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Hire Accountant for Tax Return

Do I need an accountant to do my Self-Assessment tax return?

Now that we are approaching the end of the year, we are all starting to think about our taxes, and as the tax deadline is just a few months away, the sooner you get your self-assessment tax return file prepared, the better. This will also save you from a lot of worries. With that being said, are you planning to prepare everything all by yourself, or do you need the help of an accountant to get your job done? Well, it is always a better idea to hire an accountant who would do the job for you in a better and more professional way. So, let us have a look at some of those people for whom it is really important to hire an accountant for their tax return.

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Bookkeeping Services for Small Businesses

Bookkeeping Blog and Resources for Small Business

Whether it is a startup or an established organization, bookkeeping services are important for everyone. However, small businesses work on a very tight budget, and they also do not have sufficient resources available who would carry out all the bookkeeping and accounting services. So, it becomes very important for such companies to rely on bookkeeping and accounting services. The professional accounting service providers will get the entire job done for you, and you will also be able to have a better understanding over the cash flow of your organization.

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Why won’t HMRC talk to you?

When HMRC refuses to talk to a tax agent the problem is usually a missing client authorisation to act, but there are numerous and confusing ways to secure this.

 The most common way to authorise an agent to act is for a new client to complete a form 64-8, either online or on paper.

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Share schemes: Tax-efficient employee rewards

Smaller companies are finding share schemes offer a cost-effective way to show employees they are appreciated.

Cash bonuses or vouchers are the simplest and most common way for employers to express their appreciation for employees. Sometimes to remain attractive to employees, businesses will also provide additional benefits such as a company car, private medical cover or the use of a holiday home.

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NIC changes: What you need to know

Here’s what you need to know about the changes to national insurance contributions announced by Rishi Sunak on 23 March.

Employers’ class 1 NIC

The secondary class 1 NIC rates and thresholds (paid by employers) were not altered in the Spring Statement, and the rate is increasing from 13.8% to 15.05% on 6 April 2022.

For 2022/23 the various secondary class 1 NIC thresholds are:

  Secondary class 1 NIC  Thresholds
For most employees the employer pays at 15.05% on wages:
Per week: £175
Per month: £758
Per year: £9,100
If the employee is an apprentice or aged under 21 employer pays class 1 NIC at 15.05% on wages above:
Per week: £967
Per month: £4,189
Per year: £50,270
For new employees working at least 60% of their time in a Freeport site the employer can claim relief from class 1 NIC on wages up to:
Per week: £481
Per month: £2,083
Per year: £25,000

Employees’ class 1 NIC

The rates of primary class 1 NIC paid by employees are increasing on 6 April 2022 from 12% to 13.25% and from 2% to 3.25% for the upper rate.

The lower earnings limit (LEL) has not been changed from the proposed level for 2022/23, which will be: £123 per week, £533 per month, £6,396 per year. On earnings between the LEL and the primary threshold, the employee pays class NIC at 0%, thus receives NIC credit for those wages.

The upper earnings limit (UEL) has also not been changed by the Spring Statement, and will stay at the proposed thresholds for 2022/23 of £967 per week, £4,189 per month, £50,270 per year. On earnings above the UEL, the employee will pay class 1 NIC at 3.25% for 2022/23.

The complication introduced by the Spring Statement is that the primary threshold (PT) for class 1 NIC will change part way through the tax year on 6 July 2022. The employee will pay class 1 NIC at 13.25% on earnings between the LEL and the PT for 2022/23.

Class 1 NIC primary thresholds  6 April to 5 July 2022  6 July 2022 to 5 April 2023 
Per week £190 £242
Per month £823 £1048
Per year £9,880 £12,570

As NIC is paid according to the pay period, and is not cumulative, only nine months of earnings (from July 2022 to March 2023) will benefit from the higher PT.

