Tax authority HMRC is removing paper VAT registration from November 2023, pushing ahead with the move to ‘digital by default’ with online-only tax services.

As of 13th November, businesses and tax agents must go online to register for VAT. If they are digitally excluded or unable to use the service, then they will have to call the helpline to make a special request for a paper form.

The switch to online-only VAT registration aims to make the application process faster, easier, and more secure, with the majority of businesses already using the digital service – but what if registering by post is the only option?

Paper-only VAT registration

Some businesses will still need to apply with a paper VAT1 form by post if they are unable to apply online or if it is a certain type of registration. Businesses must call the helpline to explain why they need a paper form if they want to:

In addition to those without digital access, online registration is also unavailable for overseas partnerships or entities without a UTR (Unique Taxpayer Reference) – aside from UK partnerships and non-established taxable persons (NETPs).

Problems with VAT registration

While HMRC provides a VAT registration guide
online, it can be difficult to get direct advice and the assistance needed when HMRC has closed down many of its phone helplines to allow staff to focus on processing online applications instead.

Currently, businesses and agents can only call the VAT helpline if there is a genuinely urgent enquiry that cannot be resolved online or by mail.

However, with the VAT registration threshold being frozen at £85,000 since 2017 – and staying frozen until 2026 – more and more businesses are being pushed over the threshold by inflation and becoming liable for VAT.

This means more registrations to process, with HMRC taking an average of 30–40 working days to respond to an application or query.

Help with registering for VAT

With VAT still being accounted for from the date that registration became obligatory, invoicing in the meantime can run into problems.

There is also a new system of VAT penalties to contend with when it comes to filing returns and paying tax bills, so if your business is obligated to register for VAT and comply with these processes, you may want to seek professional support.

At gbac, our accountants in Barnsley can assist with a range of tax management matters and HMRC enquiries, including online registration.

Call 01226 298 298
or send an email to info@gbac.co.uk to enquire about our bookkeeping and VAT services.

If you earn money through self-employment or running your own business, it’s very likely that you’re obligated to file annual tax returns with HMRC.

Self-Assessment involves submitting your income and expenditure details for the previous tax year so that HMRC can calculate how much Income Tax you owe, then paying your tax bill by the annual deadline of 31st January.

This means the deadline for filing returns for the 2022–2023 tax year is looming – they must be submitted and outstanding tax paid by midnight on 31st January 2024.

If you have not submitted a Self-Assessment tax return
before but need to do so this year, you’ll have to register for a digital tax account with HMRC. This involves waiting to receive an activation code and Unique Taxpayer Reference in the mail before you can use the account, which can take 2 weeks (or 3 weeks if you’re based overseas).

Therefore, if you’re due to complete a Self-Assessment return for the first time in 2022–2023, it’s crucial that you don’t leave it until the last minute to register with HMRC.

Who needs to register for Self-Assessment?

There are several reasons why taxpayers may become liable for Self-Assessment for the first time, which some earners may not even be aware of.

First-time registration will be necessary if you have:

In the case of earning secondary income through online trading or advertising or by renting out property, there is a tax-free allowance of £1,000. Any earnings above this are subject to Income Tax and must be reported via Self-Assessment.

There has been a significant rise in people trying to earn more money through online content creation and sponsorships in particular, with HMRC having to issue tax warnings for online sellers and creators
earlier this year.

Any income that you have not already paid tax on must be reported to HMRC. Even if you don’t think you need to notify HMRC of your self-employed earnings, it’s best to contact them and check, as failure to do so could result in tax penalties.

Register and submit your tax return ASAP

If you leave registration to the last minute, there will be very little time to complete your tax return, submit it, and pay your tax bill before the deadline. Rushing also increases the risk of making errors, which could result in fines from HMRC.

Filing your Self-Assessment tax return as early as possible will give you more time to handle any unforeseen issues that might arise, and allow you to plan how to pay the tax on time. If you can’t pay your tax bill all at once, you’re more likely to be able to set up a repayment agreement with HMRC if you don’t miss the deadline.

You can check if you need to send a Self-Assessment tax return on the government website, and follow the official advice to access HMRC support.

If your bookkeeping has seen better days and you need a professional to pull your accounts together, our Barnsley accountants can help self-employed earners to manage their tax liabilities and minimise tax expenses.

