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Introduction Value Added Tax (VAT) is a tax on the value added to goods and services during their production and distribution. In the UK, businesses that are registered for VAT must submit regular VAT returns to HM Revenue and Customs (HMRC). Failing to submit VAT returns accurately and on time can result in hefty penalties and legal action. Therefore, it’s vital for businesses to understand the VAT return submission process and ensure they have all the necessary documents. In this blog post, we detail the steps to submit VAT returns in the UK, the required documents, submission frequency options, and tips to ensure an accurate VAT return submission. VAT Return Submission Process in UK Submitting your VAT return in the UK is a necessary task for all VAT-registered businesses. Here’s a step-by-step process to follow: Step 1: Calculate VAT due Firstly, you need to calculate the amount of VAT due on your sales and purchases during the relevant period. You can do this by subtracting the VAT you’ve paid on your purchases from the VAT you’ve charged on your sales. Step 2: Complete the online form Next, you need to complete the online VAT return form on HMRC’s website. You’ll need to enter the amount of VAT due, the VAT rate, and the relevant period. Step 3: Submit your VAT return You can submit your VAT return online via HMRC’s website. When submitting, double-check that all figures are correct and accurate, and keep a copy of your submission for your records. It’s important to keep accurate records of all your business transactions as HMRC may ask to see them in the future. Remember, inaccurate or late submissions can result in penalties and legal action from HMRC. So, make sure to complete and submit your VAT return on time and check for any errors. Important Documents Required for VAT Return Submission When submitting a VAT return in the UK, there are certain documents that you must have on hand to ensure your calculations are accurate. These documents include: Sales invoices – invoices for all goods and services sold during the VAT period. Purchase invoices – invoices for all goods and services purchased during the VAT period. Import/export documents – if you import or export goods from outside the EU, you will need to provide documentation that shows the value of the goods and the amount of VAT paid. Keeping copies of these documents is important for record-keeping purposes, and they may be requested by HMRC in the event of an audit. It is also recommended that you keep a ledger of all VAT transactions, including any adjustments or corrections you make throughout the VAT period. By keeping accurate records, you can ensure that your VAT return submission is as accurate as possible and avoid potential penalties from HMRC. VAT Return Submission Deadline and Penalties Submitting your VAT return on time is crucial to avoid potential penalties and legal action from HMRC. The deadlines for submitting VAT returns vary depending on the frequency and payment method you have chosen. If you submit VAT returns annually, the deadline for online submissions and payments is 12 calendar months after the end of your accounting period. If you submit VAT returns quarterly, the deadline for online submissions and payments is one calendar month and seven days after the end of your accounting period. If you submit VAT returns monthly, the deadline for online submissions and payments is one calendar month and seven days after the end of your accounting period. If you pay by direct debit, the deadline is extended by three working days. It’s important to note that late submission of VAT returns can lead to financial penalties. If you miss the deadline, HMRC may send you a penalty notice. The amount of the penalty will depend on how late the return was submitted and the value of the VAT due. The penalty can range from £100 to £400. If you continue to miss deadlines or fail to submit your VAT returns altogether, HMRC may take legal action against you, which can result in higher fines and even prosecution. Make sure to always submit your VAT return on time to avoid any potential issues and penalties. How to Register for VAT in the UK Registering for VAT in the UK is a fairly straightforward process. Here are the steps to follow: Determine if your business needs to be VAT-registered. Your business must register for VAT if your VAT-taxable turnover is more than £85,000 in a 12-month period. If your business’ turnover is less than this, VAT registration is voluntary, but you can still register if you wish to do so. Visit the HMRC website and register for VAT online. You will need your business details, including your VAT number, company registration number, and bank details. You’ll also need to provide details about the nature of your business, such as its trading activities and the types of products or services it sells. Wait for HMRC to process your registration. Once you have submitted your registration form, HMRC will review your application and contact you if they need more information. It typically takes a few weeks for your registration to be processed. Receive your VAT registration certificate. Once HMRC has accepted your registration, they will send you a VAT registration certificate. This certificate contains your VAT registration number and other important information. Begin charging and claiming VAT. With your VAT number, you can start charging VAT on your sales and claiming back VAT on your purchases. Remember, once you’re registered for VAT, it’s important to stay on top of your VAT responsibilities. Make sure you submit accurate VAT returns on time and keep accurate records of your VAT transactions. VAT Return Submission Frequency Options in UK As a UK VAT-registered business, you have the freedom to choose your VAT return submission frequency. Here are the options available to you: Monthly VAT Returns If your VAT payments exceed £100,000, you must submit VAT returns monthly. Quarterly

Many people aspire to be self-employed, and if you are an individual running your own business, you are considered a “Sole Traders.” There are many benefits to being a sole trader, such as the ability to set your own schedule and achieve a good work-life balance. Additionally, you get to keep all of your business’s profits after taxes. But you are personally responsible for any losses and ensuring that you pay the correct amount of income tax and national insurance. It is crucial to know how much tax you are required to pay and complete an annual self-assessment tax return as a sole trader. Registering for self-assessment is easy, but it is essential to do so each tax year. As a sole trader, you are also responsible for paying your own national insurance contributions. Recent research has indicated that over 75% of UK sole traders are uncertain about the tax and VAT thresholds that apply to them. This lack of knowledge could be costing them too. A survey of 800 sole traders conducted by Account-Ease revealed several gaps in the financial knowledge of small businesses in the UK. We are here to fill those gaps for you, allowing you to focus on running your business. 