic sales suppression (ESS). ESS happens where a business deliberately manipulates its electronic sales records in order to hide or reduce the value of individual transactions.

This type of fraud is hard to spot as it tries to reduce the recorded turnover of the business and the corresponding tax liabilities while providing what appears to be a credible and compliant audit trail. This can be done by misusing built in till functions or installing software specifically designed to suppress sales.

HMRC officers are continuing to target businesses across the country that are suspected of being involved in making, supplying or promoting ESS systems. These businesses can face fines of up to £50,000 and criminal investigations. HMRC is also actively targeting users of these systems who will also face having to pay back tax evaded, financial penalties and possible criminal convictions. HMRC has confirmed that they will continue to contact and target till fraud throughout 2024.

HMRC is also urging affected businesses to voluntarily come forward and use the online portal to disclose their undeclared sales and stop using ESS software immediately. If businesses do not come forward, HMRC may issue an assessment and open an investigation, and harsher penalties will apply.

Source:HM Revenue & Customs| 08-04-2024

Using the starter PAYE checklist

11th April 2024 by fpdteam

Employers that take on a new employee need to work out which tax code and starter declaration to use in their payroll software. Incorrect tax codes can lead to a new employee paying more tax than is due.

Employers will require certain information from their new employee in order to ensure that the correct tax code and starter declaration information is entered on the payroll software. In most cases, all the necessary information can be found on the employees P45. It is important to remind new employees to bring this with them on their first day of work.

If the employee does not have a P45 the necessary information can be collected by asking the new employee to complete HMRC's online starter PAYE checklist. A paper version can also be completed if the new employee is unable to use the online version. This information must be held in the employers’ payroll records for the current year and the 3 following tax years. Once the information has been collated, HMRC’s online tool can be used to work out the employee’s tax code.

The starter checklist can be used by a new employee if:

they have a student or postgraduate loan;
their personal details are different to those shown on their P45;
they do not have a P45; and
they have been sent to work temporarily in the UK by their overseas employer.

Once the checklist has been completed, the new employee should email, post or give the completed list to their employer. There is no requirement to send the checklist to HMRC.

Source:HM Revenue & Customs| 08-04-2024