Contact gbac by calling 01226 298 298 for help with Self-Assessment, or send an email to info@gbac.co.uk
with your concerns and we’ll be in touch.

If you are a property owner, you should make sure that you are actively protecting yourself, your property, and your land from fraud.

Though it is not as common as other types of fraudulent activity, the Land Registry has prevented over £100 million in property fraud in the last 5 years.

To help property owners in England and Wales, especially landlords with multiple properties, the Land Registry has a free service called Property Alert.

Landlords may not be aware that they can sign up to receive notifications whenever changes are made to a property’s register, such as a new mortgage application.

How to sign up to Property Alert

To receive property alerts, you must sign up through the HM Land Registry
website and create a Property Alert account, which requires a valid email address.

You can then sign into your account and add up to 10 properties that you want to monitor, using their postcodes or title numbers. Properties can only be monitored if they are already registered with the Land Registry.

Once you have signed up and added properties to your monitoring list, you will receive email alerts for official searches or applications made against them.

Features of the Property Alert service

The Property Alert service does not automatically block changes to the register, but it will warn you of changes so you can take action against potential fraud.

You do not need to own a property to be able to monitor it. Multiple people can monitor the same property, and if you need to monitor more than 10 properties, you can enlist relatives, friends, or any other person to create another account.

As properties like flats or apartments can be registered under two titles, for companies (freehold) and individual owners (leasehold), it is important to make sure you choose the right title when signing up to monitor this type of property.

It is also essential to make sure Land Registry emails are not blocked by spam filters, so that you will not miss them. Alert emails will contain information about the type of activity, the applicant, and who to contact in case of suspicious activity against a property.

Are you at risk of property fraud?

You will be more at risk of property fraud if the property is not registered – though it should be if you purchased it or have taken out a mortgage on it after 1998. Be sure to check that the information in the register is correct, including your contact details.

There will also be a more significant risk for landlords who either rent out properties or leave properties empty while living abroad, and for property owners who have had their identity stolen.

If you are especially concerned, you can request to put a title restriction on a property, which will block the registration of a mortgage or sale unless a conveyancer or solicitor certifies that you made the application as the owner.

Requesting a title restriction is free if you do not live at the property, but there may be a fee if you need a certificate from your conveyancer or solicitor.

In addition to preventing financial loss through fraud prevention measures like signing up for Property Alerts, landlords should stay on top of the latest developments that may affect them in England and Wales – such as changes to EPC requirements or the roll-out of Making Tax Digital for landlords and self-employed earners.

If you need assistance with tax management as a landlord, or would like to outsource Service Charge Accounts, then gbac could help you.

To speak with Barnsley accountants about landlord services, call 01226 298 298 or email info@gbac.co.uk today.

There has been plenty of speculation in recent months that the UK government would suspend the Triple Lock for State Pensions
due to soaring inflation rates.

With State Pension increases possibly outpacing inflation by the start of the next tax year, and the government’s fiscal management leaving a lot to be desired, the future of the Triple Lock is in question ahead of the next General Election.

But what exactly is the Triple Lock, and how does it affect your pension? Here is a quick summary of what’s happening with the State Pension Triple Lock.

What is the Triple Lock?

There are two systems for State Pensions in the UK. Prior to 6th April 2016, the old version offered two tiers: a basic State Pension based on National Insurance contributions, and an additional State Pension that was partially related to earnings. From 6th April 2016 onwards, this system was replaced with the new State Pension.

It is legally required for the government to uprate the basic and new State Pensions every year in line with average earnings, but the Triple Lock is a discretionary commitment that goes beyond this statutory requirement. While it isn’t legislated, the government can choose to uprate these pensions by the highest of three factors:

The Triple Lock has been applied each year since it came into effect in 2011, though it was temporarily suspended in 2022. Prior to this measure, pensions were uprated in line with prices since the 1980s – but now the Triple Lock ensures that State Pensions increase by more than they would by relying on a single factor.

How will the Triple Lock affect State Pensions?

The Office for National Statistics (ONS) published the most recent earnings data for May–July 2023 in September, which is key in the Bank of England’s interest rate considerations as well as setting the increase level for State Pensions
from April 2024.

