Covid-19 has changed many aspects of life, including your taxes. In light of these changes, HMRC is reminding you of the Covid tax return deadline. Payers must declare Covid-19 payments in their tax returns for the 2021 to 2022 tax year.
More than 2.9 million people claimed at least one Self-Employment Income Support Scheme (SEISS) payment up to 5 April 2022. These grants are taxable and should be declared on tax returns for the 2021 to 2022 tax year before the deadline on 31 January 2023.
What is the Self-Employment Income Support Scheme?
The SEISS application and payment windows during the 2021 to 2022 tax year were:
- SEISS 4: 22 April 2021 to 1 June 2021
- SEISS 5: 29 July 2021 to 30 September 2021
SEISS is not the only Covid-19 support scheme that should be declared on tax returns. If taxpayers received other support payments during the 2021 to 2022 tax year, they may need to report this on their tax return if they are:
- In a partnership
- A business
How do I claim Covid tax relief on self-assessment?
All you have to do is head over to the HMRC tax relief microservice page and follow the instructions there. Make sure to have your Government Gateway ID to hand. If you don’t have one yet, you can set it up on-site.
Top Tip: Make sure you are on the right website and on a secure link (https). If you are ever worried about filling in forms online get in contact with a member of our helpful team.
<h2>Can I claim tax relief for working from home during Covid?</h2>
Did you know that over half a million people claimed Covid tax relief when working from home? Here at Kirkwood Wilson, we will always find ways to save you money and working from the Covid tax relief when working from home could be one of them.
The tax relief is applied at the same rate as you pay income tax. That’s a 20% Basic Rate, 40% Higher Rate and 45% Additional Rate. HM Revenue and Customs ( HMRC ) is accepting tax relief claims for working from home due to the coronavirus from 2021 to 2022, so don’t forget to apply online or let us know when working on your accounts.
Coronavirus Job Retention Scheme and Eat Out to Help Out
If you received a Coronavirus Job Retention Scheme (CJRS) grant or an Eat Out to Help Out payment, you will need to do both of the following:
● Include it as income when calculating your taxable profits in line with the relevant accounting standards.
● Report it separately on your Company Tax Return using the Coronavirus Job Retention Scheme and Eat Out to Help Out boxes.
You should record all other taxable COVID-19 payments as income when you calculate your taxable profits.
Confused about what this may mean for you? Get in touch with Kirkwood Wilson for support and advice during this time, take a look at our packages to see how our team can make a difference to your accounts. and help with Covid19 declarations.
From Tuesday 1 November you will no longer be able to use your existing VAT online account to file your monthly VAT returns. Businesses that file annual VAT returns only will still be able to use their VAT online account until May 2023.
It is now a legal requirement for VAT registered businesses to sign up to Making Tax Digital (MTD) and to use MTD-compatible software to keep their VAT records and to file their VAT returns.
If your business does not sign up for MTD and file VAT returns through MTD, you risk incurring penalties. The best way to avoid penalties is to start using MTD now, so you have a good amount of time to get to grips with the new system.
Even if you already use MTD-compatible software for record keeping and to file your returns, you must also register through Gov.uk before you file your next return.
I haven’t signed up and I don’t know where to start?
Don’t worry, we can get you MTD ready! Our in-house experts can guide you through the software and the process. Just give one of the team a call today to find out more. Call today on 01704 546000 or email firstname.lastname@example.org .
Making Tax Digital for Income Tax will apply to sole traders, property landlords and other businesses with gross turnover and/or property income over £10,000 a year, commencing in April 2024. The system will then be extended to partners from April 2025, LLPs and partnerships with corporate members from April 2026.
The Income Tax (Digital Requirements) Regulations 2021 set out the requirements that relevant persons must comply with under Making Tax Digital for Income Tax. This includes the use of Making Tax Digital compatible softwares to keep and preserve business records (income and expenses) digitally, send quarterly updates of their records to HMRC, and to submit an end-of-period statement to HMRC.
