If you miss the deadline for submitting a self-assessment tax return or for paying outstanding tax, HMRC can charge ongoing interest and financial penalties.

About 1.1 million people failed to submit their 2022–2023 self-assessment returns on time before the deadline of 31st January 2024, and now face daily penalty charges.

From 1st May, HMRC has been applying a £10
daily penalty for late submissions. This can run for up to 90 days, potentially reaching the maximum late fine of £900.

This penalty applies for late tax return submissions even if no tax is owed. For those with outstanding tax payments, HMRC can also charge up to 7.75% late payment interest, on top of a penalty of up to 5%
of the outstanding balance.

The longer it takes to file your self-assessment tax return and pay any tax you owe, the more you’ll end up paying – so what should you do if you receive a penalty notice?

What to do about late self-assessment penalties

While it won’t absolve you of any penalties and interest applied up to the submission date, it’s crucial to submit your online self-assessment tax return as soon as possible to avoid the accumulation of further financial penalties.

Even if there’s some information missing, you can still submit a provisional 2022–2023 tax return with estimated numbers. You should note which numbers are provisional, why accurate figures aren’t yet available, and when you will provide them.

If HMRC has asked you to submit a self-assessment tax return in error – for example, if you no longer earn income from self-employment or renting out property – then you should contact them and request the cancellation of penalties.

HMRC can cancel self-assessment tax returns requested in error and penalties already charged up to 2 years after the deadline, so you would have until 5th April 2025 – but it’s best to contact them sooner rather than later.

If you do owe a self-assessment tax return but there is a valid reason why you missed the submission deadline, you may be able to appeal against penalties by submitting a form with supporting information within 30 days of receiving a penalty notice.

Reasonable excuses for late tax returns

To appeal against the daily penalty, you must provide a credible or ‘reasonable’ excuse to HMRC, which covers at least the period of time from the original filing date to the penalty issue date (31st January to 1st May).

HMRC is likely to consider circumstances such as bereavement or prolonged illness to be reasonable excuses for missing tax return
deadlines, but as they examine appeals on a case-by-case basis, not every excuse will be considered reasonable.

For example, HMRC is unlikely to excuse late submissions or late payments due to work pressure, missing information, or being unaware of the deadline or tax rules.

If you successfully appeal against a self-assessment penalty, HMRC may either amend the penalty or cancel it altogether and will notify you of this decision.

The best way to avoid getting into this situation in the first place is to make sure you keep accurate financial records and submit tax returns and payments on time.

Whether you need help with bookkeeping and filing returns or liaising with HMRC about penalties, our team of accountants in Barnsley can help. Get in touch by calling gbac on 01226 298 298 or emailing info@gbac.co.uk to discuss our services.

If you are self-employed, you should already be aware that you can deduct some of the running costs of your business from your taxable profit to reduce your tax bill.

Allowable expenses include costs like office equipment, clothing, travel, insurance, advertising, staff, premises, and stock or raw materials that you buy to sell on.

These expenses do not include business money used for private purchases, and you cannot claim allowable expenses if you use your tax-free trading allowance.

However, some self-employed individuals may not know that some training costs are also tax deductible – such as training courses that help you to update or expand your current skills relating to the operation of your business.

HMRC recently updated its online guidance on the tax deductibility of self-employed training costs, so here’s a quick explanation of which training costs count as tax deductible for self-employed people and which ones don’t.

Which training costs are tax deductible?

Even with updates, the deductibility rules for self-employed earners are stricter than the rules for employers. To count as an allowable expense, the training course needs to relate to your existing self-employed business.

This means you can only claim business expenses for training that allows you to:

• • Improve your skills and update knowledge that you use in your line of work.
• • Stay up to date with technological advances within your industry.
• • Develop new knowledge and skills to expand your business activities.
• • Enhance your ability to run your business (e.g. administrative processes).

HMRC has provided several examples of scenarios where a self-employed business owner could claim allowable expenses for training costs, which include:

• • A wedding photographer taking a photo editing course to refresh and improve their photography skills.
• • A personal trainer gaining a basic qualification from a nutrition course to help them provide better training.
• • An author taking a beginners’ illustration course to start illustrating the children’s storybooks they write.
• • A plumber taking a bookkeeping course at a local college to help them improve record-keeping for their business.A local potter taking an e-commerce course to learn how to move into online sales and set up a website.

Which training costs don’t count?

