But do make sure you pay on time
STEP 1: Find your UTR
Find the letter from HMRC requesting you complete a self assessment tax return, and locate your personal Unique Tax Payer’s Reference code (UTR)
STEP 2: Create your Digital Tax Account
If you are completing your own tax return online for the first time you will need to visit the GOV.UK website to get your individual user ID:
Then simply follow the instructions to register as a new user.
- You will be sent your account activation code within about 10 days, and can then use this to log in and file your return.
So, please remember to give yourself enough time to receive your code in advance of the deadline!
Now it’s time to gather your information and get everything together in one place before you start:
STEP 3: Income and Expenses
Income – make a list of all your sources of income, including where relevant:
- Your PAYE (pay as you earn) income from your main employment
- Remember to include any bonus payment and company benefits such as a company car or car allowance, medical cover or fuel allowance
- Your PAYE (pay as you earn) income from your main employment
- Income from property letting
- Remember residential and holiday letting are treated differently and should therefore be looked at separately
- Income from property letting
- Self Employment
- Income (or profit) from any self employment
- Income from dividends from your business or from other investments and shares
- Bank and building society interest
- Other Allowances Foster or Carer’s allowances are also taxable as income
- Any sale of asset should be considered in relation to capital gains or losses
Do also remember that Jointly held income of any form should be split accordingly
Expenses – make a list of all your allowable expenses, including where relevant:
- Professional subscriptions or other expenses paid personally
- Property expenses
- Rates, insurances, and a proportion of your mortgage interest
- Depending on your tax band of course!
- Rates, insurances, and a proportion of your mortgage interest
- Self employment
- These will be the expenses shown in your accounts
- Private pension payments
Other things to consider:
- Child benefit
- If you or your spouse (or partner) has income over £50,000 and have received child benefit you will need to pay some or all of this back dependent on actual income
- Charitable donations
- If you are higher rate tax payers and made any gift aid donations you can claim the tax relief on these
STEP 4: Find the paperwork to support your lists:
- Employment P60 and P11D
- Signed Accounts
- Share and/or dividend statement
- Bank and/or building society account statements
- Charity receipts
- Mileage records
- Etc etc etc
Remember that there are certain other allowable expenses for which you might not have actual supporting records and receipts, such as flat rate use of home or daily subsistence allowances – don’t forget to include these.
For more on what you can claim if you work from home, see our article or watch our video here
That’s it – you’re almost there – you have done the difficult bit!! All that remains is for you to:
STEP 5: Complete your self assessment tax return online
- Log in to HMRC online using your identification code from step 1
- Select Self-Assessment
- Go through each page answering the questions with the information you’ve compiled in 2-4 above
- Save and submit – it’s as simple as that 🙂
* REMEMBER *
Do remember that the lists above are by no means exhaustive and every individual situation is unique, so if you do have any questions, or if you feel your position is complicated then please seek professional advice.
For the tax year ending 5 April 2017:
- Deadline for online submission is 31 January 2018
- Deadline for payment of any liability to be received is 31 January 2018
- Deadline for the first payment on account to be received by HMRC is also 31 January 2018 if applicable
However if you are salaried and would prefer to have your tax liability collected via your tax code, the deadline for HMRC to receive your completed return online is 31 December 2017
What if I miss these deadlines??
The initial penalty for late submission of your self assessment tax return is £100, which is enforced whether you actually owe any tax or not! If your return is more than 3 months late this starts to increase by £10 per day, so can quickly ramp up!
Remember also if you do owe any tax, then interest will be charged on liabilities due which are not received in HMRC’s bank by the 31 January deadline or around 5% of tax due
Just DON’T leave it until the last minute – HMRC’s website does get busy (and slow!) at this time of year, and computers crashing are not deemed a reasonable excuse by the treasury when we have had almost 9 months to get the information in!
If all this sounds a little overwhelming, please do give us a call – for any information received to us by you before Christmas we will guarantee to submit your self assessment tax return on time, so you can sit back, relax and enjoy the festive break
Working from Home? Your guide to what you can and can’t claim in terms of tax relief…
Business mileage and tax relief explained
How to change accountants – it’s easier than you think!