Making Tax Digital and draft notices
HMRC have published draft notices of the detailed provisions for consultation. The consultation invites views on these which provide additional information on the key requirements of Making Tax Digital, as they relate to:
- The navigation of functional compatible software.
- The required information for submission of quarterly updates and end-of-period statements.
- Retail sales election.
Draft notices specify the proposed dataset requirements. Later in the year, HMRC is set to publish guidance explaining the ways that customers can reflect any accounting and tax adjustments that may be required to reconcile the quarterly submissions to the final taxable profits for the year (The End of Period Statement). The consultation sets out the adjustments that are likely to be required, such as:
- Private use adjustments
- Capital allowances
What is a self assessment tax return? All the requirements
The breakdown of income and expenses broadly follow the heading on the self-employment and property income pages on the Self Assessment Tax Return.
The consultation document states that where annual turnover is below the VAT registration threshold, the individual can opt to provide the total of all income and the total of all expenses, rather than a detailed breakdown of expenses. This is also the case with the self-employment pages in the Self Assessment Tax Return.
Retail business may enter a single digital record containing the daily gross takings for any retail sales made.If you need support in ensuring that your business is government compliant with Making Tax Digital, please contact us today to speak with a member of the team. We are here to help!
If you make PAYE payments to HMRC, you should check that your payment reference number is correct every time. If you use an incorrect reference number, your payment may not be recognised. This can lead to penalties and charges being issued even if you paid on time, and you will need to call HMRC to correct any error.
What is PAYE on payslip?
A payment reference number is specific to the type of tax and the accounting period for which you are making a payment. The characters in your payment reference number tell HMRC where to allocate your payments, which helps them process your payments as quickly as possible.
Your online banking service may default to a previous payment reference so be sure to check this is right every time you pay HMRC.
HMRC want to help you get this right. You can use the ‘Pay now’ tool to find the correct reference number to use each time. Do your staff need assistance on pay slip advice, we offer a whole variety of business advice and payroll information.
What does PAYE stand for?
PAYE is known as Pay As You Earn, it will be located on your monthly or weekly payslip and is HMRC’s system to collect income tax. Income tax focuses on services like health care, defense, and education.
What is PAYE reference number?
If you are paying on time for the current period, you will need to use your 13-character Accounts Office reference. You can find this on:
- the letter HMRC sent you when you first registered as an employer.
- the front of your payment booklet.
- the letter from HMRC that replaced the booklet.
- your Business tax account if you’ve already added Employer PAYE enrolment to it.
If you are not paying for the current period, you need to add 4 extra characters to the end of your Accounts Office reference. These final 4 characters will show the year and the month or quarter your payment is for. You will need to enter all 17 characters without any spaces:
- Characters 14 and 15 are for the tax year — for example, 22 for the tax year from 6 April 2021 to 5 April 2022, or 23 for the tax year from 6 April 2022 to 5 April 2023.
- Characters 16 and 17 are for the tax month or quarter depending on how you pay — you can use the ‘Pay now’ tool to find out which characters to include.
How much PAYE should I pay?
Each tax period has a different payment reference number so it’s important to make separate payments for each period.
For example, to pay for the month ending 5 June 2022 (month 2 of the 2022 to 2023 tax year), add the 4 extra characters 2302 to the end of your Accounts Office reference — 23 to tell HMRC it’s for the tax year ending 5 April 2023 and 02 to tell them it’s for month 2.
As of 1 April 2019, HMRC’s ‘Making Tax Digital’ policy was implemented on a compulsory basis for VAT purposes. This was to enable businesses to keep on top of their affairs and have their financial records up to date, while running more efficiently and smoothly. For many, this policy was the perfect opportunity to reap the rewards of using online accountancy for business.
Digital bookkeeping for business
Many businesses previously struggled when it came to completing their taxes, but gone are the days of endless paperwork and calculations – thanks to the making tax digital for business policy.