This year, the total earnings growth between May and July was 0.3% higher than anticipated at 8.5%, which the ONS is attributing to one-off payments to NHS and civil service workers in June and July. This means that State Pensions are now expected to increase by 8.5% in line with average earnings from April 2024:

That is, unless the government chooses to suspend the Triple Lock, as it did in 2022, or to exclude bonuses and COVID-related payments from the average earnings data, which would reduce the increase to 7.8% instead.

What will happen to the Triple Lock in 2024?

The Triple Lock undoubtedly has been making pensioners better off than they would be otherwise, but there are still concerns that it is costing the government too much in a time of ongoing economic volatility, as this fiscal risk may not be sustainable in the long-term.

As such, neither the Conservative nor Labour Party has committed to including the Triple Lock in their manifesto for the next General Election yet – so it is currently unclear whether this measure will survive beyond 2024 or not.

This could cause further uncertainty for people planning for retirement – even with the increase to £221.20 a week for the new State Pension, this would still be less than two thirds of a 35-hour week’s pay on this year’s National Minimum Wage.

If you are concerned about how changes to the Triple Lock could affect your finances, especially in relation to plans to defer your State Pension or changes to the Pension Lifetime Allowance, you may want to speak to our Barnsley accountants.

To discuss pension planning and receive professional financial advice, please call gbac on 01226 298 298, or email info@gbac.co.uk and we will be in touch.

The UK government is facing criticism for ‘backtracking’ on energy efficiency targets for rental properties in England and Wales, but this news is likely to be welcomed by landlords who own older properties that may be expensive or difficult to upgrade.

Currently, any property to let in England and Wales must have an Energy Performance Certificate (EPC) with a rating of E or above, otherwise it cannot legally be let. Under previous proposals, new tenancies would be expected to have a rating of C or above by 2025, while existing tenancies were expected to comply with this upgrade by 2028.

Not having a valid EPC can incur a penalty of £5,000, which was due to be increased to a £30,000 penalty under the discarded proposals.

However, in his recent speech on Net Zero, Prime Minister Rishi Sunak announced that these proposals are now being scrapped, as it is believed to be too costly and difficult for most households to meet those targets in such a short timeframe.

The cost of upgrading EPC ratings

Improving a property’s EPC rating from an E or D up to a C rating could cost anywhere from £10,000 to £20,000, which most households are not able to afford – especially in such difficult economic times for many families across the UK.

Increasing energy efficiency can boost property value and pay for itself eventually via the resulting savings on reduced energy bills, but the upfront costs are the first hurdle. The process of upgrading a property can cost this much because it may require installing double glazing and new installation throughout, as well as replacing gas boilers.

This would have been a large burden for landlords if they were no longer able to let properties without paying to upgrade them to a C rating – as capital expenditure, most of this work wouldn’t even qualify for tax relief against their rental income.

Not only are some much older properties extremely difficult to upgrade, but landlords may also have passed on these high costs to tenants via higher rents.

The future of energy efficiency in the UK

Alongside scrapping the requirement for landlords to upgrade their rental properties to a C-rated EPC in the next few years, the Net Zero announcement also covered changes to other proposals intended to improve the UK’s energy performance.

These include the ban on selling petrol and diesel cars being moved back from 2030 to 2035, and the ban on installing fossil fuel boilers for off-gas-grid homes being delayed until 2035
rather than a phase-out beginning in 2026. Grants for upgrading boilers are also due to increase from £5,000 to £7,500 for heat pumps.

Though new rules for Energy Performance Certificates are off the table for the time being, this could change depending on the results of the next General Election. However, whatever happens, landlords should bear in mind that a good EPC rating
will always make a property more valuable and attractive to tenants.

If you are a landlord looking to streamline your operating costs, you could benefit from speaking with our Barnsley accountants. Here at gbac, we can provide various financial services to help landlords and property owners, such as tax planning and Service Charge Account management.

Call us on 01226 298 298 or email info@gbac.co.uk to find out how we can help you.

Earlier this year, the government was reportedly discussing the abolition of Inheritance Tax (IHT) in the UK – which is catching more and more bereaved families in its net due to the nil rate band threshold freeze in place until 2028.

While only around 4%
of deaths resulted in an Inheritance Tax bill in 2020–2021, this is expected to increase to 7% by 2032–2033, affecting 1 in 8 people.