The reason most often given to us as to why individuals and businesses stay with unsatisfactory accountants for longer than there is any need for them to do so, is simply fear:
- Fear of the potential complexity of changing accountants
- Fear of any associated costs
- Fear of the unknown (otherwise known as ‘better the devil you know’ complex)
- Fear of confronting, telling or letting someone down. You may have worked with them for quite some time, and they perhaps don’t realise that you are dissatisfied
- Fear of opening up your, or your business’ financial world to scrutiny from someone new
The process however, is actually incredibly simple and cost free. As the client making the decision to change accountants it is courtesy to inform in writing the outgoing accountants of your decision. (please see link at the foot of this article to your downloadable sample letter)
This is a process that is usually all completed within a couple of weeks. It is a long established and agreed procedure between accountancy firms and their governing bodies.
IN Accountancy, Stockport are absolutely thrilled to have once again been shortlisted for a Talk of Manchester TOMs award – this year for the BEST BOUTIQUE ACCOUNTANCY PRACTICE 2017.
We don’t know who nominated us – apparently we had a number of nominations in more than one category – so thank you, whoever and wherever you are 🙂
So, now we move on to the shameless plug. As these awards are judged by public vote we need your help as, as you know we are only a very small business so please do vote for us and spread the word as far as you can.
Voting doesn’t open until 10am on Wednesday (27 September 2017), and you can cast your vote HERE. They close again at 5pm on Wednesday 11 October, so act fast 🙂
Don’t forget to use the twitter hashtag #TheTOMs of you’re sharing on that social channel…
If you are over 55 and have accessed any of your pension this affects you, so read on…
In Philip Hammond’s 2016 Autumn statement he first introduced the idea that the £10,000 limit on new contributions to pensions for those who had already accessed any of their possible 25% tax free cash would be slashed by a massive 60% to just £4,000 per annum. Although these plans were confirmed in the 2017 Finance Bill, the government did a massive turnaround in April of this year once plans for the snap general election had been announced. Other equally unpopular measures were also shelved at the same time, such as the proposed reduction of the tax free dividend allowance also by 60% from its current £5,000 per annum to just £2,000 per annum from 2018-19.
This latest “Finance Bill 2” which has been announced yesterday to be introduced in the autumn legislates for a number of policies which have already been announced and includes a number of provisions which will apply from the start of this 2017-18 tax year, including this reduction in the money purchase annual allowance to £4,000.
It is estimated that there will be many individuals who have already exceeded this amount in the first three months of this following the earlier announcement that the rate was to he held at £10,000.
To read the full article from The Professional Adviser please click here
For the full updated draft legislation of the Finance Bill (2) published on Thursday please click here
As always, please don’t hesitate to contact us if you require any further information about any of these measures.
Following on from an earlier guide to business expenses, it’s worth knowing some more about claiming expenses and the importance of how you record them.
As Contractor Accountants in Manchester, we are often asked about business expenses we are often asked about the use of rented offices, company cars and even if contractors can pay their partner as a business.
What costs cannot be claimed as an expense?
Any costs that are not exclusively for the use of your business cannot be claimed as business expenses. These include such costs as medical expenses, client entertainment, gym membership and childcare.
How do I claim business expenses?
If you are a limited company contractor, then claiming expenses is straight-forward. If you pay for the expense yourself, then you need to complete a bank transfer from your business account to your personal account to cover the cost. If you take the expense straight out of your business bank account, then you need to make a note of it so that you can accurately assess your profit at the end of the financial year.
How should I record my expenses?
We cannot emphasise enough the importance for contractors to keep clear and detailed business records. Whether you pay for an expense yourself or through your company bank account, then you must keep some proof of purchase. HMRC demand that you keep expense receipts and invoices for a minimum of 6 years in case they decide to investigate you. The receipt/invoice should show a detailed breakdown of the purchases and include a separate VAT calculation if included.
How do I make pension contributions?
You can make personal pension contributions or employer contributions through your limited company, and both ways of contributing can be advantageous to you from a tax perspective depending on your circumstances. The team at In Accountancy are not authorised to give you any advice on which pension to invest in, but we can help with informing you of the potential tax relief involved.
Can I pay my partner a salary?