HMRC does not allow deductions for training costs that help a self-employed person to start up a new business, or to expand into another area of business that does not directly relate to the work they currently do.

This means you cannot deduct training costs if they do not support your current self-employed business – examples provided by HMRC include:

• • A freelance makeup artist undergoing training to become a tattoo artist.
• • An unemployed person completing training to qualify as a driving instructor.
• • A sportswear shop owner enrolling in university to do a sports science degree.
• • A taxi driver training as a painter and decorator to start their own business.

These training costs would not be allowable expenses and would not be tax deductible.

With the newest rules dating back to a consultation in 2018, it’s unlikely that HMRC will change these rules for self-employed training tax deductions any time soon.

Get help with self-employed accounts

More information about whether training could be an allowable expense for your business if you’re self-employed is available on the government website.

If you need help managing your business accounts and ensuring you comply with tax rules, you may want to outsource your bookkeeping to our accountants in Barnsley.

It’s important to keep up with changes like National Insurance cuts and Making Tax Digital for ITSA that could affect your business finances and administration.

We can help with this here at gbac, so if you would like to learn more about our services and how we can support self-employed business owners, please get in touch.

Previously, when property prices were on the rise and mortgage costs weren’t so high, buy-to-let properties were a worthwhile investment for many landlords in the UK.

The same can’t really be said in 2024, with inflation and rising interest rates cancelling out savings from the Capital Gains Tax (CGT) rate reduction, and the progressing Renters’ Reform Bill potentially making regulations stricter for landlords.

The government also announced in the Spring Budget that tax reliefs for furnished holiday lets will be scrapped from April 2025, which would make holiday lets less profitable for second home owners, who may decide they would rather sell up.

Landlords worse off with higher CGT bills

While the higher rate of CGT on the disposal of residential property has dropped from 28% to a lower rate of 24%, effective from 6th April 2024, most buy-to-let property owners will still face a higher CGT bill compared to a couple of years ago.

This is because the 4% cut to the CGT rate doesn’t compensate for the annual exempt amount reduction, which has decreased from £12,300 to just £3,000.

Sellers who are basic rate taxpayers will be worse off because the lower rate of CGT
for gains within the basic rate band remains the same, at 18%.

Higher or additional rate taxpayers who sell up with gains lower than £68,000 will also be worse off – for example, newer landlords in areas with lower property values.

Deferring or reducing capital gains

Landlords who sold their buy-to-let property before the rate reduction, facing CGT liability at the previous higher rate, could attempt to reduce this by deferring their gains through an enterprise investment scheme (EIS).

However, this is a risky strategy – while the gain won’t come back into charge until the investment is realised, there is the possibility that some or all of it could be lost, or that the CGT rate could increase again in the meantime.

That said, the CGT rate reduction could be a useful bonus if you were already considering using an EIS for the 30% relief on Income Tax.

Of course, there are other options landlords could pursue to minimise their CGT bills, such as claiming expenditure, disposing of investments that are already at a loss, or moving properties into join ownership with their spouse.

Need help planning for CGT?

HMRC has provided a guide to tax when selling property on the government website, but if you’re a landlord in need of assistance with financial organisation and tax planning for your buy-to-let, you may want to consult professional accountants.

Here at gbac, we have a team of skilled accountants in Barnsley who can provide a range of services, from managing Service Charge Accounts to assisting with property tax planning, including Capital Gains Tax
and Inheritance Tax.

Reach out by calling us on 01226 298 298 or emailing info@gbac.co.uk to find out how we can tailor our services to help you with buy-to-let property sales.

Flexible working rights allow employees to find a way of working that suits their needs, while meeting the needs of their employers, too.

This can involve more flexibility in working hours or work locations – for example, adjusting start and finish times, or working from home part-time or full-time.

Employees have the right to make a flexible working request, known as a statutory application, to their employer – though employers aren’t obligated to approve them.

Previously, employees would have to work for their employer as normal for 26 weeks before being able to make a flexible working request.

However, new changes came into effect on 6th April 2024, allowing all employees to apply for flexible working requirements from their first day of employment.

Changes to flexible working rights

The changes to flexible working applications mean that from April 2024 onwards, employees can make a request for relevant flexible working conditions from the day they begin working for an employer.

Additional changes improving flexible working opportunities for employees include:

• Allowing 2 requests within a year (previously only 1 request every 12 months)
• Requiring employers to make a decision within 2 months (formerly 3 months)
• No longer requiring an employee statement explaining the impact of their request on the business (which was difficult for new employees to fulfil).

