Are there gaps in your National Insurance record?

An individual needs 35 complete years of NIC (payments or credits) in order to receive the maximum  state retirement pension, and at least 10 complete NIC years to receive any  state retirement pension. An NIC gap could also mean you are denied other contribution-related benefits such as employment and support allowance, the bereavement support payment or maternity allowance (for self-employed individuals).

Your NIC credit for the year can be gained by;

Paying class 1 NI as an employee

Paying class 2 NI as a self-employed individual

Making voluntary class 3 NI contributions

Claiming an NI credit as the stay-at-home parent of young children

This is not an exhaustive list and there have been instances where NI credits have not been correctly attributed to taxpayers, so it is important to check your NI record.

How to check

A taxpayer can check their NIC record for their entire working life in their online personal tax account. This will also provide an estimate of the state retirement pension the taxpayer should expect to receive.

Tax advisers cannot access their clients’ personal tax accounts. If you cannot use a computer to view your NIC record, you should call the HMRC helpline for national insurance contributions: 0300 200 3500.

You should check your NIC record at least once per year, and particularly so in the run up to retirement.

What if I have a gap?

Contact your tax advisor who can assist with correcting any errors and discussing the potential of making top up payments to fill in gaps.

Time is of the essence so act now

Normally, you can make voluntary payments for periods in the last 6 years which would need to be filed by 5th April 2023. However, HMRC is currently allowing women born after 5 April 1953,  and men born after 5 April 1951, to complete gaps in their NIC record right back to 6 April 2006. This opportunity to plug old NIC gaps closes on 31 July 2023.

Contact info@evansaccountants.co.uk for advice on this issue.

Less than one week to go for Making Tax Digital

Businesses have less than a week to prepare for Making Tax Digital (MTD) for VAT becoming mandatory for VAT-registered businesses on 1 April, warns HMRC

All VAT-registered businesses must use MTD for VAT for their first VAT return starting on or after 1 April 2022 although they will not have to pay VAT via MTD until July 2022.

HMRC urges businesses to use the time left to choose software, whether that is one of the simple free options available, or a more advanced product for those with more complex affairs.

Businesses should ensure that they sign up to MTD at least five days after their last non-MTD for VAT return deadline date, and no less than seven days before their first MTD for VAT return deadline date to avoid paying for their VAT twice.

Evidence shows MTD is succeeding in its central aims of reducing errors, while also making it faster to prepare and submit returns, and boosting productivity for businesses. New research, conducted by HMRC and peer reviewed by independent academics, shows MTD is likely to have generated increased revenue through reducing errors in 2019 and 2020.

Nearly 1.6m taxpayers had joined MTD for VAT as of December 2021 with more than 11m returns submitted. Around a third of VAT-registered businesses with taxable turnover below £85,000 have voluntarily signed up to MTD for VAT ahead of April 2022.

Lucy Frazer, financial secretary to the Treasury, said: ‘Businesses using MTD are saving time on their tax affairs, streamlining their processes and boosting their productivity as a result.

‘Our first move towards a modern, digital tax service – MTD makes it easier for businesses to get their tax right first time.’

Accountants can sign up on behalf of a business, although businesses remain responsible for meeting their VAT obligations. Those who do not join may be charged a penalty for failure to do so.

There are a range of compatible software products available for MTD for VAT, allowing businesses to choose which tools they use to run their business and tax affairs. A list of software compatible with MTD for VAT, including free and low-cost options, can be found on gov.uk.

Some VAT-registered businesses may be eligible for an exemption from MTD, if it is not reasonable or practicable for them to use digital tools for their tax. If a business has previously been granted an exemption for VAT online filing, this will carry over to MTD for VAT requirements.

To sign up to MTD VAT, businesses, or an agent on a businesses’ behalf, need to:

Step 1: Visit gov.uk and choose MTD-compatible software

Step 2: Keep digital records starting from 1 April 2022 or the beginning of their VAT period

Step 3: Sign up and submit their VAT return through MTD

Useful links

Links to commentary, legislation and other resources on Making Tax Digital can be accessed via the Quick Link

For commentary on MTD for VAT, see In-Depth: 55-080 Making Tax Digital

See also Hardman’s Key Data: 2-005 Digital reporting and record-keeping (Making Tax Digital)

Digital Services are covered in the HMRC Self Assessment Manual: SAM50530

Credit: Croner-i

Evans & Co is 39!

Today, Evans & Co celebrates 39 years of trading. With employees ranging from a few years to 38 years service and clients who have been with us from day 1, we hope we’re doing something right!

Here’s to another 39 years.

