April Tax Tips & News3/04/23
More time to pay missing National Insurance Contributions
In March we reminded you to check whether yournational insurance contribution (NIC) record contains any gaps, and how this could affect entitlement to the state retirement pension. The deadline for paying voluntary Class 3 NIC to fill any NIC deficiencies in tax years back to 2006/07 had been set at 5 April 2023.
However, to make the payment of NIC online taxpayers need to call HMRC, and their phone lines have been overloaded with the large numbers of people wanting to pay the class 3 NIC required. As many people have been unable to get through to HMRC, the Government has extended the deadline for payment of class 3 NIC to 31 July 2023, to cover all periods back to 6 April 2006.
This opportunity to pay class 3 NIC for past years applies to women born after 5 April 1953 and men born after 5 April 1951, so roughly people aged up to age 70.Those taxpayers aged under 45 will still have another 22 to 23 years of working life in which to pay class 1 or class 2 NIC, so it is unlikely that it would be economical for them to pay class 3 NIC to complete any existing gap years.
The other piece of good news is that the Government is allowing taxpayers to pay class 3 NIC at the 2022/23 rate (£15.85 per week) until 31 July 2023, rather than the 2023/24 rate of £17.45 per week.
Remember paying voluntary class 3 NIC is effectively an investment decision. You need to decide whether paying extra NIC now will give you sufficient extra state pension over your expected lifetime to make the payment worthwhile.
Check with the Department of Work and Pensions to confirm whether paying voluntary class 3 NIC for particular years will increase your pension: call 0800 731 0175 if you are below the state pension age or 0800 731 7898 if you’ve reached the state pension age.
Cleaning up your sales till
Electronic sales suppression (ESS) is the term for when a sales till is programmed to hide or reduce the value of individual sales.
For example, the electronic point of sale (EPOS) software installed on the till may deliberately exclude certain items from the sale records. Alternatively, the EPOS software may be set to operate in a training mode, allowing the sale to be rung up, but excluding it from the daily takings.
In December 2022 HMRC raided 90 businesses that were involved in the design and marketing of ESS software, and as a result, HMRC has a list of the names and addresses of businesses that bought that software. Using this information HMRC is issuing traders who have purchased ESS software with a notice to remove the software within 30 days. If that notice is ignored HMRC can impose a penalty of up to £50,000.
HMRC has recently issued a warning that businesses that have used ESS software need to come clean and disclose what sales have been missed from tax returns. It has set a deadline of 9 April 2023 (Easter Sunday!) for voluntary disclosure of the taxes due.
A disclosure for ESS can be done online but please talk to us before launching into this disclosure process, as it may be better to use another method.
HMRC views the act of using ESS software as tax fraud, and it will prosecute under criminal law for large and serious cases. However, in most cases, HMRC will agree with a civil settlement to recover the tax underpaid, but penalties of up to 100% of the tax due plus interest will also be payable.
Employment status of Associate Dentists
For years HMRC has accepted that associate dentists can be treated as self-employed rather than as employees of the dental practice they work for, but this informal agreement is about to end on 5 April 2023.
This was first announced by HMRC in September 2021, in December 2021, and again in the February 2023 Employer Bulletin.
Where a contract for engaging an associate dentist runs from or over 6 April 2023 the Dental Practice that they work for will no longer be able to rely on the guidance in the HMRC employment status manual (para ESM4030 ). Instead, HMRC recommends that the Dental Practice should use the Check Employment Status for Tax ( CEST ) tool to establish whether the associate dentist should be treated as an employee or self-employed.
Electronic returns of benefits and expenses
In February 2022 HMRC suddenly withdrew the interactive online PDF form for reporting expenses and benefits for employees (form P11D). Employers were forced to submit their P11Ds electronically or go back to using paper P11D forms.
In the February 2023 edition of the Employer Bulletin HMRC has made it clear that paper P11D and P11D(b) forms won’t be accepted for the tax year 2022/23 or any other year. Also, paper amendments for P11D forms for earlier years will be rejected from 6 April 2023.
The deadline for submitting P11D forms for 2022/23 is 6 July 2023.
There are now only two options open to employers to submit P11Ds – both of which are electronic:
– Use commercial software
– Use HMRC’s PAYE online service
The HMRC PAYE online service can be used for up to 500 employees. HMRC will be running webinars about submitting P11D forms during May, June, and early July.
April Questions and Answers
Q. In his Spring Budget, the Chancellor said ‘full expensing’ would apply to plant and machinery. Does this mean I can write off the balance brought forward in my plant and machinery pool, which was previously written down at 18% on the reducing balance method?
A: The new ‘full expensing’ rules announced in the Spring Budget on 15 March 2023, only apply to new (not second-hand) assets purchased on and after 1 April 2023.
If the brought-forward balance in your plant and machinery pool is now no more than £1,000, you can write off that amount under the current rules, otherwise, you must carry it forward reducing it by 18% each year until it reaches £1000.
Q. I’ve been receiving text messages from tax.service.gov.uk advising of new PAYE codes for 2023/24. However, when I log into the HMRC website, it says that no new PAYE codes have been issued. This has been going on for weeks, is it a scam or genuine contact from HMRC?
A: These messages are genuine, but there is a fault with the HMRC system that it is sending out these text messages when no PAYE code changes have been issued.
Q. I want to top up my NIC record by paying to complete seven tax years. To pay online I need an 18-digit reference number which is only available by calling HMRC, but the HMRC telephone line is never answered. How can I make the payment?
A: It is difficult to get through to HMRC by phone, and that is why the deadline for making voluntary NIC payments has been extended to 31 July 2023, as we explained above.
You can pay the NIC due by cheque made out to “HM Revenue and Customs only”. But be sure to write your name and National Insurance number on the back of the cheque, and don’t fold the cheque. Also include a cover letter which details:
– your name, address, and phone number
– your National Insurance number
– how much you are paying
– the period you are paying for
Send this letter and cheque to:
HM Revenue and Customs
National Insurance Contributions and Employer Office
April key tax dates
5 – Last opportunity to utilise income tax personal allowances, annual ISA allowances, and exemptions for CGT and IHT for 2022/23.
Last day to claim exemption from Class 4 NIC for 2022/23 where earnings are also subject to Class 1 NIC.
Final day for claims for 2018/19 relating to personal allowances, remittance basis, terminal loss relief, overlap relief, carry-forward of trading losses, and capital losses.
The deadline to claim an asset became of negligible value or loan to a trader became unrecoverable in 2020/21.
11 – Last day to set up a variable direct debit to pay PAYE for payment this month.
19 – Employers must make the final RTI payroll report for 2022/23 using FPS or EPS.
22 – PAYE, NIC, and student loan deductions are to be paid to HMRC by electronic means for the month of 5 April 2023, unless the employer has set up a direct debit so HMRC can collect the amounts due.
30 – Daily £10 late filing penalties start to apply to outstanding 2021/22 self-assessment returns.
Any IHT due on lifetime transfers between 6 April and 30 September 2022 is due.
ATED returns and ATED relief declarations must be filed for 2023/24. The ATED charge must be paid for 2023/24.