Crestmere Limited

Crestmere Limited Chartered Certified Accountants, Registered Auditors, Business Development Planning.

25/11/2024

A FESTIVE COCKTAIL OF DEADLINES

As we approach December, it's crucial to be aware of the upcoming tax filing and payment deadlines to ensure compliance and avoid potential penalties. Here's a detailed overview of the key dates and obligations for December 2024:

VAT Returns and Payments
7 December 2024: If your VAT quarter ended on 31 October 2024, your VAT return and any payment due must be submitted to HM Revenue & Customs (HMRC) by this date. Timely submission is essential to avoid late filing penalties and interest charges.

PAYE and National Insurance Contributions (NICs)
19 December 2024: For employers who pay their PAYE and NICs by non-electronic methods, this is the deadline for payments to reach HMRC for the month ending 5 December 2024. Ensure payments are sent in advance to compensate for postal delays.

Self-assessment tax returns
30 December 2024: If you have a tax liability of less than £3,000 and wish for it to be collected through your PAYE tax code during the 2025/26 tax year, you must submit your online Self-Assessment tax return for the 2023/24 tax year by this date. This option allows the tax owed to be spread over the following tax year, easing immediate payment burdens.

Corporation Tax
1 December 2024: Any Corporation Tax due for the accounting period ending 28 February 2024 should be paid by this deadline to avoid interest on late payments.
31 December 2024: Companies with accounting periods ending on 31 December 2023 must file their Corporation Tax returns (CT600) by this date.

Other considerations
Pension Contributions: Whilst not a December deadline, it may be prudent to review your pension contributions as the tax year-end approaches on 5 April 2025. Maximising contributions before the end of the tax year can provide tax relief benefits. And higher rate tax relief has not been withdrawn.
Charitable Donations: Similarly, consider making any planned charitable donations before the tax year-end to take advantage of Gift Aid and potential tax benefits by expanding the amount of income you can earn at basic rates of income tax.
By staying informed and proactive, you can navigate the December tax deadlines with confidence and avoid unnecessary penalties.

We can help
Please call if you need to discuss any of the issues raised by this alert, and feel free to pass on this information to your family friends and business associates

07/10/2024

Child benefit and high earners

Changes to the High Income Child Benefit Charge (HICBC) for 2024-25, mean that where a child benefit claimant or their higher earning partner has adjusted net income of between £60,000 and £80,000 (previously £50,000 to £60,000) they will now be able to keep some or all of their child benefit for 2024/25.

Importantly, if they have previously opted not to receive child benefit in order to avoid the HICBC payment, they will need to restart their Child Benefit claim if still eligible to do so.
The HICBC for 2023-24

Up to April 2024, parents earning in excess of £50,000 would have suffered a partial or complete claw-back of their Child Benefit receipts. Rather than pay this charge, parents may have elected to stop receiving benefits.

The HICBC from April 2024
The income limits changed for 2024-25. Now, you may have to pay the High Income Child Benefit Charge if you or your partner have an individual income that is over £60,000 and either you or your partner get Child Benefit or someone else gets Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep.

It does not matter if the child living with you is not your own child.
What counts as income for HICBC purposes?
Your adjusted net income is your total taxable income before any allowances and not including things like Gift Aid. Your total taxable income includes interest from savings and dividends.

Restarting previously cancelled Child Benefit payments
To avoid the HICBC during 2023-24 or earlier years you may have opted out of receiving Child Benefit payments. Now that the income limits have increased it may be beneficial to re-apply. To do this, use the online forms at https://account.hmrc.gov.uk/child-benefit/make_a_claim/hicbc/opt-in, or call the Child Benefits claims office on 0300 200 3100 (+44 161 210 3086 from outside the UK).

Planning note
If at any time you choose to opt out of getting Child Benefit payments you should still fill in the Child Benefit claim form. You need to state on the form that you do not want to receive payments.
You need to fill in the claim form if you want to get National Insurance credits, which count towards your State Pension and get your child a National Insurance number without them having to apply for one – they will usually get the number before they turn 16 years old.

23/09/2024

PENSION CREDITS

We all have elderly folk in our family or ageing neighbours, and many may or may not be eligible for financial support this coming winter. But recent government announcements have shifted the goal posts, and the welcome Winter Fuel Allowance is now restricted to pensioners receiving Pension Credits or other means tested benefits.

According to government sources, there are upwards of 880,000 pensioners who could qualify for Pension Credits and have not yet applied.