VAT deferral window closes

29/06/2020

The period for deferral of VAT payments, given as part of the Coronavirus relief, comes to an end this month.

Payment of VAT falling due between 20‌‌ March and 30‌‌ June 2020 can be deferred until 31‌‌ March 2020. However, VAT returns with a payment due date after 30‌‌ June must be paid in full, on time.

If you haven’t deferred any VAT payments, you don’t need to take any further action.

Where VAT has been deferred and would normally be paid by Direct Debit, it will now be necessary to reinstate the instruction. This must be done at least three working days before submitting the VAT return in order for HMRC to take payment.

For further details go to GOV.UK and search for ‘Pay your VAT bill’.

HMRC reminds businesses that VAT payments that were deferred under the emergency measures should be paid in full on or before 31‌‌ March 2021. You can make ad-hoc payments or additional payments with your subsequent VAT returns to reduce the amount outstanding, if you wish.

Businesses that cannot pay the VAT due should contact HMRC before the payment is due to discuss additional time to pay.

Changes to the Job Retention Scheme

04/06/2020

Changes to the Job Retention Scheme

As you may have seen in the news, the Job Retention Scheme will now run for eight months until the end of October, with claims backdated to 1 March 2020.

On 29 May, further major changes to the scheme were announced. In effect there will be two schemes - the 'mark I' scheme which will run until 30 June 2020 and the 'mark II' scheme of 'flexible furlough' which will introduce more flexibility to help employees back into work and under which employers will be asked to contribute towards the cost of their furloughed employee's salaries and replace part of the contribution currently made by the Government. Furloughed employees will remain entitled to 80% of their wages (subject to the monthly cap of £2,500) throughout their furloughed time.

If you wish to take advantage of the new, flexible scheme in the coming months, you must ensure any employees qualify by furloughing them for at least 3 weeks by the 30th of June, so anyone who has not been furloughed yet will need to be by next Wednesday, the 10th, to make sure they qualify for the mark 2 scheme.

Key dates for changes are as below. We are expecting detailed guidance on the changes to be published on 12 June 2020.

• 10 June 2020 - This will be the last day on which an employee can be furloughed for the first time in order that they can complete the minimum three week period before the scheme closes to new entrants.

• 30 June 2020 - The original 'mark I' scheme will close to new entrants.

• 1 July 2020 - The 'mark II' version of the scheme takes effect. From this date, the scheme will only be available to cover the wages of employees who were furloughed at some point under the 'mark I' scheme. At the same time, employers will be able to bring back furloughed employees on a part time basis, with the furlough scheme contributing to 80% of their salary (subject to the relevant cap) for their normal hours not worked.

• 31 July 2020 - Employers claiming under the 'mark I' scheme must have completed and submitted all claims for the period to 30 June 2020.

• 1 August 2020 - From this date the scheme will no longer cover the costs of employers NIC and pension contributions on furloughed wages and employers must cover this cost.

• 1 September 2020 - The Government contribution will be reduced to 70% of wages, up to a cap of £2,187.50 per month for the hours the employee does not work. Employers must make up the difference of 10% to bring furlough payments to 80% of wages (up to a cap of £2,500) for unworked hours, while continuing to meet NIC and pension contributions on furloughed wages.

• 1 October 2020 - The Government contribution will be reduced to 60% of wages, up to a cap of £1,875 per month for the hours the employee does not work. Employers must make up the difference of 20% to bring furlough payments to 80% of wages (up to a cap of £2,500) for unworked hours, while continuing to meet NIC and pension contributions for furloughed wages. 

Please contact us if you have any queries. 

Support for businesses during the Covid-19 outbreak

01/04/2020

HMRC have put in place a number of measures to help companies during the Covid-19 outbreak. Details can be found at https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses.

The measures include;

• a Coronavirus Job Retention Scheme

• deferring VAT and Self-Assessment payments

• a Self-employment Income Support Scheme

• a Statutory Sick Pay relief package for small and medium sized businesses (SMEs)

• a 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England

• small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief

• grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000

• the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank

• a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans

• the HMRC Time To Pay Scheme

The latest information is in the above link but if you have specific questions not covered by this, please contact us to discuss. Our clients can also benefit from HR and legal advice if they are looking to furlough workers for example. Get in touch if this might be of use to you.

Our office is now closed but we will continue to provide support remotely

24/03/2020

As of 2pm today, our office is closed for clients but we will still remain in touch as we work remotely.

If you need advice, please email your usual contact in the first instance. Calls will be diverted so you can still call the office number but please note there will be a limited number of people answering the phones so you may not always be able to get through. We would suggest emailing first and we can reply all call you.