The latest reports suggest that the Conservatives are looking to slash the IHT rate in the Spring Budget next March, which could be a prelude to abolishment – but how likely is this to actually happen, and how might it affect you?

How much is IHT?

If a person or couple passes away and the value of their estate exceeds the tax-free allowance, then Inheritance Tax will be due. The nil-rate threshold has been £325,000 for a single person or £650,000
jointly for a couple in a marriage or civil partnership since 2009.

There is also a residence nil rate which came into effect in 2017, adding a further £175,000 per person to the tax-free allowance for residences directly inherited by the spouse, children, or grandchildren of the deceased person.

However, if the total estate value exceeds the available allowances, beneficiaries will be taxed 40% on the excess value of the deceased’s assets.

Why should IHT be abolished?

Considering that investments in assets, especially property, are typically paid for using taxed income, IHT is like a second tax charge on wealth that has already been taxed.

This is one of the main reasons that IHT is a widely despised tax, with many believing it should be abolished – though the fact that it applies to virtually all assets, with few exemptions, also makes it extremely unpopular.

Though wealthier people are more affected by IHT, they are also more likely to be able to reduce the Inheritance Tax
burden for beneficiaries with tax planning measures, such as trusts and lifetime gifts. This may not be possible for moderately wealthy people whose main residence may make up the majority of their estate value.

While abolishing the tax completely is a dramatic move that could lead to increasing tax burdens elsewhere, there are arguments for at least reducing the high 40% tax rate and/or increasing the currently frozen tax-free threshold.

How likely is IHT abolition?

Getting rid of Inheritance Tax could gain the Conservative government some favour ahead of the next General Election, as inflation continues to push more families over frozen tax thresholds during an ongoing cost-of-living crisis.

However, a cut to the tax rate seems more likely than the complete removal of IHT – not least because the lack of revenue from IHT receipts would create a fiscal gap that would need to be filled some other way to keep Britain’s finances on track.

In any case, Inheritance Tax reform is well overdue, so measures such as reducing the levy and reviewing IHT and gift allowances would still be welcome.

We won’t find out about changes to IHT until the next Budget is announced in March 2024, but in the meantime, anyone whose estate is likely to become liable for IHT should look into suitable ways to reduce this liability.

Consult HMRC’s guide to Inheritance Tax on the government website, or speak to a financial adviser like one of our Barnsley accountants, who can assess your financial position and help you with tax planning for the future.

Call gbac on 01226 298 298 or email the team at info@gbac.co.uk
to arrange an IHT planning consultation at a time that suits you.

According to HMRC, around 1.5 million companies paid Corporation Tax in the financial year up to 31st March 2022 – but only 7% of these exceeded the small profits threshold of £50,000 a year.

Though less than 100,000 companies are likely to face the marginal rate of Corporation Tax at 26.5%, which applies to profits between £50,000–£250,000, these will mostly be owner-managed companies keen to mitigate the increased tax.

As an example, a company with year-end profits of £200,000
will have a Corporation Tax bill that’s £11,250 higher this year than the previous year.

One approach that could help company owners to mitigate the impact of this tax increase is a self-invested personal pension or SIPP
– and here’s how.

Director’s SIPP (Self-Invested Personal Pension)

An SIPP is similar to a standard personal pension, as it is a registered pension scheme that allows an individual to save and invest to build up a retirement fund.

The difference is that an SIPP offers a greater choice of investments – including company shares, collective investments, trusts, and sometimes commercial property – which the individual can make changes to whenever they like.

Even if a company director was previously not in favour of sizeable pension contributions, there may now be a strong case for doing so through an SIPP:

Income Tax relief is available on SIPP contributions, depending on the individual’s tax band, though there are annual limitations on how much you can contribute and how much tax relief you can claim. SIPPs also affect annual allowances and lifetime allowances.

However, even if there isn’t an overall tax advantage, there is still the benefit of timing – cutting the Corporation Tax bill for the current financial year and deferring the tax cost until the director claims their pension income from their SIPP.

Mitigating cost and risk with an SIPP

Anyone in the UK under 75 years old can start an SIPP
– and there isn’t an age limit for transferring funds from other personal pensions into an SIPP.

If you aren’t sure whether an SIPP would be beneficial for you as a company owner or director, this basic guide to SIPPs could help you to make up your mind.