This newly implemented scheme was introduced to help businesses become more effective and consistent with their bookkeeping and tax records. Tax recording should now be easier to carry out, with less chance of miscalculations or human errors.
Not only will this process be much simpler for you personally, but the removal of physical paperwork is a great way of minimising your paper waste and actively being more environmentally friendly. Paper filing is definitely something that every office will be glad to see the back of.
One thing that is worth noting is that, as yet, the Making Tax Digital scheme has only been introduced for VAT compliance and for the submission of VAT returns so it has not yet been implemented on a wider scale – which luckily gives you more time to prepare!
Online accountancy for business
Online accountancy for business has many positives when using software like Xero. Xero is designed to make your online accountancy more methodical since the accounting system takes its information directly from your online banking. This eliminates the risk of simple mistakes. Additionally, when used in conjunction with Receipt Bank, Xero is another great way to modernise and streamline your online accounting.
Not only is Xero an excellent piece of software that has been designed to be convenient and easily integrated into your business, but when Receipt Bank is used alongside this platform, you couldn’t ask for a better combination. Receipt Bank allows you to take a simple photograph of purchase invoices and receipts, which can then be attached electronically to statements from your bank feed.
Don’t forget, all of these benefits are very practical when it comes to the end of the month – no more hassle or stress, Xero and Kirkwood Wilson have got your business covered!
Here at Kirkwood Wilson, based in Burscough, near Ormskirk, we are proud to say we are Xero Gold Partners. This means that all of our accountants are specially trained to deliver the highest possible standards of advice, tips, and practical strategies when it comes to all things Xero.
For more information about our digital accounting services, or for a Making Tax Digital consultation, contact Kirkwood Wilson today. Call 01704 546 000 or email email@example.com.
As a method of improving processes and efficiency, HMRC’s aim with their ‘Making Tax Digital’ policy is to go paperless. Gone are the days of filing and keeping paper records – hooray! This blog will discuss how this government policy affects individuals and very small businesses, and what you need to know during this process.
Digital bookkeeping for individuals
Making Tax Digital for individuals is not yet a compulsory scheme for self-employed people and landlords, but there is nothing stopping you from signing up anyway – it is all good practice. It has been previously announced that plans to make Income Tax part of the Making Tax Digital scheme have been pushed back until at least April 2020 – so if you are a self-employed person, you still have time!
For those who want to be ahead of the game, there is an Income Tax pilot scheme. This scheme is aimed at those who are self-employed or rent properties and it lets you keep records digitally and send Income Tax updates to HMRC as opposed to filing a Self Assessment tax return.
This has been introduced to allow individuals to see how much Income Tax they might owe as time goes by. Individuals will have to use relevant and well-suited software to keep their own digital records, and HMRC would expect you to send income and expense summaries every three months.
Online accountancy for individuals
While the Making Tax Digital scheme has been implemented for businesses earning over the VAT threshold and not for individuals, it is worthwhile for the small businesses and the self-employed to acquaint themselves with the upcoming processes and changes. These individuals should take the necessary steps to digitalise their VAT returns to ensure a smooth transition into the digital bookkeeping world, before the widespread implementation.
Due to Brexit throwing a few curveballs into the scenario, HMRC have delayed the Making Tax Digital scheme for individuals, so whilst it is not an immediate worry, it would be worthwhile setting yourself up with the relevant, compliant software to ensure you are ready for this inevitable transition.
Perhaps consider relevant software such as Xero or Sage – both are incredibly helpful and recommended for digitising your tax information.
No need to worry or rush into this, no tax information is required just yet but here at Kirkwood Wilson, we would advise that you take every step possible to familiarise yourself with the upcoming policy changes to ensure that when the time comes, you are fully Making Tax Digital ready!
For more information about our digital accounting services, or for a Making Tax Digital for individuals consultation, contact Kirkwood Wilson today. Call 01704 546 000 or email firstname.lastname@example.org.