3 in 4 sole traders are unsure of the amount they would need to earn to pay a higher tax rate of 40% (£50,271) Less than 1 in 10 (9%) know what could happen if they didn’t pay their tax bill 1 in 50 thought nothing would happen if they did not pay their tax bill Which sole traders are the least informed? Based on the survey findings, lawyers appear to have the highest knowledge regarding when they should pay a higher income tax rate. While retailers are the least informed, with only 13% providing the correct answer. Furthermore, the survey revealed that only 31% of sole traders are aware of the deadline for submitting a self-assessment tax form. With legal professionals being the most knowledgeable, as 42% of them knew about the January 31st deadline. Sole traders are not obligated to pay corporation tax, unlike limited liability companies. However, 73% of sole traders mistakenly believe that they are required to pay this tax. Sole traders pay most tax since records began Over the last two decades, there has been a notable surge in the number of individuals starting their own businesses and working as full-time self-employed professionals. As a result, sole traders are now paying the highest amount of tax ever recorded. In January 2023, the self-employed sector paid a record high of £22 billion in income tax. Marking a one-third increase from the previous year. Looking after your finances The survey also revealed that 18% of sole traders have not made any pension contributions or saved for their future. The East of England had the lowest percentage of sole traders with pension schemes, with only 55% having one. Meanwhile, those in London and Wales were the most financially astute, with 92% having a pension pot. Additionally, 21% of sole traders admitted to having no safety net saved for at least three months. Which is concerning given the current economic crisis. Although Welsh sole traders were found to be the most informed regarding pensions, they were the least likely to save. With one in three not having any funds put aside. Regarding reinvestment, restaurants were the most likely to allocate at least 20% of their income back into their business. On the other hand, those in education were the least likely, with 25% not reinvesting. Account-Ease offers a comprehensive accounting service for small businesses, with personalized assistance from dedicated accountants. They understand that every business has different needs, and provide tailored support to help clients save for the future. Take care of their finances, and achieve a work-life balance. With Account-Ease on board, business owners can focus on running their business with peace of mind that their finances are being handled by experienced professionals. Joining Account-Ease If you’re looking for a forward-thinking, tech-savvy accountant, switching to Account-Ease is so easy. We have vast experience working with businesses in a diverse range of industries and sectors. From tech start-ups to established SMEs, contractors, freelancers and locums – we’re able to support a wide range of small businesses and SMEs. Our pricing is transparent with no hidden fees or surprises. Our sole trader accountancy package is just £50 + VAT per month. Ready to join Account-Ease? Contact Us Now

When an economic downturn occurs, there are various steps you can take to protect your business and ensure it survives. This guide outlines your options. Understand your finances During an economic downturn, it’s crucial to have a comprehensive understanding of your company’s financial status. This entails knowing your cash reserves and whether they are sufficient to maintain operations during challenging times.   To achieve this, you should prepare a cash flow projection that shows how much money you anticipate receiving and spending. Being able to anticipate and track changes in your cash position will allow you to plan for future cash requirements and make informed decisions.   Continuously reviewing your company’s finances and budget during a downturn is essential. You should keep a close eye on the performance of your activities and make adjustments to your forecasts as needed.   Additionally, an accountant can provide valuable assistance in managing your cash flow, including preparing a cash flow forecast, guiding you through the process, or providing a critical evaluation of your existing forecast and the assumptions behind it. Review costs During challenging economic conditions. It can be an excellent opportunity to analyse your expenses and identify areas where you can reduce costs. To achieve this, you should consider all your costs, including raw materials, energy supplies, software and magazine subscriptions, travel expenses, insurance, internet and phone bills. Once you have identified your expenses, you can start looking for ways to cut those costs. This may include contacting suppliers and negotiating a better deal, using business service price comparison websites to find cheaper prices, cancelling unnecessary subscriptions, and switching from physical to online meetings. By taking these steps to reduce costs, you can potentially save a significant amount of money, which can help your business weather the challenging economic conditions and emerge stronger in the long run. Focus on key performance indicators Key performance indicators (KPIs) are a valuable tool for monitoring your business’s success, especially during challenging economic times. By tracking your performance against predetermined metrics. You can ensure that your operations stay on course and that you achieve the success you desire. Setting targets that are closely linked to your business goals and objectives can also help you identify potential issues before they become major problems. KPIs can be financial or non-financial and can cover a broad range of areas, including increasing the number of customers, improving sales revenue, boosting customer satisfaction levels, and enhancing profitability. By monitoring these critical areas, you can gain insight into where you are succeeding and where you need to focus your efforts to achieve your desired outcomes. Putting up prices During an economic downturn, it might seem counterintuitive to raise your prices; however, it can be one way to safeguard your business. There are ways to implement price increases without alienating your customer base. One strategy is to segment your clients and determine which are less likely to be sensitive to price increases. These could be individuals with significant disposable income or new customers who have not yet developed a strong price sensitivity. Another critical factor is honesty and transparency with your customers about the reason for price increases. By being open about the reasons behind the price rise. You can encourage customer loyalty, particularly if you emphasize factors that they particularly appreciate, such as exceptional customer service, added-value products or services, and fast or free delivery. It’s also important to note that raising prices should