Annual maintenance costs can be kept to a minimum by choosing a low-cost SIPP provider, and if retirement isn’t that far off, exposure to stock market volatility can also be minimised by investing in fixed-term cash deposits.

SIPPs are typically most suitable for those with an understanding of financial markets, who are prepared to research and actively manage investments responsibly.

Alternatively, you could consult a qualified financial adviser for professional advice on SIPP suitability and investment fund management.

At gbac, our Barnsley accountants can assist with pension and tax planning – call us on 01226 298 298 or email info@gbac.co.uk to set up a consultation and find out more.

Did you know that you don’t have to take your State Pension when you reach State Pension age? The majority of workers may plan to retire as soon as they’re eligible, which is currently at 66 years old, but some may continue to work past this age.

If you put off claiming your State Pension, this means you are deferring it to claim at a later date. It will automatically be deferred if you don’t actively claim it.

Delaying your State Pension claim can be beneficial, as you could end up with a bigger pot and higher payments when you do decide to draw your pension.

However, deferring your State Pension may not be a good idea for everyone, as there are pitfalls to navigate – from tax implications to life expectancies.

Here, we look into what it means to defer a State Pension
and the potential pros and cons you should consider when deciding whether to defer or not.

When can you claim your State Pension?

Under the current system, men born on or after 6th April 1951 and women born on or after 6th April 1953 will be eligible to claim the new State Pension from their 66th birthday. However, the minimum age will increase to 67 years old by April 2028, and may rise another year in the decade after that.

The government should send a letter to eligible citizens at least a couple of months before they reach State Pension age, which will provide details on how to claim.

You must follow this information and make an official claim before you can receive payments – if you don’t, the government will defer them automatically. Your deferred State Pension will then increase every week until you decide to claim it.

To be able to claim the full State Pension, which is currently £10,600 a year, you must have made at least 35 years of qualifying National Insurance contributions. If you won’t have enough by the time you reach the eligible age, you could defer and look into topping up your National Insurance Contributions to boost your pension.

What happens if you defer your State Pension?

If you passively or actively choose not to claim your State Pension from the date you become eligible, your future payments should rise by the time you do claim it. The new amount will depend on how much you are entitled to claim, and how long you delay taking your pension.

You must defer for at least 9 weeks to make a difference to your payments, as new State Pension payments from 2016 will increase by 1% for this period, up to a total of 5.8% a year. This would give you an annual boost of £614.64 if you deferred for a full year, or an extra £11.82 a week – which would apply for the rest of your life.

However, deferring for a year to achieve this would mean giving up the £10,600 you could have claimed that year, so it could take at least 17 years for this extra money to even out, depending on inflation and rising interest rates.

That’s one of the main reasons why deferring State Pensions can be a gamble, as how much more you’ll receive over your retirement after deferring depends on how long you live. If you were to pass away before claiming your deferred State Pension, your beneficiaries would only receive 3 months of payments.

Is it worth deferring your State Pension?

If you intend to continue working and have a steady salary when you pass State Pension age, or have already started taking money from a private pension plan, it could well be worth deferring your state benefit to increase the payments for a later time, when you will likely need them more.

It’s worth noting that your State Pension is considered taxable income if your total earnings exceed your annual Personal Allowance, so claiming while continuing to work could push you into a higher tax bracket and spirit away more of your money.

Of course, higher pension income could later push you over a higher tax threshold, but if you wait until you’re no longer working to claim, you could fall into a lower tax bracket and enjoy more of your increased payments from deferring.

As mentioned, it takes a while to break even and for the 5.8%
extra to really pay off, so the downside is that deferral may not be the best idea if you aren’t in good health.

According to the 2021 Census, the most common age at death was 86.7 years for men and 89.3 years for women, so it’s possible to recoup what you deferred.

However, you should also be aware that you can’t increase your State Pension by deferring if you (or your partner) are receiving certain state benefits. You would therefore only receive the same amount as you would if you hadn’t deferred.

You could also reduce or lose your entitlement to means-tested benefits once you begin to claim your State Pension if the uplift from deferring pushes your income over the allowance for those benefits, such as Pension Credit.

So, if you wish to give up working at State Pension age
but won’t have enough income without it, you may be better off claiming.

Do you need financial planning advice?

