Self-Assessment tax returns 2023-24

We have just passed the filing deadline for the 2022-23 tax year, and any 2022-23 returns filed after 31 January 2024 will be subject to late filing penalties.

However, this post is focussed on processing your returns for 2023-24 and the message is, lets get your returns processed as soon as possible after 5 April 2024.

What could delay this process?

  • Salary earners – employers have a legal obligation to let you have a form P60 (that includes all your salary, tax and NIC details, by the 31 May following the end of the tax year. And shortly after this date, details of any taxable benefits (form P11D).
  • Self-employed persons should have their accounts computerised, and with our support, accounts should be available for 2023-24 during the summer period.
  • Company owners/directors – again, accounts should be computerised and up-to-date, which means information regarding any dividends, benefits or salaries for 2023-24 should be available during the summer 2024.
  • Investment income from bank and building society deposits should be sent to you by post or be available from banking apps.
  • Pensions income from non-State sources should by sent to you as a P60 form.
  • You should be able to calculate the amount you have received as State Pension by totting up the receipts deposited to your bank statements.

For most self-assessment taxpayers this should cover the majority of the figures that need to be declared on their tax returns. And if this data is processed before the end of July 2024, you will have advanced notice of any taxes payable January and July 2025 in good time to consider how you will fund the payments.

 

Sooner rather than later

Access to information is best organised so that conclusions can be drawn well in advance of any filing or decision making deadlines. In which case, aim to have a comprehensive draft of your 2023-24 self-assessment tax return before August 2024. In this way there may still be time to consider any residual planning options and you will have six months to consider how you will fund any 31 January 2025 tax payments.

Timing in business is everything

In a previous blog post we outlined the importance of reviewing your income before the end of the current tax year. The message was a simple one, any meaningful planning has to be implemented – for 2023-24 – before 6 April 2024, the end of the tax year.

A similar deadline applies to business planning, but the deadline is not focussed on the 6 April – unless your accounts year end is the end of March or the 5 April – but on the last day of your accounting year end.

Action, you take (or do not take) before the end of your accounting year end can have dramatic effects on your published accounts and any resulting tax liability.

For example, imagine you are a building tradesperson and need to buy a replacement van. Do you buy before the end of your accounts year, which is the 31 March 2024, or afterwards? Some of the issues you should be considering are:

  • If you are self-employed, will you be able to offset the full cost of the van, say £20,000, if you buy before the 31 March 2024 or would you be advised to defer the expenditure to April 2024 as you estimate that the 2024-25 trading year will be more profitable?

Incorporated businesses, where the owners are paid directors and receive the bulk of their earnings as salaries and dividends, face more planning choices. For example:

  • What options are on the table regarding the payment of year end bonuses? Should they be paid before or after the year end and as salary, dividends or some form of salary sacrifice (including pension top-ups)?

And don’t forget your bank manager. How will business funders react to your planning arrangements?

If your business year end is 31 March 2024 or during the spring/summer 2024, now is the time to consider your options. Pick up the phone. We can help you consider your options and arrive at a business plan for the current and following trading years.

Support for thousands of pubs

More than 38,000 pubs will benefit from the six-month freeze on alcohol duty from 1 February 2024. According to HM Treasury:

  • The great British pub receives further boost from I February as a six-month alcohol duty freeze to 1 August 2024 takes effect.
  • This tax saving will help support around 38,175 pubs to face rising costs.
  • Duty freeze comes in addition to £4.3 billion in business rates cuts and duty protection for pints sold in pubs.

“British pubs are a significant part of the fabric of communities across the UK and a further freeze on alcohol duty will help to support the sector while the government continues to bring down inflation while driving growth and investment.

“This will impact around 38,175 pubs across the country and was announced as part of a multi-billion support package by Chancellor Jeremy Hunt in his Autumn Statement which also included £4.3 billion business rates relief.

“The six-month duty freeze, from 1 February to 1 August 2024, follows the biggest reform of alcohol duties taking effect last August, where, for the first time in over 140 years the UK’s alcohol duty system simplified so the duty paid reflects the amount of alcohol in it.

These reforms cut duty on pints in pubs by up to 11p when compared to the same product sold in supermarkets. Not increasing alcohol duty in line with inflation has now saved a further 3p to the duty on a typical pint of beer, 2p to a pint of cider, 4p to a glass of whisky, or 18p to a bottle of wine.