Stay safe and hopefully we can return to normal practices shortly.

Covid-19: six month deferral on self assessment payments

24/03/2020

Payments due on the 31 July 2020 will not now be payable until the 31 January 2021.

This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.

However, at the weekend Prime Minister Boris Johnson was forced to declare that the government ‘was standing behind’ the self employed, after claims that the government’s coronavirus rescue package did not offer the same level of support for this group as for employed workers.

Mike Cherry, national chairman of the Federation of Small Businesses (FSB), said: ‘While it was encouraging to hear the Chancellor pledge his support for the self employed today, with a commitment to defer self assessment and VAT bills and suspend the minimum income floor, this government has a long way to go to show it’s on the side of our five million-strong self employed community.

‘It cannot be right that an employee currently earning £25,000 a year could access £20,000 per annum through the new job retention scheme, while someone who’s self employed earning the same sum might only access around £5,000 worth of support.’

The Resolution Foundation has highlighted issues with self employed taxpayers seeking to access universal credit (UC) if they are now no longer able to work because of coronavirus restrictions or business shutdowns.

In an analysis, the think tank said: ‘Although the removal of the minimum income floor is welcome, this will be of little help to those self-employed people not covered by it because other income in the family or savings deny them means-tested UC.

The goal should be a more comprehensive version of the Coronavirus Jobs Retention Scheme that encompasses the self employed.’

Coronavirus and Business Interruption, the story so far

20/03/2020

As you are aware, the world is facing an unprecedented challenge in dealing with the Covid-19 virus. Here at Evans & Co, we will continue to support our clients with a presence in the office with other staff working remotely. In the first instance, please email any questions you have and we will respond by phone or email. We will still have limited phone cover so do not be concerned if  you cannot get through. Please also check our website under “news” for any further updates in this fast-changing environment.

If you wish to drop off paperwork, please contact us in advance and we can arrange this. The current policy is to drop off at the door and we can then bring the paperwork inside although this could be subject to change.

Below is a summary of the key points announced so far by the Chancellor to help businesses with the outbreak. Full updated details can be found at https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses And https://www.gov.uk/government/publications/support-for-those-affected-by-covid-19

Base rates
Bank of England cut base rates on 11 March from 0.75% to 0.25%. This has been cut again to 0.10%

Coronavirus Business Interruption Loan Scheme

The Government has announced £330 billion of loans for small business. The Coronavirus Business Interruption Loan Scheme was revealed in the budget with a maximum loan of £1.2 million and the first 6 months interest-free. A week later, this has been raised to £5 million, with the Chancellor promising more if necessary.

Commercial bank loans

Help from major UK lenders appears to be readily available for micro, small and medium sized businesses, with Lloyds Banking Group offering £2bn of assistance, HSBC and NatWest both providing £5bn each and lenders such as Barclays, Santander and the Co-operative Bank all offering assistance to their business customers.

£10,000 grant for the smallest businesses

Approximately 700,000 of the smallest businesses in England will be entitled to a one-off, non-repayable grant. Initially set at £3,000 in the Budget this has been increased to £10,000.

This is payable to those small businesses that are currently eligible for Small Business Rate Relief (SBBR) or Rural Rate Relief. Any business eligible for those reliefs can apply for the emergency funding direct from their local authority.

The grant only applies in England. Scotland, Wales and Northern Ireland will make their own arrangements. Scotland has already announced an £80 million fund to provide grants of £3,000 to small businesses in sectors that suffer the worst economic impact of COVID-19, available via a helpline on 0300 303 0660.

Welfare payments

Universal credit will be boosted by £500 million and has been made more accessible. This will help workers who have been laid off and made redundant.

Hardship fund

A £500 million hardship fund is to be made available through local authorities. This is a further source of funds for those without income, including the self-employed.

Business rates

Almost half (45%) of those currently paying business rates in England were to be made exempt for the 2020-21 tax year as a result of Covid-19 assistance announced at the Budget for the retail, leisure and hospitality sector, where businesses had a rateable value of less than £51,000. Again, less than a week later the Government announced a drastic expansion of this policy, exempting all businesses in the retail, leisure ad hospitality sectors, irrespective of rateable value for the entire 2020-2021 tax year.

Time to settle tax bills

HMRC has confirmed it will ensure that businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs. It is employing an extra 2,000 staff to run a dedicated Covid-19 helpline on 0800 0159 559.

The “Time to Pay” system has previously been used in response to flooding and the financial crisis and has proved successful. These arrangements give businesses a time-limited deferral period on HMRC liabilities owed and set a pre-agreed time period to pay these back.