If the employer isn’t agreeable to the request right away, they must meet with the employee to consult with them before making a decision to approve or reject it.

Employers must handle flexible working requests in a reasonable manner, considering the advantages and disadvantages and discussing possible variations or trials.

If the employer doesn’t do this, then the employee can appeal against their decision or unreasonable actions at an employment tribunal.

Managing flexible working requests

For an employer to turn down a flexible working application, there must be a valid business reason. There are no changes to the acceptable reasons for rejecting a flexible working request, which include:

• An unacceptable increase in costs
• Detrimental effects on employee performance
• Insufficient workload to accommodate changes
• Inability to reorganise workloads or schedules around other employees

The code of practice for flexible working requests can be found on the ACAS
website.

If you are an employer, it’s better to have a good policy for flexible working that can help to boost employee wellbeing and motivation, reducing staff turnover and improving the inclusivity of your business.

Depending on changes to working hours and patterns, it’s also important to make sure your admin and payroll departments keep track of employee wages, ensuring you comply with minimum wage and equal pay rules, too.

If your business needs to outsource accounts to make sure your bookkeeping is up to date, gbac can help. Contact our accountants in Barnsley for more information.

When buying two properties or more in a single or linked transaction, it’s currently possible to reduce the overall rate of Stamp Duty Land Tax (SDLT) through multiple dwellings relief.

This is a bulk purchase tax relief that allows the buyer to pay SDLT on the average price of each of the dwellings, so they can benefit from lower SDLT
bands.

However, from 1st June 2024, the UK government will abolish multiple dwellings relief for SDLT to avoid disputes over questionable claims, particularly whether ‘granny annexes’ qualify.

This will impact buyers who purchase multiple properties in single or linked transactions from June 2024.

Multiple dwellings relief abolished

The abolition of multiple dwellings relief will affect investors and property owners engaged in multiple property transactions, with each dwelling now subject to assessment individually.

Unfortunately, this means that even genuine claims will now lose SDLT relief, such as country homes with cottages in the grounds, or town houses with basement flats.

For example, from June, a property with an annexe costing £750,000 would be liable for double the SDLT previously payable – increasing from £12,500
to £25,000.

As the removal of this relief was announced on 6th March 2024, it will still be available for transactions where the buyer entered into the contract on or before this date, even if completion takes place after 1st June.

Otherwise, this SDLT relief is only available if a purchase completes or substantially performs before the date that the abolition comes into effect.

It’s important to be wary that some companies may contact buyers offering to claim back their SDLT in return for a commission, but these SDLT refunds are usually based on questionable relief entitlement.

Speak to a tax consultant about SDLT

The removal of SDLT multiple dwellings relief shouldn’t affect most properties that are single-property transactions, but if you need more information, the government’s guide to Stamp Duty Land Tax relief is available online.

If you would rather seek tailored advice from professional accountants in Barnsley, why not make use of our tax consultancy services at gbac?

Simply contact us by phone or email to find out what we can do for you.

Leading up to this year’s Spring Budget, the media has often portrayed the Office for Budget Responsibility (OBR) as a powerful body that can constrain the tax-cutting options of the Chancellor ahead of the upcoming general election.

However, this is an over-simplification, as the OBR doesn’t set the fiscal rules, the Chancellor does – the OBR only calculates whether the Chancellor can meet his rules or not. Nor does the OBR set the assumptions underlying these rules.

For example, when estimating the government’s tax revenue from 2025 onwards, the OBR followed the Treasury’s assumptions that fuel duty cuts will be scrapped and fuel duty will rise with inflation, but nobody expects this to actually happen, as fuel duty rates haven’t risen since 2010.

Despite such limitations, the OBR has highlighted the impact of the lack of tax changes in the Chancellor’s plans, with new calculations showing that the status of ‘higher rate taxpayer’ is becoming increasingly common due to tax freezes.

The consequences of threshold freezes

Reports from the OBR have demonstrated the consequences of continuing to freeze the thresholds for Income Tax rates and the tax-free Personal Allowance until 2028, which is pushing more taxpayers over the higher rate threshold with inflation.

As shown in the graph below, the OBR estimates that by the 2028–2029 tax year, there will be 7.3 million taxpayers in the higher rate bracket. This is 2.7 million or 59% more than there would be if the higher rate threshold was tied to price indexes.