The decision to claim or defer your State Pension is obviously a very personal one, and whether it would be beneficial for you or not depends on your individual circumstances, both at present and what can be anticipated in the future.

As many people are living longer and staying in work for longer, deferring for increased payments later can be appealing. However, you do need to make sure you consider all circumstances before committing to this, including tax obligations.

Official guidance on deferring a State Pension
is available on the government website to help you with planning your retirement. If you need more in-depth assistance working out your retirement income and how best to maximise your savings for later in life, it would be best to seek professional financial planning advice.

At gbac, we can provide a range of helpful services, including private pension planning and tax planning, to ensure you get the most out of your savings and your State Pension entitlement when the time comes.

Call our Barnsley accountants on 01226 298 298 or send an email to info@gbac.co.uk
to arrange a consultation and learn more.

This year was the 50th anniversary of the introduction of Value Added Tax (VAT) in the UK, but despite being around for so long, many businesses still find managing this tax too complicated. Unsurprisingly, more registered businesses than ever are now receiving penalties from HMRC for inaccuracies in their VAT returns.

A new VAT penalty system for submitting returns or paying tax bills late came into force on 1st January 2023, replacing the old regime and also applying to nil or repayment returns. HMRC is now issuing correspondence to businesses that have incurred VAT penalties under the new system – some of which may not be aware of their errors.

Frozen thresholds and inflation

The two primary factors that may be leading to businesses failing to meet their VAT obligations are high inflation rates and frozen tax thresholds. The registration threshold for VAT has stayed the same since 2017, so increased prices could push businesses over the £85,000 annual turnover threshold even if they haven’t grown in size.

This threshold is due to remain frozen until 2026, with more and more businesses expected to become liable for VAT over this time, even if inflation drops to 2%
by 2025. As this is predicted to raise an additional £1.4 billion in tax revenue by 2028, it’s essential for businesses to stay on top of their VAT liabilities to avoid penalties.

Similarly, the annual income thresholds for accounting methods have stayed the same for over a decade. Though the government announced intentions to adjust the cash basis scheme earlier this year, in the meantime, it’s very easy for businesses to mistakenly continue using the wrong accounting scheme for their income bracket.

Beware VAT penalties

With HMRC aiming to increase VAT revenue and shrink the tax gap, the risk of small businesses being penalised for VAT
inaccuracies will only get higher. The tax agency expects businesses to take responsibility for their own tax liabilities, and seek appropriate guidance if there is something they are unfamiliar with.

The new scheme introduced this past January runs a point-based penalty system for late VAT submissions and a percentage penalty system for late VAT payments. This can lead to a £200 penalty for not submitting returns on time, or up to 4% of the outstanding balance for an overdue tax bill (plus interest at the Bank of England rate +2.5% – currently 7.75%).

There are also fines of £100–£400 for failing to keep records and submit returns electronically through the Making Tax Digital
online portal, and penalties of £5–£15 a day until the digital records are updated. Online digital submissions have been compulsory for VAT
since November 2022, so HMRC is likely to be sceptical of excuses.

Additionally, should you make any errors in your VAT return, and HMRC believes this was a result of carelessness, you could receive a significant penalty. This could be up to 30% of the outstanding tax for lack of reasonable care, up to 70% for deliberate error, or up to 100% for a deliberate error that was also deliberately concealed.

Get help with VAT returns

To avoid incurring any of these penalties, you must be sure to submit complete and accurate VAT returns on or before the annual deadline, using Making Tax Digital compatible software (unless you have been granted an exemption by HMRC).

As this is the first year of implementing the new system, HMRC
may be willing to be more lenient towards genuine VAT errors – as long as these issues are corrected and any outstanding tax is paid as soon as possible.

The tax agency also has the discretion to suspend a VAT penalty for up to 2 years, after which it could be cancelled if the business has complied with specified conditions during this period, such as improved record-keeping.

Of course, it’s best to prevent this scenario from occurring by keeping accurate VAT records and submitting returns on time in the first place. If your business has trouble with this, you could use professional assistance with VAT management.

Here at gbac, we have a team of accountants in Barnsley that includes expert tax consultants. To arrange a bookkeeping and VAT consultation, give us a call on 01226 298 298, or email an enquiry to info@gbac.co.uk
and we will be in touch.