 

Keep an eye on your income for 2023-24

As you are probably aware the 2023-24 tax year ends on 5 April 2024. After this date, most of the opportunities to arrange your tax affairs in the most advantageous way end and action to reduce your tax payments must be taken before this date.

Accordingly, we have less than two months to get organised.

We have listed below a few of the trigger points that you need to keep your eye on to maximise the use of legitimate tax allowances and reliefs and keep your tax footprint for 2023-24 to a minimum.

  • If you or your partner have claimed Child Benefits and either of your income’s are likely to exceed £50,000 this tax year, you may become subject to the High Income Child Benefit Charge. Effectively, for every £100 your income exceeds £50,000 you will be asked to repay 1% of the Child Benefits received. Which means when your highest income reaches £60,000 all of the Child Benefit received will be clawed back. The claw back will be made via self-assessment. If you are not registered for self-assessment, you will need register.
  • Once your combined income sources exceed £50,270, you will become subject to income tax at 40%. Also, if you receive significant dividend income, dividends that form part of any excess income above £50,270 will be taxed at 33.75% not 8.75%.
  • If your income exceeds £100,000, for every £2 your income exceeds this amount your £12,570 personal allowance will be reduced by £1. Which means when your income reaches £125,140, you will no longer be entitled to as personal tax allowance for income tax purposes. And, as you are paying income tax at 40% and reducing your personal allowance between £100,000 and £125,140, your effective rate of tax in this band is an eye watering 60%.

These three pointers will give you some idea of the issues you may need to consider in order to review your income tax for 2023-24, but there are also a raft of issues that it may benefit you to look at to minimise capital gains tax, inheritance tax, corporation tax, VAT and National Insurance.

Don’t delay. If your tax affairs warrant a review, please pick up the phone so we can help you consider your options before the tax planning curtain closes, for most of us, on 5 April 2024.

Powers of Attorney Act receives Royal Assent

Reforms to simplify and streamline lasting powers of attorney are given Royal Assent.

These legal agreements enable a person to grant decision making powers about their care, treatment or financial affairs to another person if they lose mental capacity.

The Powers of Attorney Act fires the starting gun on bringing the existing paper-based process online for the first time. The changes, when introduced, will make the system quicker, easier to access and more secure for the thousands of people who make and rely on a lasting power of attorney every year.

The legislation, which was introduced by Stephen Metcalfe MP and supported by the government, will also strengthen existing fraud protection by allowing checks on the identity of those applying for a lasting power of attorney.

The new online system and the additional safeguards are now being developed by the Office of the Public Guardian. Extensive testing will need to be conducted to ensure the process is simple to use, works as intended and is secure. More information on when it will be available will be published in the coming months.

The number of registered lasting power of attorneys has increased drastically in recent years to more than 6 million but the process of making one retains many paper-based features that are over 30 years old. Every year, the Office of the Public Guardian manages more than 19 million pieces of paper as a result of their offline system.

The digitalisation will speed up registration time by picking up errors earlier and allowing them to be fixed online rather than having to wait for documents to be posted back and forth between the applicant and the Office of the Public Guardian as currently happens.

An improved paper process will also be introduced for those unable to use the internet.

These reforms build on the success of the ‘Use an LPA’ service which was launched in 2020 which allowed organisations like banks to digitally and securely check the registration of a lasting power of attorney instantaneously. This sped up a process that previously took weeks to conclude while paper copies were shared.

State Pension entitlement if you retire abroad

You can claim State Pension abroad if you have paid enough UK National Insurance contributions to qualify.

To make a claim you must be within four months of your State Pension age.

You must choose which country you want your pension to be paid in. You cannot be paid in one country for part of the year and another for the rest of the year.

Your State Pension can be paid into:

  • a bank in the country you’re living in
  • a bank or building society in the UK

 

You can use:

  • an account in your name
  • a joint account
  • someone else’s account – if you have their permission and keep to the terms and conditions of the account

 

You will need the international bank account number (IBAN) and bank identification code (BIC) numbers if you have an overseas account. You will be paid in local currency – the amount you get may change due to exchange rates.

How your future pension may be affected

If you live outside certain designated areas, you may lose out on the annual increases in the UK State Pension.

Your State Pension will only increase each year if you live in:

  • the European Economic Area (EEA)
  • Gibraltar
  • Switzerland
  • countries that have a social security agreement with the UK (but you cannot get increases in Canada or New Zealand)

However, if you have not qualified for annual increases whilst abroad, your pension will go up to the current rate if you return to live in the UK.