That’s not all, either – thanks to the lowering of the additional rate threshold in 2023, there will also be 0.6 million more taxpayers in the additional rate bracket.

While 1 in 5 taxpayers were previously estimated to move into the higher rate or additional rate bands by the current 2024–2025
tax year, the OBR now estimates that 2 in 9 taxpayers will be paying more than the basic rate of Income Tax by 2028–2029.

With these freezes generating too much tax revenue for the government to reverse them without drastically overhauling government policies, it’s not surprising that the Chancellor and Prime Minister are focusing on National Insurance cuts instead.

Tax planning for your tax band

As the new 2024–2025
tax year gets underway, it’s essential to make sure you know what to expect from your tax bill. You must check that you’re on the right tax code and look into the ways that changing tax bands could affect your tax reliefs.

Your income level and tax band can affect your entitlement to benefits like marriage allowance and childcare, not to mention tax-free savings, so the importance of effective personal tax management cannot be overstated.

If you need assistance with tax planning, you can always come to the team at gbac
for tailored guidance relating to income taxes, savings, pensions, and more.

Our accountants in Barnsley are just a phone call or email away – get in touch by calling 01226 298 298 or emailing info@gbac.co.uk.

Every year since 2019, the PLSA (Pensions and Lifetime Savings Association)
has been sharing research into the retirement costs for couples and single people.

Their findings are presented in three categories of living standards, which include:

• Minimum – covers basic needs with a little disposable income.
• Moderate – provides more security and flexibility with finances.
• Comfortable
  – offers greater financial freedom and luxuries.

Their latest figures show what life might look like for retirees at each level going into 2024, and the necessary expenditure for reaching certain living standards.

Here is a guide to the rebased figures for retirement living standards, and what this could mean for your future if you are approaching or currently saving for retirement.

Retirement Living Standards

The PLSA Retirement Living Standards include the cost of several primary categories, covering house maintenance, transport, food and drink, holidays and leisure, clothing and footwear, and gifts or helping others.

For a more detailed idea of what these standards imply, here is a breakdown of the ‘food and drink’ and ‘holidays and leisure’ categories. This table shows the average cost and level of affordable comforts per couple:

Increased expenditure requirements

For the first time since the start of these reports, the ‘Moderate’ and ‘Comfortable’ groups have been adjusted to account for changes in spending patterns.

For example, from 2022 to 2023, ‘Comfortable’ retirees have one car instead of two, and ‘Moderate’ retirees now spend as much as ‘Comfortable’ retirees on clothes.

Reflecting more than inflation, the rebasing shows a significant jump of 34% in the single income requirement for achieving ‘Moderate’ living standards.

Take a look at the graph below to see the bottom-line annual costs for single people and couples to achieve the retirement living standards in each group:

These figures are not gross but net income requirements (after tax), displaying the increasing annual expenditure required to achieve each set of living standards – albeit without taking any rental costs into consideration.

As of 2023, a single person will need £14,400 a year to meet the minimum living standards for retirement. With the new State Pension being £11,502
a year from April 2024, individuals without their own savings may find covering costs a struggle.

Financial planning for retirement

By providing benchmark figures that savers can easily understand, the PLSA hopes to encourage people to develop personal savings targets for their own retirement.

While many people will expect their private pension and State Pension to be enough to meet at least the minimum living standards, there may be other costs to consider that the PLSA doesn’t include – such as mortgage, rent, social care, or tax payments.

With more than half of survey participants expressing concerns that they won’t have enough money in retirement, and some people considering State Pension deferral to keep working and saving for longer, it’s important to start planning as early as possible.

If you need expert help with assessing your financial circumstances, calculating your retirement income, and following a savings plan, why not come to gbac?

Our Barnsley accountants offer a range of professional accounting and financial planning services that could help you to maximise your retirement savings, so get in touch by calling 01226 298 298
or emailing info@gbac.co.uk to find out more.

The government agency that maintains the register of all incorporated and registered companies in the UK, Companies House, will soon be increasing their fees.

Companies House charges statutory filing fees for the registration and incorporation in the UK of companies, limited liability partnerships (LLPs), limited partnerships (LPs), community interest companies (CICs), and overseas companies.

From 1st May 2024, incorporation and maintenance fees will rise as part of the agency’s cost recovery efforts – the fees cover the cost of their services without profit.

Here’s how the cost of incorporating a company will be affected from May 2024.