be considered carefully and strategically. A steep price hike could lead to a loss of customers, and it’s essential to assess the potential risks and benefits before making any significant changes to your pricing strategy. Supporting employees During difficult economic times, it’s common for employees to experience anxiety and worry, which can lead to decreased productivity and other issues that could negatively impact your business. One strategy to mitigate these concerns is to be honest and transparent with your staff about any cost-cutting measures that need to be taken due to the economic situation. By keeping your employees informed, you can help them understand the reasons behind any changes and alleviate any undue stress. It’s also important to involve your staff in decision-making processes and to listen to their feedback and ideas. By encouraging employee participation. You can tap into their knowledge and expertise and identify potential solutions that may not have been considered otherwise. By taking these steps to address employee concerns and involve them in the decision-making process. You can help maintain employee morale and productivity, even during challenging economic times. This can ultimately benefit your business by allowing you to continue operating at a high level, even in the face of adversity. Stay on top of invoices During challenging economic times. It’s especially critical to ensure you’re receiving payment for your products or services in a timely manner. Unpaid invoices can have a significant negative impact on your cash flow and may even jeopardize the survival of your business. To mitigate this risk, it’s essential to monitor your customer invoices closely and ensure you’re being paid promptly. If payment is not received on time, it’s important to take steps to get the bill settled by contacting the customer and asking why payment has not been made. Additionally, there are several steps you can take to ensure prompt payment. For example, it’s crucial to issue accurate invoices that contain all the necessary information. Such as the invoice number, date, and itemized charges. You should also make it easy for customers to pay by offering various payment options, such as online payment or automated recurring billing. Maintaining strong and friendly relationships with your clients is also crucial to ensuring timely payment. By building a positive relationship with your clients, you can improve communication and reduce the likelihood of payment delays. Overall, taking proactive steps to monitor customer invoices and encourage prompt payment can help protect your business during challenging economic times and ensure that you maintain a healthy cash flow. Access business funding and support During

As we prepare for the start of a new tax year, many self-employed freelancers, contractors, sole traders, and small businesses across the UK are eagerly anticipating the Spring Budget. Chancellor Jeremy Hunt recently delivered his highly anticipated budget, which he dubbed “a budget for growth.” UK Economy Outlook In general, the UK economy’s outlook for 2023-24 is promising. With a focus on reducing debt, halving inflation, and creating prosperity with a purpose. The primary takeaway from the budget announcement that is most significant for small businesses is that the UK is expected to avoid a technical recession in 2023. This aligns with the priorities of getting the economy back on track. Hunt stated that “we are following the plan, and the plan is working.” Stability and Normality Jeremy Hunt is only the second of the last five chancellors to have held the iconic red box outside Number 11 for the Spring Budget announcement. With an average tenure of just nine months, the previous five chancellors have caused U-turns and uncertainty. This figure is in stark contrast to the previous five chancellors who were in office for a total of 26 years. Hunt aimed to reassure the UK of stability and normality, stating that “we are proving the doubters wrong.” Government’s Financial Goals Despite being the only G7 economy that is still smaller than it was before the Covid-19 pandemic, the UK economy grew by 4% last year. The Treasury’s recent announcements contain numerous reasons for optimism, and Hunt asserts that the UK economy is on the “right track.” The UK government is on track to achieve its goal of reducing underlying debt to 92.4% of GDP by next year. With the figure expected to decrease annually until 2027-28. In addition, Hunt announced that underlying debt in three years will be lower than it was in the autumn of last year. Budget Priorities Hunt’s budget was divided into three priorities: providing help with the cost of living crisis, reducing debt, and growing the economy. Inflation Rate As we head into the 2023-24 tax year, it’s worth noting that the inflation rate is expected to fall to 2.9% from 10.7%. This is excellent news for everyone, as it will help mitigate the rise in prices.   In conclusion, the Spring Budget announcement contains several reasons for optimism. The UK economy’s outlook is positive, and the government is taking steps to reduce debt and inflation while promoting economic growth. Priority 1 – help with cost of living crisis reduce debt – Priority 2 Priority 3 – grow the economy Let’s take a look at what will affect you going into the 2023-24 tax year… Inflation is set to fall to 2.9% by the end of the year Great news for everyone is that the rate of price rises, or inflation, is forecast to fall to 2.9% from 10.7%. Economy forecast to grow by 1.8% next year After this year the UK economy will grow in every single year of the forecast period. By 1.8% in 2024, 2.5% in 2025, 2.1% in 2026 and 1.9% in 2027. Energy bill support The Energy Price Guarantee will remain at £2,500 for the typical household for the next three months. This means that the average family will save a further £160 on top of the support measures already in place. Small Business Investment increased to £1m The Annual Investment Allowance has increased to £1m for small businesses. Meaning 99% of all businesses can deduct the full value of all their investment from that year’s taxable profits. This new policy aims to see full capital expensing for the next 3 years. With an intention to make it permanent as soon as responsibly possible. This means every £1 a company invests in IT equipment. Plant or machinery can be deducted in full and immediately from taxable profits. Tax boost for smaller and medium businesses The chancellor has announced that small or medium-sized businesses will be able to claim a credit worth £27 for every £100 they spend if they spend 40% or more of their total expenditure on Research and Development. 