The following alert sets out what needs to be done to ensure that your family members or acquaintances, who may be eligible for this support, take the necessary steps.
Eligibility

If you are a pensioner, single with total weekly income under £218 or if you are a couple, both of pension age, with weekly income under £332, you should investigate and see if you could claim Pension Credits.
Pension Credits bonuses
If you are eligible to claim Pension Credits making a claim is a gateway to additional benefits including the Winter Fuel Allowance. Other benefits might include a free TV license, council tax reductions, and the Warm Home Discount.

How to apply
You can apply via Gov.uk if you have already claimed the State Pension, otherwise phone the Pension Service on 0800 99 1234 (or the Northern Ireland Pension Centre on 0808 100 6165). You can backdate a claim for three months, so the quicker you check, the quicker you wlll benefit.

The application process will filter out claimants who are not eligible. Accordingly, if you are not sure if you can make a successful claim, call the above application line and find out.

09/09/2024

ADVISORY FUEL RATES

If you need to claim for the fuel used on business journeys in your private car, HMRC have kindly created an updated chart that sets out the rates per mile you can claim. (Advisory Fuel Rates – AFRs). If your employer does not reimburse you for the fuel costs, you can make a claim on your tax return.

And if you have the use of a company car and your employer pays for your private petrol, you can avoid the draconian Car Fuel Benefit charge by using the appropriate fuel rate to repay your employer for any private journeys. See comments below for how to achieve this.

Reclaiming VAT on fuel
If you or your business pays for fuel, you can use the AFRs to reclaim VAT on the fuel element of mileage payments. To do this:
• Ensure that the mileage is for business use.
• Keep VAT invoices for the fuel purchased.
• Use the AFR to calculate the VAT that can be reclaimed on the fuel cost. This is done by applying the relevant rate (based on the car’s engine size and fuel type) to the business mileage and calculating the VAT portion (currently 1/6th of the fuel rate).
Reimbursing employees for fuel costs

If your employees drive a company car for business trips, you can use AFRs to reimburse them for the fuel they pay for as long as you use the correct rate set by HMRC, based on the car’s engine size and fuel type:
• No additional tax or National Insurance Contributions (NICs) are due on the reimbursement.
• This makes the process tax-efficient and reduces administrative burdens.
• By sticking to the AFRs, you avoid the need for complex calculations of actual fuel costs and keep both employees and HMRC happy.

Avoiding the Car Fuel Benefit Charge
If employees use company cars for personal trips and reimburse the company for fuel, using the AFRs can help reduce the tax they have to pay:
• By reimbursing the exact amount of fuel used for personal trips at AFR rates, employees can reduce or eliminate the fuel benefit charge, a taxable benefit on private use of company fuel.
• As long as the full reimbursement is made, there’s no taxable benefit.

The key is to work out the amount of any reimbursement to be made and compare this with the tax cost of any Car Fuel Benefit Charge. Unless you have excessive private use of a company car reimbursing the fuel costs to your employer may be less expensive than paying the extra tax.
Avoiding the benefit charge may also save your employer National Insurance costs.

Practical steps
• Keep good records of business mileage and fuel receipts.
• Check HMRC’s rates regularly, as they are updated quarterly (March, June, September, and December).
• Ensure correct VAT invoices are retained to reclaim VAT.
• Current advisory rates can be accessed at https://www.gov.uk/guidance/advisory-fuel-rates.
By using the HMRC’s advisory fuel rates efficiently, businesses can simplify reimbursement processes, avoid unnecessary tax and NIC liabilities, and maximise tax savings for employees.

We can help

As mentioned above, the key to maximising savings for your business and employees is to set up appropriate systems and crunch the numbers to maximise tax savings. We can help you undertake a review of your present reimbursement arrangements to ensure you reap the maximum benefits.

02/09/2024

Registering for VAT

When you have to register

If you supply services or sell goods that are subject to VAT you will need to register for VAT if your annual turnover exceeds £90,000. You must register if either:
your total taxable turnover for the last 12 months goes over £90,000 (the VAT threshold); or
you expect your taxable turnover to go over £90,000 in the next 30 days.

But you can volunteer

If most of your customers are registered for VAT and if a significant part of your costs include a VAT charge, you may want to register for VAT before your turnover reaches the £90,000 threshold.
The good news is you can…

What qualifies as turnover for VAT purposes?

Turnover for VAT purposes includes:
zero-rated goods
reduced-rated goods
standard-rated goods
goods you hired or loaned to customers
business goods used for personal reasons
goods you bartered, part-exchanged or gave as gifts
services you received from businesses in other countries that you had to ‘reverse charge’
goods and services which are subject to the ‘domestic reverse charge’
building work over £100,000 your business did for itself

What if you are late registering?

