Gary Perrens, TaxAssist in Sudbury, answers your questions this month on invoicing, Tax Credit renewals & more
9th June 2016
... Comments

Tax and Business Q&A answered by TaxAssist Accountant in Sudbury

 

Paying HMRC by Credit Card

Question

I am thinking about making my July payment on account for my income tax bill on credit card. Are there any problems with that? 

Answer

No, but there are a few things you need to be aware of. As it is for income tax/ self assessment, make sure you use your 10-digit Unique Taxpayer Reference followed by the letter ‘K’ as your payment reference. 

There’s also a fee if you pay HMRC by credit card that isn’t refundable. This applies whatever the tax is that you're paying.

HMRC have changes the fees for using a credit card from 1st April 2016. These replace the former 1.5% fee. The new rates vary depending on the type of card used and whether the card is a personal or corporate card. As you can see, the fees for paying using personal credit cards have been reduced and the rates for corporate credit cards have increased. The new rates are:

Personal credit cards 

Type of card

Rate

VISA Personal Credit Card

0.415%

MasterCard Personal Credit Card

0.386%

MasterCard World Premium Credit Card

0.374%

MasterCard Signia Premium Credit Card

0.606%

MasterCard Elite Premium Credit Card

0.606%

 

Corporate credit cards

Type of card

Rate

VISA Business Credit Card

1.508%

VISA Corporate Credit Card

1.744%

VISA Purchasing Credit Card

1.755%

MasterCard Business Credit Card

1.973%

MasterCard Corporate Credit Card

2.248%

MasterCard Purchasing Credit Card

2.406%

MasterCard Fleet Credit Card

2.134%

Source http://www.legislation.gov.uk/uksi/2016/333/pdfs/uksi_20160333_en.pdf

Please note that from 1st January 2016, HMRC will limit the number of times you can use a credit or debit card within a certain time to pay your tax.

 

 

 

What information do I need to show on my invoice?

Question

Answer

Invoices don’t have to be produced on a computer but there are stipulations you need to follow about what information needs to be displayed.

You must clearly display the word ‘invoice’ on the document. You must include:

  • ·         your business name, address and contact information
  • ·         a clear description of what you’re charging for
  • ·         the date of the invoice
  • ·         (if applicable) the date the goods or service were provided if different to the date of the invoice
  • ·         the total amount owed

It’s good practice to give each invoice a unique number or reference and to include the name and address of the customer you’re invoicing, particularly if they’re also a business.

If you’re VAT-registered or trading as a limited company, slightly more information is required.

If you’d like any assistance in raising sales invoices or maintaining your records, get intouch with Gary Perrens. Owner of TaxAssist Accountants in Sudbury

 

 

Taxation of director’s loan

Question

If a company has provided an interest-free loan to a director of say £100,000, and assuming the loan balance stays the same the following year, does the corporation tax charge have to be paid again?  

Answer

There are often tax implications where small companies provide loans to their directors or “participators” (any person having a share or interest in the capital/ income of the company- normally these are shareholders).

A company is a separate legal entity and company money belongs to the company. The directors and shareholders would also stand to benefit from more favourable terms, than they might get from a bank from example.

To deter companies from making loans to directors or shareholders, a corporation tax charge arises on the company (S455). Previously this has been imposed at 25% but due to the change in the way dividends are taxed from April 2016, the charge is 32.5%.

For small companies, the tax liability normally falls due nine months after the end of the accounting period in which the loan was made.

Repayments – even made up to nine months after the relevant accounting period – would be taken into account before calculating the tax charge. As the loan balance is reduced, HMRC refund the company the S455 tax so the tax charge is only temporary in effect. 

However, a taxable benefit in kind would also arise on the recipient of the loan assuming it is over £10,000 and the benefit and therefore the tax charge would arise each year that the balance exceeds £10,000.

With the prospect of the S455 tax being refunded and avoidance of a benefit in kind charge, there is a definite incentive for the loan to be paid back as quickly as possible.

If you’re experiencing cashflow problems, your local TaxAssist Accountant could work with you to produce cashflow forecasts/ business plans. You may also have options available to you to reduce the balance on your loan account. Contact us for more information. 

 

Self employed and tax credits renewal

Question

I’ve received a letter from Concentrix claiming they are checking tax credits claims for the  self employed  on behalf of HMRC. Is the letter legit and should I be worried? 

Answer

HMRC have contracts with some private companies to undertake work on their behalf; one of which is Concentrix. If you are contacted by Concentrix in relation to a tax credits claim, you should deal with them in the same way you would deal with HMRC.

In April 2015, the rules tightened slightly and self employed tax credits claimants must be able to demonstrate that their business is conducted on a commercial basis; with a view to achieving profits. These changes will not affect the rules for claiming Child Tax Credit.

The reason you have been contacted, is because the profits from your business per hour equate to less than the National Minimum Wage.

The information you may be asked to provide should be typical business records, such as receipts and expenses, records of sales and purchases, and bank statements. They may also ask for supporting documents such as a business plan, planned work, cash flow and profit projections.

If your business is in its early stages and is not yet profitable, you may have to rely more on your projections and business plans to satisfy HMRC/ Concentrix that you have aspirations of making good profits in the future.

HMRC will use the information provided to reach a decision about the claimants’ current working tax credit award. There is a risk that some claimants may lose their working tax credits if they cannot provide the evidence HMRC ask for and may have to repay any tax credits they are not entitled to.

 
 

 

No P11D due

Question

I have previously had to report benefits and expenses to HMRC on form P11D. This year, I indicated on my final RTI submission for the tax year that I would be submitting them as normal- but I have now realised there’s nothing to report. Can I ignore the P11D(b) that HMRC have sent me? 

Answer

No. If HMRC have issued you with a P11D(b) form, you will have to tell them that no P11Ds are due and therefore not to expect any Class 1A contributions either. Otherwise, they will assume that the P11Ds are late once the deadline of 22nd July has passed and will consequently issue with late filing penalties.

To advise HMRC that no P11Ds are due, there are 2 options:

6.        Complete the P11D(b) you’ve received and tick the option ‘No expenses payments or benefits of the type to be returned on forms P11D have been or will be provided for the year ended 5 April 2015. For this reason no forms P11D are attached’ or

7.        Use the online form entitled ‘PAYE - no return of Class 1A National Insurance contributions due for 2015-16’

Whichever option you go for, make sure you inform HMRC by the normal deadline of 22nd July. If you’re using the paper form, make sure you’ve allowed for postal delays. 

More
About the Author

Penny W

Member since: 17th March 2014

Hello! I'm Penny from thebestof Sudbury, shouting about the best local businesses from Hadleigh through the Clare. When I'm not doing that, you'll find me knitting socks or tending to my 6 chickens

Popular Categories