12 new Investment Zones The government said the scheme, which is backed by £80m of investment over five years in each of the new high-growth zones. Is designed to accelerate research and development in the UK’s “most budding industries”. They will be spread across the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool. There will also be at least one in each of Scotland, Wales and Northern Ireland. Corporation tax to increase to 25% Corporation tax for businesses is to increase from 19% to 25%. Firms which make a profit of more than £250,000 will pay 25% tax on their profits from April. Extending a cut to fuel duty To help households under pressure from living costs. Fuel duty will remain frozen and the 5p reduction will be maintained for a further year. This will save the average motorist £100 next year. “Returnerships” for Over 50s wanting to re-enter the workplace 3.5m people of pre-retirement age but over 50 are not working. Jeremy Hunt claimed that “Older people are the most skilled and experienced people we have” and “no country can thrive if it turns its back on such a wealth of talent and ability”. A new apprenticeship scheme for over 50s that want to return to work called “returnerships”. Pension Taxes The chancellor has abolished lifetime allowance on amount workers can save in pensions without paying tax. Hunt says he will increase the pensions annual tax-free allowance from £40,000 to £60,000 and will abolish the Lifetime Allowance – previously set at £1.07m. Free childcare for working parents To help parents get back to work, starting from April 2024. Every child over 9 months will receive 30 hours of free childcare per week. Government will pay the costs upfront and increase funding by 30% per year. Incentives of £600 for those that move into the childcare profession. On top

As tax season approaches in the UK, many individuals and businesses find themselves struggling to complete their Self Assessment tax returns. However, with the help of HMRC’s digital assistant, the process can become much more manageable. In this blog post, we will take a more in-depth look at the HMRC digital assistant and how it can assist you in completing your Self Assessment tax return. What is HMRC digital assistant? The HMRC digital assistant is a chatbot designed to assist individuals and businesses with any questions they may have related to their Self Assessment tax return. It utilizes artificial intelligence to understand natural language and provide accurate information and advice to the user. Whether you are registering for Self Assessment, filling out your tax return, or paying your tax bill, the digital assistant can help guide you through the process. How to access HMRC digital assistant? Accessing HMRC’s digital assistant is a straightforward process. You can access it through the HMRC website, where it is available 24/7. Once you are on the website, click on the “Help and contact” link on the homepage and select “Chat with us” to start your conversation. The digital assistant is available to assist you with any questions or concerns you may have related to your Self Assessment tax return. What can HMRC digital assistant help you with? The HMRC digital assistant is designed to assist with a broad range of topics related to Self Assessment tax returns. Here are a few examples of how the digital assistant can assist you: Registering for Self Assessment: If you are self-employed, a landlord, or a freelancer, you may be required to register for Self Assessment. The digital assistant can guide you through the registration process and help you understand whether you need to register or not. Filling out your tax return: The digital assistant can help guide you through the process of filling out your tax return. It can answer questions about which expenses you can claim, how to calculate your tax bill, and how to submit your tax return. Paying your tax bill: If you owe tax, the digital assistant can help you understand how to pay your tax bill. It can explain the different payment methods available and help you set up a payment plan if necessary. Deadlines: The digital assistant can help you keep track of important deadlines related to your Self Assessment tax return. It can remind you when your tax return is due, when your tax bill needs to be paid, and when to file your tax return if you are submitting a paper form. You Can Also Read Our Guide: Will the Tax Deadline be Extended Again in 2023? Security: The digital assistant can also help you with security-related questions. It can explain how to keep your personal information safe and how to avoid phishing scams. Why use HMRC digital assistant? There are several reasons why using HMRC digital assistant can be beneficial. First, it is available 24/7, so you can access it anytime you have a question related to your tax return. You do not need to wait for business hours to speak with an HMRC representative. Second, it can save you time. Rather than calling HMRC or searching the HMRC website for answers, you can simply ask the digital assistant. It can provide you with accurate and relevant information quickly, which can save you time and help you complete your tax return faster. Third, it is convenient. You can access the digital assistant from any device with an internet connection. You do not need to download any software or install any apps. Finally, it is free. HMRC digital assistant is a free service provided by the government. You can use it as often as you need to without incurring any charges. What are the limitations of HMRC digital assistant? While HMRC digital assistant is a helpful tool, it does have its limitations. Here are a few of them: It may not be able to answer all your questions: While the digital assistant is designed to assist with a wide range of topics related to Self Assessment tax returns, it may not be able to answer all your questions. If you have a particularly complex question or issue, you may need to speak with an HMRC representative directly. It may not provide personalized advice: The digital assistant provides general information and advice that applies to most people. However, it may not be able to provide personalized advice based on your specific situation. If you need personalized advice, you may need to speak with an HMRC representative or a tax professional. It may not be able to resolve technical issues: If you experience technical issues with the HMRC website or digital assistant, you may need to contact HMRC technical support directly. It may not be suitable for everyone: Some people may prefer to speak with an HMRC representative directly rather than using the digital assistant. Additionally, if you have a disability or accessibility needs, you may require additional support beyond what the digital assistant can provide. Conclusion In conclusion, HMRC digital assistant can be a helpful tool for completing your Self Assessment tax return. It can assist you with a variety of topics related to your tax return, including registering for Self Assessment, filling out your tax return, and paying your tax bill. It is available 24/7, convenient, and free to use. However, it does have its limitations, and it may not be able to answer all your questions or provide personalized advice. If you have a particularly complex question or issue, you may need to speak with an HMRC representative directly. Nonetheless, HMRC digital assistant is a useful resource that can save you time and help you complete your tax return faster.