Companies House

Companies House has confirmed that any companies unable to file their accounts on time due to Covid-19, can make an application to extend the period allowed for filing by up to three months.

Making an application is essential as any late filing companies will still receive an automatic penalty if they fail to do this.

Insurance

For the vast majority of businesses, insurance cover is unlikely to mitigate their losses.

The Association of British Insurers (ABI) issued a statement on 17 March 2020 which made clear that “…irrespective of whether or not the Government orders closure of a business, the vast majority of firms won’t have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by Covid-19.”

The ABI went on to explain, “…standard business interruption cover – the type the majority of businesses purchase – does not include forced closure by authorities as it is intended to respond to physical damage at the property which results in the business being unable to continue to trade.”

Grants to those without insurance cover

Smaller businesses without sufficient insurance cover will be eligible for a cash grant of up to £25,000 per business.

Tax helpline to support businesses affected by coronavirus

13/03/2020

HMRC has a set up a phone helpline to support businesses and self-employed people concerned about not being able to pay their tax due to coronavirus (COVID-19).

The helpline allows any business or self-employed individual who is concerned about paying their tax due to coronavirus to get practical help and advice.

Up to 2,000 experienced call handlers are available to support businesses and individuals when needed.

For those who are unable to pay due to coronavirus, HMRC will discuss your specific circumstances to explore:

• agreeing an instalment arrangement

• suspending debt collection proceedings

• cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately

The helpline number is 0800 0159 559 - and is an addition to other HMRC phone contact numbers.

Opening hours are Monday to Friday 8am to 8pm, and Saturday 8am to 4pm. The helpline will not be available on Bank Holidays.

The MTD ‘grace’ period is over – so what now?

The MTD ‘grace’ period is over – so what now?

22/01/2020

The ‘soft landing’ introduction of MTD for VAT comes to an end this year, so what happens next?

For the great majority of businesses the soft-landing for MTDfV will end after 31March this year. A relatively small number with more complex affairs will have an extra 6 months, up until 30 September 2020.

After this date, businesses required to account for VAT must have a digital link between the data in their record keeping systems and the software that submits the VAT Return.

HMRC’s goal is end-to-end dynamic data, removing the possibility of human error that exists in cut and paste.

Digital links

The end of the grace period does not mean that businesses need to move all of their financial records out of spreadsheets and into cloud accounting software.

HMRC recognises spreadsheets as a component of ‘functional compatible software’, which is necessary to file returns through MTD. But a spreadsheet isn’t enough on its own.

A business will require a ‘digital link’ in order to receive the return. HMRC classifies a digital link as an exchange of data between two systems within a business, or the transfer of data to an agent, such as accountant. HMRC has listed some common examples of what they classify as digital links:

• emailing a spreadsheet containing digital records so the information can be imported into another software product,

• transferring a set of digital records onto a portable device (such as a pen drive, memory stick, flash drive) and physically giving it to someone who imports that data into their software,

• XML, CSV import and export, and download and upload of files,

• automated data transfer,

• API transfer.

Contact us for further details on VAT MTD Compliance

Changes to pension and payroll

20/01/2020

New National Living and minimum wage rates have been published which will take effect from April. They are;

• 16-17 £4.35

• 18-20 £6.15

• 21-24 £7.70

• 25+ £8.21

• Apprentice £3.90

It is essential that you ensure this rates are met to avoid action by HMRC.

It is now over three years since the Auto Enrollment pension scheme came into effect and you should receive correspondence from The Pensions Regulator about re-enrollment. As well as assessing employees each pay cycle to make sure everyone who should be enrolled is, eligible jobholders who opted out need to be re-enrolled after three years. You can choose a date for re-enrollment up to 3 months before or 3 months after your anniversary. A declaration then needs to be made to TPR to confirm your obligations have been carried out.

Please contact us for further information on any of the above.

Getting ready for Brexit

24/10/19

Although there remains a strong possibility that the EU will accept the UK’s request for a further extension, the UK’s Prime Minister is adamant that Britain will leave the EU at the end of the month.

While an orderly 31st October Brexit is by no means certain, those in business, accountants and bookkeepers should look at the UK government and HMRC’s Brexit web-based support service, as it will help all those with a business interest to plan or provide added-value help and advice to your employers or clients.

With all the focus being on a no-deal Brexit it’s easy to forget that a deal is entirely possible and that we should all be planning for the eventuality at the same time as for a no-deal.

‘Getting ready for Brexit’ is the government’s website landing page for all things Brexit. While it has been updated to acknowledge ‘A Brexit deal has been agreed in principle with the EU’ it also recognises that ‘both the UK and the EU need to approve and sign the withdrawal agreement.’