If you register late, you must pay VAT on any sales you have made since the date you should have registered.
Temporary increases in turnover
You can apply for a registration ‘exception’ if your taxable turnover goes over the threshold temporarily. Contact HMRC to request the VAT1 registration form. You will need to provide evidence showing why you believe your taxable turnover will not go over the deregistration threshold of £88,000 in the next 12 months.
HMRC will consider your exception and write to confirm if you get one. If not, they will register you for VAT.

We can help

If you are unsure if you should register for VAT please call so we can consider your options. Choosing the right course of action will not only satisfy the VAT regulations, but it may also affect your profits and cash flow.

21/08/2024

Child Benefit can be claimed for children after they turn 16 if they are staying on in approved education or training.

29/07/2024

PENSION CONTRIBUTIONS

Pension contributions are made to provide individuals with a passive income when they retire. At present, tax relief can be claimed on individuals’ contributions at their highest rate of income tax. Which means pension contributions remain one of the most popular ways to save for retirement and reduce income tax payments.

However, the new government may change this generous tax deduction by limiting the amount of tax relief that can be claimed by individuals to say 30%. Currently, higher income earners can claim income tax relief at their highest rates, potentially at 40% or 45%.

High income earners may like to hedge their bets and make their 2024-25 pension contributions ahead of the Autumn Budget due to be announced later this year. Unless changes are back-dated, this may ensure higher rate tax relief.

A summary of the current tax position of pension contributions follows. But please note, before making any changes to your present pension contributions, please discuss your options with your pension advisor.

Limits on an individual’s annual contributions
You will be limited to annual contributions of £60,000 plus any unused annual allowance accrued for the previous three years. For the tax years 2016-17 to 2022-23 the standard annual allowance was £40,000.

This £60,000 allowance will be reduced for high income earners on a tapered basis and could be as low as £10,000.
Employer contributions
There are no limits on employer contributions, but any contributions made will count towards the employee’s annual allowance.

In most cases, HMRC will allow employer contributions to be deducted from profits as a business expense, and this will reduce corporation tax payments. However, HMRC do have the right to challenge this deduction if they consider the payment did not meet their “wholly and exclusively” criteria.

Further complications
If an individual has taken more than their tax-free cash from their pension fund they may have a reduced annual allowance of £10,000. This is called the money purchase annual allowance.
Like to consider your contribution options for 2024-25?
Please call if you would like to consider your pension contribution options for 2024-25, and as highlighted above, do not make any changes without taking professional advice.

22/07/2024

CONSTRUCTION INDUSTRY SUBCINTRACTORS

If you are a building subcontractor, and the contractors you are working for are stopping tax from the payments they make to you, HMRC have upgraded their guidance for sub-contractors that want to register and be qualified to be paid gross, with no tax stopped.
The following HMRC notes explain who is qualified to apply and how to apply, and feel free to forward this alert to any building subcontractors that you consider may benefit.

To apply for registration under the new Construction Industry Scheme and have payments by contractors paid to you in full, your business must meet all of the following conditions:
• be run in the UK with a bank account;
• have a net turnover of at least £30,000 each year; and
• have complied with certain tax obligations.
These tests are known as the business test, turnover test and compliance test, and are explained below.
The business test
To pass this test your business:
• must be able to show us that it is conducting construction work in the UK or providing labour for such work; and
• is run through a bank account.
The turnover test
This test is based on ‘net turnover’. This is your gross income from construction work excluding VAT and the cost of materials. To pass, you need to demonstrate that your business had a net construction turnover of at least £30,000 in the 12 months before applying for gross payment. If your net turnover is not enough to pass the test but your total turnover from all sources in the 12 months up to the application is more than the threshold, you may still be able to pass the test
The compliance test
This test can be summarised as complying with your obligations to file:
• Self-Assessment tax returns;
• if applicable, filed any monthly returns due of CIS deductions made;
• if registered, that you have filed VAT returns by the due dates and paid any VAT due before the payment deadlines;
• if you have employees, that you have paid over any PAYE or NIC contributions by the due dates;
• paid your tax or NIC contributions; or
• supplied any information to HMRC that may have been requested.

HMRC have also indicated that they will disregard certain, limited filing or payment discrepancies, usually those limited to three late payment or late submissions during the same 12-month period.

Pass the tests? How to apply for gross payment status

If after reading this alert you feel that you should be qualified for gross payment status you will need to file an application form.
This can be done online, or by using the dedicated print and post form. And we can help you review your status and file the form on your behalf

15/07/2024

The new government and tax

We have a new government, elected with a landslide majority, and so we can expect changes as the new broom sweeps away the cobwebs.