Are you ready to become an employer for the first time? This is huge news! If you’re just getting started, you might be glad to know about Employment Allowance relief. This allows employers who have 2 or more employees (or companies with 2 or more directors) to reduce the cost of their National Insurance contributions by up to £5,000. You’ll find everything you need to know about the Employment Allowance right here, but if you need more in-depth advice or support, just book a call back from one of the team. What is employer’s National Insurance? Let’s start off with the basics. National Insurance is based on how much an employee earns, and is made up of two payments: one from the employee and one from you, the employer. Employees pay Class 1 (primary) National Insurance if they are under State Pension age and earn more than the Primary Threshold (in 2023/24 this is £12,570). Employers pay Class 1 (secondary) National Insurance on employee’s earnings above the Secondary Threshold, which in 2023/24 is £175 per week (or £9,100 a year). As the employer, it’s you who manages Class 1 National Insurance. You’ll deduct the employee’s contribution from their wages before it lands in their bank account. This deduction, along with your contribution for employer’s NI, is paid on to HMRC. What is the Employment Allowance? This is where it gets really interesting as the Employment Allowance could shave a significant amount off your outgoings. The Employment Allowance only applies to the employer’s contribution towards National Insurance. The amount that your employee contributes doesn’t change and isn’t impacted. Providing you are eligible (more on that below), you could save up to £5,000 per tax year in relief. It means that each time you run payroll you’ll pay less employer’s NI, until you use up the allowance, or start again in a new tax year. Once you’ve used up your full £5,000 allowance in a tax year, you’ll need to start paying any remaining employer contributions towards National Insurance. You don’t need to be paying more than £5,000 to qualify, either. Even if your bill for employer’s NI is less than £5,000 in a year, you can still benefit from the Employment Allowance. Am I eligible for the Employment Allowance? There are three basic criteria to qualify for claiming the Employment Allowance.   Are there any exceptions? You can probably guess that qualifying for the Employment Allowance isn’t quite as straightforward as that. Remember that one employee you need to have in order to be eligible? That employee can’t be both a director of the business and the only employee who’s paid more than the secondary threshold for National Insurance. This is the amount that employees can earn before their employers must start contributing towards their National Insurance. In 2023/24 the secondary threshold amount is £758 per month. In other words, if you employ one person, and that person is a director of the business and they are paid more than £758 per month, then you can’t claim Employment Allowance. It also means that if you employ several people, but the director is the only one paid above the National Insurance secondary threshold, you won’t be able to claim the Employment Allowance. I make or sell goods or services, are the rules different? Yes! This is where state aid rules come into play. The Employment Allowance is counted as part of the ‘de minimis state aid’ for those that make or sell goods or services. Depending on your sector, there is a limit to the amount of state aid you can receive over a three-year period. To understand if you’re eligible to claim Employment Allowance you will need to: Check whether you’re within the de minimis state threshold And also calculate how much state aid you’ve received As state aid is part of an EU initiative to ensure fair competition, the threshold is calculated in Euros. Sectors are split into four key areas:   Sector De minimis state aid threshold over 3 years Agriculture products €20,000 Fisheries and aquaculture €30,000 Road freight transport €100,000 Industrial / other €200,000 Is there a deadline to claiming the Employment Allowance? We’re glad you asked. There is currently a 4-year limit in place. So, if you didn’t know about the Employment Allowance, or just didn’t find the time, you can still claim for the previous 4 tax years. Be aware though, that there are different rules for historical claims! We advise consulting with an accountant on this one. How do I claim Employment Allowance? You can make a claim for the Employment Allowance as part of your PAYE reporting process. Either: Using the HMRC’s Basic PAYE tool, or; With your payroll software. Simply tick the box that indicates you will be claiming the Employment Allowance. If you make or sell goods or services, you’ll also need to indicate that state aid rules apply. Select the relevant business sector, even if you don’t make a profit. When can I make a claim? The Employment Allowance is allocated each tax year, so you’ll need to claim for every tax year that you’re eligible for the relief. You can apply at any time during the tax year but the sooner you get your application in, the sooner you’ll get the allowance. Help! I’m late making a claim Don’t panic. You haven’t missed out. It just means that the process for claiming your Employment Allowance is slightly different. You can ask HMRC to either: Use your unclaimed allowance to pay any outstanding tax bills or National Insurance, or; Refund you after the end of the tax year, if you don’t owe anything. I’ve submitted my claim for the Employment Allowance – what next? You can start using your Employment Allowance as soon as you submit your claim. There’s no need to wait for confirmation from HMRC, and there is no formal letter to give you the green light. The only time HMRC will contact your regarding your application is if they reject your claim. In that

