RMR Partnership LLP

07/03/2024

Explore the reasons behind the significant rise in audit fees for UK listed companies and its potential consequences here: https://ow.ly/giNn50QMiCB

15/05/2023

08/04/2023

02/02/2023

For the tenth time, the Bank of England has increased interest rates, by 0.5% to 4% to the highest rate for 14 years

19/12/2022

The Treasury this afternoon confirmed a two-year delay to the Making Tax Digital for income tax (MTD ITSA) timetable.

A two-year delay until April 2026 for mandatory MTD ITSA filing.

The minimum income reporting level increased to £50,000, with those earning more than £30,000 mandated to join the scheme in 2027.
The situation for landlords and sole traders earning less than £30,000 will be reviewed to see if MTD ITSA can be shaped to meet the needs of smaller businesses;
Partnerships will not be brought into MTD for ITSA as previously planned in 2025.
Points-based penalty system to be extended to MTD ITSA filers when they join.

11/11/2022

Basis accounting on profits set to change

9 Nov 2022

HMRC is overhauling the way it assesses profits for sole traders and partnerships using an accounting date between 6 April and 30 March from the new tax year

The rule change is due to come in from 6 April 2023 but there will be a one-year transition period. However, detailed HMRC guidance on the upcoming changes is not yet available.

From 6 April 2024 sole traders and partnerships will be assessed on their profits for each tax year that runs from 6 April to 5 April. This change will affect the way tax returns are completed for those with an accounting date between 6 April and 30 March.

There will be a transition year from 6 April 2023 to 5 April 2024, to allow any overlap relief that you may be due to be used against profits for that tax year.

The changes will mean the amount of tax owed in the 2023 to 2024 tax year may change. There is no need to change accounting years and sole traders and partnerships can use whatever accounting date suits their business.

However, HMRC said: ‘If you change your accounting date in your tax return for a year before 2023 to 2024 you will not be able to spread any extra profits that arise in the tax year that you have made the change in.’

The HMRC assessment will cover the tax on profits for the following:

12-month accounting period previously used;
rest of the 2023 to 2024 tax year — minus any overlap relief that may be due — spread over the next five tax years.

The profits from the rest of the 2023 to 2024 tax year can be spread over a shorter period.
How profits for the 2023 to 2024 tax year will be assessed

The way profits are assessed for those using an accounting date between 31 March and 5 April will not change.

Profits for businesses with accounting periods ending between 6 April 2023 and 30 March 2024 will be divided and assessed over the five tax years starting on 6 April 2023. If any overlap relief is available, that will be set-off against those profits first.

Any increased profits from the 2023 to 2024 tax year will be treated in a special way to minimise the impact on benefits and allowances.
Overlap relief

It is important to note that if an accounting date between 6 April and 30 March was used when the business was set up, tax may have been paid twice on some profits which gives rise to overlap relief.

Usually, businesses can only use overlap relief to get this tax back when they stop trading or when they change their accounting date. However, HMRC will allow any business that uses any accounting period and that has unused overlap relief to use it in the 6 April 2023 to 5 April 2024 transition year.

HMRC will publish guidance on how to check how much overlap relief is due in the future.

Contact us for further information at 02088619700 or [email protected]

08/09/2022

TAX NEWS

Variable direct debits for PAYE

Functionality to allow employers to set up a recurring direct debit to pay PAYE and national insurance liabilities launches on 19 September. ICAEW’s Tax Faculty provides more details.

The August 2022 issue of HMRC’s Employer Bulletin announced that a variable payment plan for PAYE and NIC liabilities would be introduced from 19 September 2022. The current system allows only a single payment to be made by direct debit.

HMRC has confirmed that the direct debit amount will be the figure declared on returns submitted by employers/payroll agents, or a lesser figure if any overpayments have been allocated to reduce the original declaration. The direct debit will never be greater than the value declared on the return and can never be more than £20m, in accordance with direct debit BACS rules.

The money will be drawn on 23 of each month, or the next bank working day. The employer will receive an advance notice three days in advance of every collection date, to ensure they are notified of the amount being collected. There will be no additional interest charged to employers who choose to pay by variable direct debit payment plan, provided that their direct debit payment does not dishonour for whatever reason, (ie, insufficient funds, bank account closed, etc.).