Pension scam advice from The Pensions Regulator and The Financial Conduct Authority

Some useful advice from The Pensions Regulator;

“New research shows that millions of savers could be at risk of pension scams.

Scams can happen to anyone. That’s why we’re running a joint ScamSmart campaign with the Financial Conduct Authority to warn savers of the risk of scams.

You are the professional. Scammers are not. Get to know your responsibilities as a professional adviser and help protect them.

Pension scams are devastating. Figures show that last year those who fell victim lost on average £82,000.

Common warning signs include:

• pension cold calls

• free pension reviews

• claims of guaranteed high returns

• unusual investments – like overseas hotels or storage units

• early access to your pension under the age of 55

• pressure of time limited offer”

There is also a helpful scams prevention guide and online quiz to help you spot potential scams.

Evans & Co are here to help if you have any questions with the administration of auto-enrolment pension schemes

ATT publishes briefing note on tax obligations for small business owners

25/04/19

The Association of Taxation Technicians (ATT) has published a new briefing note covering the key tax obligations for small business owners. This is a really helpful guide to anyone considering setting up or has recently set up a business.

How to spot if HMRC correspondence is real or not

We get a number of questions from clients who have had a call or email purporting to be from HMRC and asking for money. These scams are becoming increasingly sophisticated but helps is at hand.

HMRC have updated guidance about genuine HMRC contact and recognising phishing emails and texts.View the updated guidance at Genuine HMRC contact and recognising phishing emails and texts.

Speak to your accountant if you are ever unsure if a piece of correspondence is legitimate.

Payslips mandatory for all workers from 6 April

From 6 April, payslips will now have to include the number of hours worked – making it easier for workers to check they are being paid the correct amount.

 It means payslips now have to include the number of hours worked, making it simpler for workers to make sure they are being paid in full, and at the correct rate.

 A failure to provide an itemised payslip to those with a “worker” status could result in a tribunal claim, especially given the attention surrounding workers’ rights.

‘Those who fail to receive their payslip on time, or receive the payslip without the necessary information, may make a claim to the employment tribunal that their right has been breached. If the tribunal agrees that this is the case, they will make a declaration and, in some cases, award the employee an amount equal to any deductions which have been made in the previous 13-week period.’

A significant change to the new payslip rules means that the total number of hours worked must be included on payslips for all workers whose pay varies depending on the amount of time worked.

‘The rules on this can be tricky; all hourly paid workers will be within the scope of this new requirement, as well as salaried hours staff who are paid the same each month for their basic hours but also work overtime and receive extra money for this,’ Parkinson said. ‘In the latter scenario, the payslip will only need to show the hours relating to the overtime, and not the salaried work, because it is the overtime that has made pay vary.

‘Where the number of hours is to be included, the hours must be clearly listed as either one total of all the hours which vary pay, or separate hourly figures for each variation of pay.’

If you have any queries or concerns regarding payroll, please feel free to contact us.

Taxpayers targeted by scammers

20th March 2019

Fraudsters in India are targeting UK taxpayers by claiming to be HMRC officials, a Daily Mail investigation has uncovered. Victims are told they must make payments related to tax they owe or face arrest and imprisonment, with some losing up to £20,000. It was found that the criminals trick some taxpayers into making multiple bank payments, saying the original transfer did not go through. It is noted that the fraudsters buy British phone numbers and take payments into British bank accounts to make the scam appear genuine.

The report shows that Indian call centres are involved in more than one in ten reported frauds in the UK. HMRC said phone scams using the threat of HMRC action escalated during 2018, with a significant increase to over 4,000 reports a month from July 2018. In the 12 months to February 2019 it received 73,382 reports of suspicious phone calls.

Please contact us if you are in any doubt about a call, email or letter received regarding tax.

Busting myths around Making Tax Digital

15th March 2019

HMRC have published a factsheet debunking certain “myths” around MTD and how it will work. Find out more below.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/785733/Making-Tax-Digital-Mythbusters-_V03_.pdf

They have also updated their list of MTD compatible software which you can find below.

https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-vat

CGT administration for UK residents with UK residential property gains

13th March 2019

If you dispose of a second home or rental property after 5 April 2020 you may be caught by new legislation requiring you to report the transaction on a “residential property return” and to pay any resulting Capital Gains Tax within 30 days of the transaction.

 You should contact us when planning to dispose of a property which may be caught so a provisional calculation can be carried out to estimate the gain and tax liability and to ensure that all the relevant information is available to enable the completion of the return within the 30 day deadline.