With another self-assessment deadline been and gone, it can often feel like the years come around exceptionally quickly when you’re posed with the task of the dreaded tax return. If you’ve not been as organised as you’d like, or if you have not used an online MTD-compliant software to keep track of your outgoings and expenses, you can feel at a total loss when you need to submit everything to HMRC. That being said, it doesn’t come as a huge shock that more than half a million workers submit their tax return AFTER the 31st January deadline – and there will more than likely still be people out there who are yet to fill it in! HMRC expects to receive 12 MILLION self-assessment tax returns this year, compared to 10.8m last year. Research shows that as of 24th January, 3.4m were still outstanding, and others are yet to be submitted. Do you need to submit a self-assessment tax return? People that are employed by a business or organisation usually have their tax deducted from their salary by their employer, through Pay As You Earn (PAYE), and automatically pays it to HMRC. Employees are not usually required to complete a self-assessment tax return. The majority of self-employed people who don’t have their tax deducted at source must submit a self-assessment tax return to enable HMRC to tax them correctly on their earnings. You must pay your self assessment tax bill and file a tax return by the deadline, which is 31st January each year. You will need to submit an HM Revenue & Customs tax return if you fall into one of the below categories: –        Self-employed (sole trader) who has earned more than £1,000 in the tax year (before taking off anything you can claim tax relief on) –        A partner in a business partnership –        Received rental income –        Received income from savings, investments, and dividends –        Wanting to claim certain tax reliefs such as on personal pension contributions –        Received child benefit and you or your partner’s income was over £50,000 –        Have sold assets in the tax year, such as additional properties, shares or crypto and    realised a capital gain –        PAYE income above £100K Why exactly are people leaving it so late? Over the years, more and more people have become self-employed for various reasons. Many find that they have a better work/life balance by doing so, and it fits better with their lifestyle. Others find they can earn more money from being self-employed and can reap the benefits that way. Whether you’re a contractor or freelancer, working alone as a sole trader. Or you employ other people to work for you, being self-employed is something many people strive for. Recent research shows that the cost of living crisis has also become a key driver of people working this way – whether full or part-time. Many people have picked up a second job or a side hustle for extra income, or turned their hand at full-time employment to override those rising costs of food, petrol, bills and interest rates. That being said, many are confused by the complexities of the self-assessment process. Which can be complicated, especially if you work a second job or gain a second income through a property, for example. Range of income streams If you have a range of income streams, Account-Ease can help you with your self-assessment process, to avoid being fined by HMRC. An expert accountant can ensure that you have all the advice you need to make sure your tax return goes smoothly year on year. All our customers at Account-Ease also get full access to FreeAgent as standard. To help you stay completely organised and on top of your incomings and outgoings. FreeAgent is cloud-based so you can access your accounts anywhere, on any device that has an internet connection. You can then get a comprehensive, real-time overview of your financial position. Its inbuilt features will make your life much easier by automating many tasks. Allowing you to put minimal time into bookkeeping and admin. You can upload receipts, manage expenses and have an efficient billing and invoicing system, so that your VAT returns can be generated automatically and electronically submitted to HMRC. Having that extra support throughout the course of the year can ensure that the self-assessment deadline is never missed and you always feel prepared. Over the Christmas period, a lot of people found it difficult to get through the HMRC for assistance. Being made to wait for phones to be answered and receiving poor customer service – with the right accountant by your side, you won’t need to waste time trying to get in touch with any third party. How much does a late submission of my tax return cost? Failing to file your self-assessment tax return on time comes with a financial penalty. If you are late, you will attract an immediate £100 fine. HMRC then charges an additional £10 each day the submission is late, over the course of the next 3 months, bringing the total fine to £1000. Additional penalties will continue to accrue the longer your self-assessment is outstanding. If you are found to have made any mistakes, accidentally or otherwise, you will also be penalised. It is incredibly important to make sure that all of your submissions are done accurately to avoid this. Official figures show that HMRC issued over 100,000 fines in the 2021/22 tax year due to inaccuracies. At a glance: –        There is an automatic late-filing penalty of £100, payable to HMRC as soon as you miss the deadline. –        After three months, there’s an additional £10-per-day penalty, up to £900. –        After 6 months, there’s a further penalty of £300 (or 5% of the tax owing if this is greater). On top of the penalties already mentioned. –        If you’re a year or more late. You’ll be charged another £300 or 5% of the tax owing if this is greater, in addition to the penalties already detailed

Dividends are a source of income so (inevitably) you’ll need to pay tax on any that you receive. The dividend tax rate is different to the rate of income tax you might pay on other types of earnings, so this can make things seem a bit confusing. In this article we explain how dividends work, and what you need to know about reporting and paying dividend tax, as well as the tax-free allowances that are available. What is a dividend? Dividends are a type of payment which a limited company makes to its shareholders from the profits left over after paying Corporation Tax. The total amount of dividends paid out can’t be more than the company’s profits in the current or previous financial years. Unlike other forms of income, such as a salary, they’re not subject to National Insurance, and the rate of tax is much lower too. This means that dividends are generally a tax-efficient way of taking money out of a limited company. Who can receive a dividend payment? Normally anyone who owns a share of the company (a shareholder), will receive a dividend payment in proportion to the number and type of shares which they own. Shareholders might simply be investors in the company, but they can also be employees, directors, or their relatives. Being a shareholder doesn’t necessarily make you a director, but it’s fairly common for someone to be both, particularly in smaller businesses. How much tax will I pay on my dividends? The amount of tax you pay on any dividends you receive depends on your total income, and how much of that income is specifically from dividend payments. The good news is that you won’t need to pay National Insurance contributions on your dividend payments! This is why lots of directors who are also shareholders tend to pay themselves using a combination of a small salary topped up with dividends, because it’s more tax efficient. What tax-free allowances can I use against dividends? The good news is that there are tax-free allowances which