Technically yes, you can pay your partner a salary, but in reality, this can be hard to justify to HMRC. For example, if your partner carries out general administration duties for you then HMRC would expect this to not take more than a couple of hours a month to be paid at an appropriate hourly rate.
Can I rent an office to work in?
If you wish to rent somewhere to work that isn’t part of your home then this can be done, but it is best to ensure that this is essential for the running of your business, that the agreement you sign is in the name of your limited company and that the rent is paid from your business account and not your personal one.
Can I buy a company car?
In general, company cars are not an economical option for owner-managed companies as the same person will end up paying both the employee and the employer taxes! Company cars are only tax efficient if you are an employee of a company that you do not own shares in or if the car is particularly environmentally friendly.
For more information on business expenses and our contractor accountant’s services, please call our experienced team on 0161 456 9666 or email us at email@example.com
You may not be aware that for every referral we receive, we donate £50 to Francis House Hospice when we are engaged to provide services. The hospice cares for children and young adults with a short life expectancy. They need over £3.6 million in charitable donations each year to continue to provide their services. All you need to do is pass the contact details of your friend, colleague or family member by ringing 0161 456 9666 or email firstname.lastname@example.org. There is no limit to the number of people you can refer to us. We will donate for each new introduction upon our appointment.
We also have a handy Tax App that is free to download for both Android and iPhones at https://www.in-accountancy.co.uk/taxapp-page/
Changes to the Flat Rate VAT scheme, used by small businesses with an annual turnover less than £150,000, will come into effect from 1 April 2017. The main change that interested us as contractor accountants is that the new rate will be a straight 16.5% regardless of your industry or type of work. Previously several different rates applied, some as low as 9%.
As it stands, the Flat Rate scheme simplifies record keeping for small businesses, by making it easier for them to work out the amount of VAT they must pay. It reduces the usual two-step process of deducting the VAT on what they buy, from the VAT on what they sell, down to just one step. So the firm just pays VAT on a flat rate percentage of turnover.
The changes have come about because government believes that some businesses are using the flat rate VAT scheme in a way which enables them to pay much less VAT than they should.
Flat rate VAT schemes have previously been quite lucrative to those small businesses who operate with a very low vatable cost base. While such businesses can still use the Flat Rate Scheme the increased percentage of 16.5% means there is very little financial incentive or advantage to the flat rate scheme. To illustrate: if they sell services of a value of £120 which includes £20 of VAT, then the flat rate of VAT they pay will be 16.5% of £120 so £19.80 – a 20 pence saving for every £100 pounds of sales, or £200 on every £100,000.
The new Chancellor Phillip Hammond has now termed such businesses “limited cost trader”, and defined them as those that spend less than 2% of their sales on goods in an accounting period. This spend on goods cannot include the purchase of capital goods, food and drink or vehicles and parts of vehicles. A firm will also be classed as a ‘limited cost trader’ if it spends less than £1,000 a year on goods, even if this is more than 2% of their turnover.
This change will impact most on businesses which are very labour-intensive and which spend very little on goods particularly those individuals trading through limited companies as contractors, such as IT Contractors, Oil and Gas Contractors, Aerospace Contractors. It will also affect those contractors who work in construction where the materials they use are provided by the main contractor.
The new rules will be enforced from April 1st next year, but may start to affect things such as invoices issued and goods brought from now onwards. You can find out more information on the HMRC site, or just email us on ask email@example.com or give us a call on 0161 456 9666.
It must be time to start Christmas shopping when the last posting dates are upon us, according to your local accountants in Stockport, IN Accountancy, .
The last recommended dates for posting International Standard (formerly Airmail) post are as follows:
- Saturday 03 December for Africa, Middle East
- Wednesday 07 December for Asia, Cyprus, Eastern Europe (except Czech Republic, Poland and Slovakia) Far East (including Japan)
- Thursday 08 December for Caribbean, Central and South America
- Saturday 10 December for Australia, Greece, New Zealand
- Wednesday 14 December for Czech Republic, Germany, Italy, Poland
- Thursday 15 December for Canada, Finland, Sweden, USA
- Friday 16 December for Austria, Denmark, Iceland, Netherlands, Norway, Portugal, Slovakia, Spain, Switzerland
- Saturday 17 December for Belgium, France, Ireland, Luxembourg