Finally, HMRC has confirmed that its current guidance on filing deadlines remains unchanged.

Details about how to set up a variable payment plan can be found in HMRC’s Employer Bulletin. Agents cannot set up direct debits on behalf of clients, as banking rules require direct debits to be set up by a signatory to the bank account.

As this is a new service, employers may wish to monitor it carefully and check the notifications.

05/09/2022

❗ The first £326 Payment for eligible customers receiving tax credits only will start landing in bank accounts from today.

👀 Keep an eye on the bank account you receive your tax credit payments into

https://www.gov.uk/guidance/cost-of-living-payment?&utm_source=f.co_hmrcgovuk&utm_medium=social&utm_campaign=col_payments&utm_content=image_1_

07/07/2022

From 6 July, the National Insurance Primary Threshold has changed. This means you pay National Insurance contributions on less of your income. Our guidance has been updated to show the changes at:

https://www.gov.uk/national-insurance/how-much-you-pay?&utm_source=f.co_hmrcgovuk&utm_medium=social&utm_campaign=nics&utm_content=9585

16/06/2022

Interest rates hiked again as inflation bites

https://www.accountingweb.co.uk/business/finance-strategy/interest-rates-hiked-again-as-inflation-bites?utm_medium=email&utm_campaign=AWUKBN160622&utm_content=AWUKBN160622+CID_0ad0ed310fb65dba49f0c72901439212&utm_source=internal_cm&utm_term=Read%20More

09/06/2022

Remuneration Or Dividend?

One of the perceived major benefits of incorporation is the ability to extract profits from the company by way of dividends. The main advantage is the National Insurance saving, as no NICs are payable on dividends, whereas a salary payment would attract employee NICs of 13.25% or 3.25% and employer NICs of 15.05% (2022/23 figures) once the salary exceeds the primary and secondary thresholds.

In determining the optimal salary level for 2022/23, it is necessary to take account of the availability of the NIC employment allowance (for which see Tips 71 and 72).

All taxpayers receive a dividend ‘allowance’, regardless of their marginal rate of tax. This dividend allowance is set at £2,000 for 2022/23. However, this is not an ‘allowance’ as such, rather a zero-rate band which taxes the first £2,000 of taxable dividend income at a rate of 0%.

Thereafter, for 2022/23 dividends (which are treated as the top slice of taxable income) are taxed at 8.75% to the extent that they fall within the basic rate band, 33.75% to the extent that they fall with the higher rate band, and 39.35% to the extent that they fall within the additional rate band. The dividend tax rates are increased by 1.25 percentage points from 6 April 2022 to provide funding for health and adult social care.

A payment of salary will attract tax at the taxpayer’s marginal rate of income tax (20%, 40% or 45% (or, for Scottish taxpayers, at the relevant Scottish rate)). Salary payments are deductible in calculating profit for corporation tax purposes, unlike dividends which must be paid out of after-tax profits. Further, a dividend can only be paid if there are sufficient retained profits. In addition, various company law requirements must be met.

It is not simply a case that dividends are always best, although in many cases, taking dividends will result in less tax and National Insurance than taking a salary payment.

However, the best result will depend on the circumstances, as the decision whether to take salary or dividends will depend on the interaction of various factors – respective rates of income tax, corporation tax and National Insurance contributions, any other income that the taxpayer has and whether the company has sufficient retained profits.

To decide whether to extract profits by way of a dividend or a salary, please contact us on [email protected] or tel : 02088619700

26/04/2022

Does your company own UK residential property that is valued at more than £500,000? If so, an annual ATED return may require submission if it meets the definition as set out by HMRC:
1) Is a dwelling
2) Is in the UK
3) Valued at more than £500,00 (for returns from 2016 to 2017 onwards)
For existing properties an ATED Return and tax payment are due by 30 April 2022. These returns look forward, so filing in April 2022 relates to the 2022/2023 year. Tax may be chargeable but exemptions are available.
For new properties falling under the definition an ATED return and payment is due within 30 days of the acquisition date.
If you are unsure if this relates to you or need further information/assistance get in contact today!