might help to reduce the amount of dividend tax that you would otherwise need to pay. You can use the Personal Allowance (the amount you can earn before starting to pay income tax) as well as a separate Dividend Allowance. The 2023/24 tax-free Personal Allowance Known as the personal tax allowance, this is the amount of income you can earn in a tax year before you start paying income tax on it. The tax-free Personal Allowance for 2023/24 is £12,570 The allowance is only available once in a tax year and it applies to the total amount of income you earn, including any dividends. So, if you receive a £10,000 dividend payment and it’s the only income you have that year, you won’t need to pay any tax on it. Double bonus points for the fact that you don’t pay National Insurance on dividends either! How much is the 2023/24 Dividend Allowance? The dividend allowance is the amount of dividends you can earn tax-free in a year. It’s separate to the personal tax allowance and you can use both, so there’s no tax to pay on dividends up to the allowance threshold, regardless of any other income you might receive. The tax-free Dividend Allowance for 2023/24 is £1,000 If you’ve received dividends before, then you might notice that this year’s threshold is lower than the tax-free allowance which was available for dividends in the 2022/23 tax year. The government announced this reduction in the Autumn Budget statement in November 2022, and the allowance will reduce again for 2024/25 (to £500). You can use the personal tax-free allowance for most types of income, including dividends, but the dividend allowance can only be used for dividends. We’ll show you some examples below. Using the tax free personal allowance and the dividend allowance Your only income in the 2023/24 tax year is a £13,570 dividend payment You can use all of the personal allowance (£12,570) and then your tax-free dividend allowance (£1,000) against the full amount. In 2023/24 you earn a salary of £10,000, and then take a £5,000 dividend The salary is paid on a monthly basis throughout the year, so this uses up part of your personal tax allowance. The £12,570 personal allowance minus the £10,000 salary leaves £2,570 at the end of the tax year. You can use this leftover amount against your dividend payment. The £5,000 dividend minus the remaining £2,750 is £2,250. That’s all of your personal tax allowance gone, but you still have the dividend allowance. £2,250 minus the £1,000 dividend allowance leaves £1,250 to pay dividend tax on. How much is the dividend tax rate in 2023/24? The rate of dividend tax that you pay is based on the tax band that you fall into after adding your total dividend income to any other income you receive. Because tax works in marginal bands (a bit like a stack of containers) you might pay different rates of tax in each band. Our tables below show the tax bands for 2022/23 and 2023/24, as well as the rate of dividend tax you’ll pay in each band for that year. To work out which band you’re in, add together your total income for the year (including dividends). 2023/24 Dividend tax rates and thresholds Thresholds 2023/24 Dividend Tax Rate 2023/24 Personal Allowance: no tax payable on income in this band. £0 – £12,570 0% Basic-rate tax payers £12,571 – £50,270 8.75% Higher-rate taxpayers £50,271 – £125,140 33.75% Additional-rate taxpayers £125,140 upwards 39.35% 2022/23 Dividend tax rates and thresholds Thresholds 2022/23 Dividend Tax Rate 2022/23 Personal Allowance: no tax paid on income in this band. £0 – £12,570 0% Basic-rate tax payers £12,571 – £50,270 8.75% Higher-rate taxpayers £50,271 – £150,000 33.75% Additional-rate taxpayers £150,001 upwards 39.35% When and how do I pay myself dividends? You can pay dividends as often as you like, just remember to follow the regulations. Most companies pay dividends quarterly, though some companies choose to pay either bi-annually or annually. You’ll need to hold a directors’

Running a business is tough, and to pile on the pressure, energy prices are now through the roof. There’s zero shame in admitting you’re finding it difficult to pay your energy bill, especially during the dark, frosty winter we’re enduring at the same time as a cost of living crisis. You’re not alone. Thousands of small businesses are facing the same situation this winter, but the good news is there’s help out there. We’re going to discuss some potential solutions for anyone in this position, and share some tips which might help your business. How do I check if my business has any options with its energy supplier? The very moment you find yourself facing the prospect of not being able to pay your energy bills, immediately contact your supplier. The earlier you do it, the better your chances of coming to an agreement. Remember, if they can’t collect money from a customer, it’s as much their problem too, so it’s in their best interests to help you arrange a payment plan. Together, you’ll be able to map something out, which is much better than having letters come through your mailbox prompting you to take action. After all, they can’t fix an issue they don’t know is there, and it looks so much better if you address it as soon as you can, and show a willingness to resolve the problem. When you talk to your energy supplier, they can go over: An overview of your account and your usage The opportunity to extend your payment deadline or to set up a payment plan Payment breaks or reductions Access to hardship funds We understand there’s a chance you won’t come to an agreement with your supplier, and if that’s the case, try contacting Citizens Advice. If the situation between you and your energy provider escalates to the point that you may be disconnected, contact the consumer helpline who can offer support and may be able to help you resolve the issue. Again, if you need an energy supply to generate income in your business (and therefore pay your bills), it’s in their best interests to keep you connected! Am I eligible for the Energy Bill Relief Scheme? You might be able to claim a discount on gas and electricity for your small business through the government’s Energy Bill Relief Scheme. Support is available to any non-domestic customers (including businesses and charities) who are on one of the following: An existing fixed-price contract agreed on or after 1 December 2021, or are signing a new fixed-price contract A variable ‘Day Ahead Index’ tariff, used by customers in Northern Ireland) ‘Deemed’ rates (where no contract or agreement is in place, such as when a new tenant moves in and takes over an existing supply) or ‘out-of-contract’ rates (when the agreement has ended, and there isn’t another to replace it) A flexible purchase or a similar contract The scheme launched 1st October 2022, and is available up until 31st March 2023. If you weren’t aware of this scheme or if you’re not