New company incorporation costs

Depending on which channel you use, the cost of registering with Companies House currently ranges from £10–£40, but these fees will increase across the board.

• Online registration for a company or LLP usually takes 24 hours with a fee of £12, but the online registration fee is increasing significantly to £50.
• Same-day incorporation fees will more than double from £30 to £78.
• Voluntary striking off or ‘dissolving’ a company when it is no longer needed normally incurs a fee of £8, but this will more than quadruple to £33.
• Overseas entities who must register with Companies House will see the biggest increase, rising from £100 to £234
  for registration and £400 to £706 for removal.

While many business owners choose to set up their new company through a formation agent, the agent’s basic service only adds a small amount to Companies House fees, which means agent fees are also likely to increase from 1st May.

New confirmation statement costs

Every registered company, even dormant ones, must file an annual return with Companies House. This is known as a confirmation statement, confirming all the registered information about the company is correct and up to date.

The fee for filing a confirmation statement is £13
for online and digital software submissions, but will be drastically rising to £34. The cost of paper confirmation statements will also be increasing from £40
to £60 in May.

Companies must file and pay this fee once every 12 months, usually with the first filing, so there should be no further cost for this during the 12-month period.

A full list of Companies House fees and updates on changing costs are available on the government website. These price rises follow changes in several Companies House filing rules that were introduced from early March, which both existing and new companies should also take note of when dealing with Companies House.

With the possibility of prosecution and financial penalties for companies that fail to register, file, or pay correctly, it may be worth getting professional financial guidance from a company like gbac, with experienced accountants in Barnsley.

Call 01226 298 298
to speak to our team Monday to Friday, or email info@gbac.co.uk
and we will respond to your company finance enquiry as soon as possible.

HMRC is turning up the heat with increasing checks on tax compliance across the board.

They are particularly focusing on inheritance tax, undeclared dividends, and the profits from share sales, ensuring that everyone pays their fair share.

Both individuals and businesses must understand their tax obligations to avoid coming under scrutiny from HMRC.

In this blog, we will discuss the specific tax compliance checks that HMRC conducts, who could be affected, and what steps individuals and businesses can take to ensure their compliance.

What Checks are HMRC Doing and Who is Affected?

• o Inheritance Tax (IHT) Accounts: HMRC is examining the accuracy of Inheritance Tax accounts.

They are checking that relief claims – particularly those for business property relief – are valid.

They are also verifying that assets like unquoted shares and properties have been correctly appraised.

• o Undeclared Dividend Income: HMRC is targeting individuals and company owners who may not have declared dividend income.

They are comparing reported company profits and reserve movements to identify undeclared dividends.

Their goal is to address tax evasion and ensure fair taxation on income from dividends.

• o Gains from Share Disposals: HMRC are also focusing on individuals who have sold shares but may have omitted this information from their tax returns.

They will be comparing data to identify discrepancies, ensuring capital gains tax related to share disposals is accurately reported and paid.

Actions to Take to Avoid Penalties from HMRC

For IHT Accounts:

• Ensure that claims for reliefs are accurately made and supported by documentation.

Business property relief can offer 100% relief from IHT, but eligibility needs careful assessment, particularly if a business holds substantial cash or investment assets.

• Obtain formal IHT valuations for significant assets, especially unquoted shares, property, and jointly owned assets.

Look at this comprehensive HMRC guide to valuing an estate for IHT.

• Be aware of the IHT payment deadline to avoid penalties.

The IHT payment deadline is stringent, requiring payment within six months after the end of the month of death. This timeline is significantly shorter than those for most other taxes.

For Dividend Income:

• Ensure your company accounts and personal tax returns accurately report all your income from dividends.

• Respond quickly to any correspondence from HMRC, even if you believe you have no undeclared dividend income, to avoid any compliance checks.

For Share Disposals:

• Keep detailed records of all your share disposals, including dates, amounts, and any calculations for your gains or losses.

• Amend your tax returns within 60 days if you receive a letter from HMRC about share disposal discrepancies.

Expert Financial Advice to Ensure Compliance

To ensure compliance and avoid penalties for you or your business, it’s essential to maintain accurate financial records, respond promptly any enquiries from HMRC, and always seek expert financial advice when necessary.

If you’ve received a letter from HMRC or have any questions about your tax obligations, don’t hesitate to get in touch with us.

You can give us a call on 01226 298 298 or send us a message via our online contact form and we will get back to you as soon as possible.