Tax Diary February/March 2024

1 February 2024 – Due date for Corporation Tax payable for the year ended 30 April 2023.

19 February 2024 – PAYE and NIC deductions due for month ended 5 February 2024. (If you pay your tax electronically the due date is 22 February 2024)

19 February 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 February 2024.

19 February 2024 – CIS tax deducted for the month ended 5 February 2024 is payable by today.

1 March 2024 – Due date for Corporation Tax due for the year ended 31 May 2023.

2 March 2024 – Self-Assessment tax for 2022-23 paid after this date will incur a 5% surcharge unless liabilities are cleared by 1 April 2024, or an agreement has been reached with HMRC under their time to pay facility by the same date.

19 March 2024 – PAYE and NIC deductions due for month ended 5 March 2024 (If you pay your tax electronically the due date is 22 March 2024).

19 March 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2024.

19 March 2024 – CIS tax deducted for the month ended 5 March 2024 is payable by today.

Do you need to register for self-assessment?

There are a number of reasons why you might need to complete a self-assessment return. This includes if you are self-employed, a company director, have an annual income over £150,000 and / or have income from savings, investment or property. The £100,000 threshold for self-assessment threshold change for taxpayers taxed through PAYE only, increased from £100,000 to £150,000 with effect from 6 April 2023.

Taxpayers that need to complete a self-assessment return for the first time should inform HMRC as soon as possible. The latest date that HMRC should be notified is by 5 October following the end of the tax year for which a self-assessment return needs to be filed.

HMRC has an online tool www.gov.uk/check-if-you-need-tax-return/ that can help you check if you are required to submit a self-assessment return.

You are required to submit a self-assessment return if any of the following apply:

  • you were self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on)
  • you were a partner in a business partnership
  • you had a total taxable income of more than £150,000 in 2023-24 (£100,000 in 2022-23)
  • you had to pay Capital Gains Tax when you sold or ‘disposed of’ something that increased in value
  • you had to pay the High Income Child Benefit Charge

You may also need to send a tax return if you have any untaxed income, such as:

  • money from renting out a property
  • tips and commission
  • income from savings, investments and dividends
  • foreign income.

Year end payroll reporting

It is not that long until the current 2023-24 tax year comes to an end and there are a number of year end payroll chores that must be completed. This includes sending a final PAYE submission for the tax year. The last Full Payment Submission (FPS) needs to be submitted no later than the last payday for your employees of the 2023-24 tax year.

It is also important that employers remember to provide employees with a copy of their P60 form by 31 May 2024. A P60 must be given to all employees that are on the payroll on the last day of the tax year – 5 April 2024.

The P60 is a statement issued to employees after the end of each tax year that shows the amount of tax they have paid on their salary. Employers can provide the P60 form on paper or electronically. Employees should ensure they keep their P60s in a safe place as it is an important record of the amount of their earnings and tax paid.

In addition, a P60 is required in order that an employee can prove how much tax they have paid on their salary. For example:

  • to claim back overpaid tax;
  • to apply for tax credits; and
  • as proof of your income if you apply for a loan or a mortgage.

Employees who have left their employment during the tax year do not receive a P60 from their employer, as the same information will be on their P45.

The deadline for reporting any Class 1A National Insurance contributions and submitting P11D and P11FD(b) forms to HMRC for the tax year ending 5 April 2024 is 6 July 2024.

National Insurance and tax after State Pension Age

If you have reached the State Pension age and continue to work, in most cases, you no longer need to pay National Insurance Contributions (NICs).

At State Pension age, the requirement to pay Class 1 and Class 2 NICs ceases. However, you will remain liable to pay any NICs due to be paid to you before reaching the State Pension age. If you continue working, you need to provide your employer with proof of your age.

Your employer remains liable to pay secondary Class 1 employer NICs. If you would rather not provide proof of age to your employer, you can request a letter (known as an age exception certificate) from HMRC confirming you have reached State Pension age and are no longer required to pay NICs.

If you are self-employed you will need to pay Class 4 NICs for the remainder of the year in which you reach State Pension age but will be exempt from the following year.

HMRC provides the following example. Someone who reached the State Pension age on 6 September 2023 will stop making Class 4 contributions on 5 April 2024 and pay their final Class 4 bill by 31 January 2025, together with any Income Tax due.

If you have overpaid NICs you can claim the excess back from HMRC.