sure whether you have been receiving energy bill relief, check out the GOV website for more information. Shop around for a new supplier If you’re not satisfied with the help or service your current supplier is offering, then you’re perfectly entitled to shop around elsewhere. This could make a huge difference, with the Business Comparison website stating a quick energy comparison could save your business up to 40% per year on its energy costs. Running a business already means you have lots to think about, but adding this to your quarterly task list will help you stay on top of your costs, without losing out on quality. It’s also well worth monitoring your financial reports on a more regular basis too. It will help you spot spending patterns, and identify areas which could be more efficient. Look for other finance schemes and grants It’s very common for energy companies to offer schemes and grants that help you with your energy efficiency, which in turn reduces your bill. You’ll need to speak with your supplier to see what they have on offer (which is why contacting them immediately is a must). If you find your supplier has nothing to offer, there are other options: Ask your local council about small business funding Use GOV.UK business finance and support finder You can seek help from charities by checking their free grants scheme (Grants Online) or go on Let’s Talk and see if there are any business funds you can apply for Get as much advice as you can This is brilliant for two reasons. One, you might be offered a potential solution and two, speaking to someone about your situation and knowing you’re not alone can be very beneficial to your mental health. Running a business can be very rewarding, but it can also sometimes feel a bit lonely. Have a chat with your accountant for more advice and support or visit Business Debtline. Side note: Be wary of scams Let’s face it, scammers are calculated, and they’re always one step ahead with new ways to catch people out. They have lots of different personas and use them as a way to get hold of your personal information. Some examples are: Pretending to be a supplier offering a refund Saying they’re from the government, local council, or another trusted company asking for your data to apply energy bill relief Offering energy-saving devices Offering a cheaper prepayment meter You might encounter other scams too, such as emails claiming to be from HMRC. Does something feel too good to be true? If the answer is yes – it’s likely a scam. If you’re ever asked to send money or personal information such as your bank details or PIN, avoid at all costs. Learn more about how we can offer support for small businesses like yours. Call the team on 020 3355 4047 or get an instant online quote.  

You might have heard that earlier this year, the tax deadline for Self Assessment was extended by the government. Sounds great, right? After all, nobody actually likes paying taxes, so the fact that HMRC gave everyone more time to file and pay their tax returns was an added bonus! But that change now has many people wondering… will the tax deadline be extended again in 2023? If you’re due to file a Self Assessment tax return, you must be DYING to know the answer. So let’s delve into what we know so far. Hang on, when is the tax deadline usually? If you’re new to the world of taxes, let’s give you a quick overview of everything you need to know about Self Assessment tax deadlines. There are two key deadlines that you need to know about for tax returns, which are: The deadline to register for Self Assessment – which is 5th of October in any given year. If you’ve never done a tax return before, this is essentially how you tell HMRC that you’re earning untaxed income. The Self Assessment deadline – which is 31st of January the year after the tax year you’re paying for. So, if you were paying your 2022/2023 tax return, this should be paid before the 31st of January 2024. It was the latter that was extended in 2022, and the one that’s got people wondering whether HMRC will extend it again next year. Why was the tax deadline extended in 2022? Earlier this year, HMRC decided to waive late filing and late payment penalties for everyone who needed to complete their 2020/2021 tax returns. Instead of filing and paying their tax return before the usual 31st January deadline, this meant that Self Assessment taxpayers didn’t: Receive a late filing penalty if they filed online before 28th February 2022 Receive a late payment penalty if they paid their tax in full, or set up a Time to Pay arrangement before 1st April So why exactly was the Self Assessment deadline extended? Well, it was mostly thanks to the Covid-19 pandemic. That and the effect it had on Self Assessment taxpayers to meet their tax obligations in time. As a result, HMRC extended the deadline to relieve some of that pressure by giving them more time to file and pay their tax. Without them having to worry about being fined! So will the tax deadline be extended again? Nope. Well, at least we don’t think so. Unless anything changes, it’s looking highly unlikely that HMRC will extend the deadline again. In fact, on their website, HMRC even states that for the 2021/22 tax year, they must receive tax returns and any money owed by midnight on 31st January 2023. So if you have untaxed income that you made between 6th April 2021 and 6th April 2022, you’ll have to file and pay your tax return before the usual deadline! Who will have to file a tax return in 2023? Wondering whether you’ll have to file and pay a Self Assessment tax return next year? This depends on whether you have any untaxed income you made between 6th April 2021 and 6th April 2022. There are various reasons that you might have earned untaxed income, such as: You’re self-employed You earn more than £100,000 You have a side gig alongside your full-time job You’re a landlord You have capital gains from investments You make a profit from selling assets (e.g. a house) You’re claiming pension tax relief That’s me! What do I need to do? Don’t panic! If you’ve never filed a tax return before, then you first need to register for Self Assessment on HMRC’s website before 5th October 2022. They’ll give you a Unique Taxpayer Reference (UTR) number, which you’ll use to pay your tax bill. Once you’ve registered you’ll then need to fill out your Self Assessment form online and pay the tax you owe before 31st January 2023. There are a few options for how you actually do this: Do it yourself on HMRC’s website: for free, although it’s not super easy to understand how to use it Find an accountant and pay them to help you: this can be pretty pricey! Give Account-Ease a go: we’re £55 per month, all in and it doesn’t matter how many sources of income you have, or how complicated your tax situation is. Plus, we’ll give you your own personal accountant too!