What is clear is that with a declared intent to tackle problems in the NHS and other areas under their influence, the government will need to raise funds if they are to effect economic growth without increasing government debt.

This alert sets out what we know Labour have declared to be their intentions regarding tax changes, what they have said they will not change, and what is speculated they may change.

The government’s declared tax changes
In their manifesto Labour have set out a number of changes to support the implementation of their “change” agenda. They are:
Ending tax breaks for private schools which exempt them from VAT and business rates.

Increasing the levy on North Sea oil and gas producers from 75% to 78% and using this money to towards its wider plans for decarbonisation and energy.

Nom-doms (non-domiciled taxpayers) will likely see a number of changes to their tax status. For example, after four years of residence in the UK (presently 15 years) individuals may be subject to UK tax on their worldwide assets, perhaps including income and gains that arise on non-UK structures. After ten years these individuals may also be subject to inheritance tax on their worldwide assets rather than – as at present – their UK assets.
Taxes Labour have said they will not change

In their manifesto, Labour have declared they will not change Income Tax, National Insurance and VAT. It is also expected that corporation tax will not be increased.
But there are a number of taxes they could tweak to raise funds.
Taxes Labour may change

There is speculation that government may change:
Capital Gains Tax – perhaps by taxing gains at income tax rates.
Inheritance Tax – reducing or eliminating reliefs for lifetime gifts, business and agricultural land.
Stamp Duty Land Tax – it is speculated there will be an increase for overseas buyers.

Wealth Tax – this would be a tax based on an individuals’ wealth or of their UK real property. This option is unlikely to actioned if the government can raise funds from less contentious taxes.
Dividends – at present, dividends are taxed at slightly lower rates than other income. The government may be tempted to equalise the rates.

When will these changes be made clear?
Rachel Reeves, the new Chancellor, will be preparing her first budget or Autumn Statement that will likely be set for September at the earliest. Needless to say, as soon as tax changes are announced, we will update you.

We will also keep a weather eye on possible changes to your tax planning options and keep you informed

14/07/2024

Musicians - more likely than not you need us.
Written By Barrie Buels

50% of self-employed musicians overpay tax according to Sarah White of Accountancy Daily

Half of self-employed artists and musicians overpay taxes due to unclaimed deductions for essential expenses and less than a third use an accountant

A significant number of artists do not fully utilise tax-deductible expenses when completing their self-assessment tax returns. Essential expenses such as music subscription services, studio time, and travel costs are often overlooked.

The most commonly missed tax-deductible expenses are music subscriptions, studio time, travel to and from shows, and equipment cost and maintenance, found a survey of 500 bands, producers, DJs, and live performers by music studio network Pirate.

Only 30% of artists used an accountant to handle their tax affairs, although one in four used an accountancy app.

While 90% incurred expenses on studio time, 40% of them did not record these costs as a business expense. At the same time, 80% spent money on buying or maintaining instruments and equipment, yet 30% of artists did not record this cost.

There was widespread confusion among artists regarding what can be expensed on a self-assessment tax return, Pirate said.

The survey uncovered not only a gap in financial literacy but also a lack of financial stability, making it difficult for artists to outsource this administrative work. Over half (51%) of artists surveyed had no savings, with 48% reportedly in debt.

‘Almost any cost that relates to your role as a ‘business’ should be scrutinised for potential tax relief. This means you’ll need to consult with your accountant (if you have one) about which expenses qualify, or meticulously review your outgoings yourself if you’re managing your tax return independently,’ said Emmavie Mbongo, artist and community manager, Pirate.

‘Accounting and taxes aren’t what most people dream of when they imagine their music career taking off. In fact, managing your own finances is one of the most intimidating parts of monetising your talents, but it becomes necessary very early on.’

Looking at how this might be affecting artists’ wellbeing, when asked how often they worry about money, only 4% of artists said never, while 26% said they worry every day.

Financial concerns primarily revolved around housing - maintaining rent payments, obtaining or paying off a mortgage, and the cost of bills and food. Being unable to afford cultural activities was also a significant concern.

When discussing financial aspirations, 21% aimed to clear debts, 14% to save, another 14% to buy a house, 10% sought more music-focused time, and 6% were working towards affording the essentials like bills, food, and rent.

Thank you, Sarah, for the heads up.

If you are a musician and you want some reliable free advice, we love Pirate – check them out here on tax deductible expenses guide

And, of course, you can always talk to us.

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