Company directors tend to use an annual or quarterly earnings period. Those on quarterly pay will use the lower threshold for the first quarter to 5 July 2022, and the higher PT for the remainder of the year. Those on annual earnings period will use a PT of £11,908 for 2022/23 as specified in clause 4(2) of the National Insurance Contributions (Increase of Thresholds) Bill 2022.

Self-employed class 4

The lower profits limit (LPL), from which class 4 NIC becomes payable, is also increased to align with the personal allowance of £12,570, but over two years. The upper profits limit is frozen at £50,270.

Tax Year  Main rate  Additional rate LPL Upper profits limit
2022/23 10.25% 3.25% £11,908 £50,270
2023/24 10.25%* 3.25%* £12,570 £50,270

* Including Health and Social Care levy

For 2022/23 the LPL will be £11,908, that is nine months of the increased level, to make it equivalent to the same NIC allowance enjoyed by employees. Although the self-employed individual will pay class 4 NIC at the main rate of 10.25%, which is three percentage points lower than the class 1 NIC paid on the same income band by an employee.

Self-employed class 2 NIC

The class 2 NIC paid by the self-employed creates a contribution record for the individual, unlike the class 4 NIC, which is a pure tax.

The class 2 small profits threshold (SPT) will remain in place from April 2022, but the individual will not be liable to pay class 2 NIC until their profits exceed the lower profits threshold for the tax year, which is aligned with the lower profits threshold for class 4 NIC.

Tax year   

Flat rate per week  

 

 

Small profits threshold 

 

Lower profits limit 
2022/23 £3.15 £6,725 £11,908
2023/24 TBA TBA £12,570

New class 2 NI credit

Where the individual has annual profits between the SPT and the LPL, they will effectively build up a NI credit for that year, while paying zero class 2 NIC. Note that the taxpayer has to make profits at least equal to the SPT for the year in order to benefit from this class 2 NI credit.

In order to receive the class 2 NI credit the taxpayer will have to submit a tax return, although if they have no other income in the year they will have no tax to pay.

The introduction of the class 2 NI credit does not eliminate the need for voluntary class 2 NIC payments. Where the trading profits are less than the SPT the individual may still wish to pay voluntary class 2 NIC in order to maintain their contribution record and qualify for the state pension, as well as for other contributory benefits.

Future alignment

Now that the starting thresholds for all flavours of NIC and income tax are to be aligned, perhaps this could be the first step toward aligning the rules for these two taxes.

The sticking points will be the pay periods for which NIC is calculated, compared to the annual nature of income tax. Also, Scottish income tax has completely different thresholds for its five rates compared to the two thresholds for income tax that apply in the rest of the UK.

 

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When is corporation tax going up?

Currently all companies, regardless of the size of their profits, pay corporation tax at the rate of 19%, which will continue until 31 March 2023.

From 1 April 2023, a new higher rate comes into effect for companies with profits over £50,000. They will face a significant increase and must pay corporation tax at a rate of 25%.

All companies with profits below £50,000 will continue paying the 19% rate of corporation tax.

Depending on the circumstances, if a company’s profits lie between £50,000 and £250,000, it may be possible to claim some marginal tax relief to reduce the 25% rate.

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Update on Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA)  

Key developments in the roadmap for MTD.

 

The Government has announced in a Written Ministerial Statement (WMS) that MTD for Income Tax Self Assessment (ITSA) will be introduced a year later, in the tax year beginning April 2024. This is in recognition of the challenges faced by many UK businesses and their representatives, as the country emerges from the pandemic over the last year and having listened to stakeholder feedback.

 

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Check Employment Status for Tax (CEST) Tool

HMRC’s regular Talking Points provide information, guidance and tips to help you to understand tax issues.

We have a Talking Points webinar coming up. There are a limited number of spaces, so save your place now.

Check Employment Status for Tax (CEST) Tool: This webinar is designed to help you understand how HMRC’s Check Employment Status for Tax tool, or CEST for short, can help you make robust and accurate status determinations. During this session we will walk you through a status determination using a mock engagement.

Register here

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