Tax Credits Actual figures

When I submitted my Tax Credits renewal forms, I had to estimate my self-employment income because I had not drawn my accounts up. I have now completed my accounts and I am about to file my tax return. Will the Tax Credits office be informed of the actual figures on my tax return?

Sadly not I am afraid. You will have to give the Tax Credits Office a call to inform them of your actual figures and you must do so by 31st January.

If you fail to meet the January deadline, your tax credits won’t stop but the tax credits you receive from 6th April may not be accurate. And if you’re overpaid, you may have to pay it back later- and you may even be charged a penalty.

HM Revenue & Customs telephone numbers change fairly frequently, so it's always best to check their website for the present Tax Credits Office number.

If you would like any assistance with the completion of your accounts, tax return or Tax Credits affairs, please feel free to give Gary a call

Small gifts from customers

One of my senior staff members received a luxury hamper from one of our clients. Are there any implications for this? 

Gifts may be received by your employees from third parties such as customers or suppliers, due to contact they may have had with throughout the year.

Small gifts of goods made by third parties to employees (or a member of their family or household) are exempt from tax if the following conditions are met:

• ·         the gift is not provided by the employer, or a person connected with the employer
• ·         neither the employer, nor a person connected with the employer, directly or indirectly procured the gift
• ·         the gift is not made in recognition, or in anticipation, of particular services performed by the employee
• ·         the gift is not in cash or in vouchers or securities that can be converted into cash
• ·         the total cost to the donor of all eligible gifts to the employee in a tax year does not exceed £250. The cost to the person making the gift includes any VAT paid, whether or not it is reclaimable.

Where the cost of a gift (or gifts) to an employee received from the same third party in a tax year exceeds £250, tax will be payable on the full amount of the gifts.

Payrolling benefits

Can you tell me more about the changes to how benefits in kind can be reported next year please?

From next year, you can opt to submit your benefits and expenses online via payroll software and therefore not report them on P11Ds anymore.

How to register

Before using the service you’ll need to ensure your payroll software allows you to collect the right amount of tax on benefits and expenses. You need to align your payroll software and register to payroll using the new service by 5^th April 2016. You won’t be able to register after this date for the 2016/17 tax year as HMRC can’t process changes in-year. To avoid being sent multiple tax codes for your employees you should register before the annual coding process which usually starts around 21^stDecember.

If you don’t register the benefits and expenses you intend to payroll you’ll have to report them on a P11D.

Limitations of the new service

The only benefits you won’t be able to payroll are:

• ·         vouchers and credit cards
• ·         living accommodation
• ·         interest free and low interest (beneficial) loans

If you’ve previously been payrolling these benefits informally you can continue to do so but you must still report them on a P11D.

Once registered

All payrolled benefits and expenses need to be included when you report your payroll information in a Full Payment Submission. P11D (b) forms must still be completed, including the total benefits and expenses provided, whether or not they’ve been put through your payroll.

An important note for company cars

If you payroll car and car fuel benefit you mustn’t complete P46 (Car) forms as you’re deducting the tax due on these benefits at source. If you use a contracted out company car provider you must notify them of your decision to payroll and ensure they don’t submit P46 (Car) forms on your behalf.

If you’d like someone to look after the day-to-day running of your payroll, including any benefits or expenses, Gary will beable to help

Cannot pay tax bill

I’m self employed and I’ve only just prepared my tax return. As a result, I’ve only just found out that I haven’t put enough aside for my tax liability. What should I do- should I put off filing my return until I have the money for my tax bill?

Your balancing payment for this year (2014/15) and if applicable, an instalment for next year (2015/16) are due by 31stJanuary 2016, together with your tax return.

If you are struggling to pay your tax, you should call HM Revenue & Customs’ (HMRC) Business Payment Support Service (BPSS). HMRC will ask you probing questions about the business and your cashflow, to ascertain why you can’t pay your tax. If they think you genuinely cannot pay your tax they may grant you an extension to settle your taxes in or agree a payment plan. However, they will not reduce the amount outstanding and they will still charge you interest.

Even though you can’t afford to pay your tax, you must make sure you still file your return before 31st January 2016. Otherwise, you will be charged an automatic late filing penalty of £100 and the penalties will mount up the longer the delay in filing the tax return. Furthermore, the BPSS will only consider making arrangements where the tax is not yet overdue- so do not leave it too long to speak with them.

If you don’t feel confident in negotiating with HMRC, feel free to contact your local TaxAssist Accountant who would be happy to liaise with HMRC on your behalf.