Don’t forget the Self-Assessment deadline

While most people will be focused on the festive celebrations at this time of the year, businesses and their owners must not forget the all-important Self-Assessment deadline.

The deadline for sending 2016-17 tax returns to HMRC is midnight on 31 January 2018.

The penalty regime for missing the 31 January filing deadline includes an initial £100 penalty, which applies even if there is no tax to pay, or if the tax due is paid on time.

Any tax due from the previous year must also be paid by midnight on 31 January, or penalties may also be issued for late payment of tax.

It is important that you do not leave submission until the last minute, as from experience HM Revenue & Customs tends to take a more careful view of those returns submitted near to the deadline.

If you haven’t submitted your tax return yet or provided information to your accountant to assist them with the necessary preparations, now is the time to act!

LINK: Self-Assessment deadlines

SMEs risk losing out on Christmas income totalling £2bn if they don’t accept cards

A new study has revealed that almost half of all shoppers will not spend money with a business this Christmas if it doesn’t provide facilities to pay by card.

A study, commissioned by card machine provider Paymentsense, has found that 45 per cent of UK shoppers walk out of cash-only smaller retailers and independent outlets because they cannot pay by card, while a quarter of customers are also unlikely to return to a business if it did not take cards on a former visit.

More than 1,000 consumers took part in the research, which also revealed that shoppers use their cards to spend just under £135 a month at smaller retailers, independent restaurants and cafes. It also found that 80 per cent of those surveyed owned a contactless card.

By extrapolating the data, the study suggests that more than £2 billion of consumer spending could be missed out on by small businesses which cannot take card payments in the month running up to Christmas.

Guy Moreve, Head of Marketing at Paymentsense, said: “Contactless card payment is fast becoming the norm, with our research showing that most consumers now use credit and debit cards. Shoppers now expect to use them almost everywhere – either in a traditional or contactless manner.

“As well as the significant revenue loss, our study suggests that smaller retailers and cafes who don’t yet take card or contactless payments could permanently lose every fourth customer, which would be a particularly difficult blow at this busy time of year.”

LINK: Cash-only SMEs risk Christmas losses worth a total of £2bn

Business rates to switch from RPI to CPI, saving SMEs billions of pounds

Businesses across the UK have welcomed the Chancellor’s decision to bring forward plans changing the way business rates are set by two years.

In the Autumn Budget, Philip Hammond announced that from April 2018 business rates would rise in line with the Consumer Price Index (CPI) measure of inflation, not the Retail Price Index (RPI). 

This move will help around 5.5 million small businesses to save up to £2.3 billion over the next five years, according to the Chancellor. 

Business rates were due to go up next year in line with September’s RPI of 3.9 per cent, but will instead stay in line with CPI that was three per cent during the same month. 

Helen Dickinson, Chief Executive of the British Retail Consortium, which campaigned for the switch alongside the British Chamber of Commerce, said: “It’s clear that the Chancellor has listened to the retail industry and the growing chorus from across business and commercial life who have spoken up in favour of action to mitigate rising rates bills.

“Crucially, this relief will unleash investment that retailers want to direct towards the needs of their customers.” 

Within the Budget, Mr Hammond also promised a change to the law that has led to companies receiving much higher rates bills if their offices were in communal blocks or spread over several floors.

This move comes after the Supreme Court ruled that a single business space meant that small businesses using multiple spaces in a building had been billed for rates as if they were separate premises, but should not have been.

The Chancellor has also promised to backdate the law to compensate firms for the additional charges.

In April this year, many businesses saw a rise in their business rates, some experiencing more significant increases than others. This rise reflected the first adjustment of rateable property values for seven years.

Those hardest hit were retailers and offices in city centres where property prices have risen the most. 

To prevent a similar drastic rise in future, the Government has now committed itself to revaluations on a three year basis, instead of a five year basis as previously proposed.

LINK: Autumn Budget: Business Rates

Class 2 and 4 NIC merger delayed until 6 April 2019

The abolition of Class 2 National Insurance Contributions (NIC) will now be delayed until 6 April 2019, according to a new written statement to the House of Commons.

HM Treasury has written to MPs to let them know that the move has been delayed to allow additional consultation with interested parties, particularly in respect of the effect of the abolition of Class 2 NIC for lower earners.

Currently, self-employed workers that have profits below the small profits threshold (£6,025 for 2017/18) can protect their rights to the state pension and certain other state benefits by paying voluntary Class 2 contributions – this includes 967,000 people, according to the Office of National Statistics, who had income below the threshold.

However, those workers with profits between the Class 2 and Class 4 thresholds (£8,164) only pay Class 2 NICs of £148.20 per year to gain a full year’s NI credit, whereas Class 4 NIC currently provides the taxpayer with no NI credits, as it is a tax on profits.

The abolition of Class 2 NIC and a subsequent reform to class 4 NIC would leave some low earning taxpayers paying into the more expensive Class 3 NIC (£714 for 2017/18), to retain entitlement to the same state benefits.

There are also concerns amongst some professionals that the need to make a Class 3 NIC payment may create barriers and discourage lower earners from protecting their state benefit entitlements.

However, a system of NI credits would be provided for no payment where the individual has profits between the current small profits threshold and the higher Class 4 NIC threshold.

With all this in mind, it is apparent why the Treasury has decided to delay the abolishment of Class 2 NIC until thorough consultations have been completed.

LINK: Update on the National Insurance Contributions Bill

Simple by name, but not necessarily by nature

Earlier this year, HM Revenue & Customs (HMRC) introduced Simple Assessments for some taxpayers who have, until now, been required to complete Self-Assessment Tax Returns.

Those affected are taxpayers with relatively straightforward financial affairs where HMRC considers that it already has sufficient information to be able to calculate the tax owed.

The first groups to be subject to the Simple Assessment regime are people who started to receive a State Pension in 2016-17, where their income exceeds the personal allowance, and PAYE taxpayers who have underpaid tax that cannot be collected through their tax code. An example of the latter is where the amount owed is more than £3,000.

Because neither of these groups were already within Self-Assessment, no one has yet been taken out of the regime.

Existing state pensioners, with incomes above the personal allowance, will have been within the Self-Assessment regime until now. They will receive Simple Assessment notifications in respect of this year’s (2017-18) income early in 2018.

If you receive a Simple Assessment notification, you will have just 60 days in which to request an amendment, if any of the information in the notification is incorrect. It is also important to check whether there are any reliefs you are entitled to. This could be in respect of Gift Aid or employment-related expenses, for example. These will need to be included on the form and it is worthwhile seeking professional advice at this stage, as identifying which reliefs you are entitled to can be a complex task, yet the tax savings can be significant.

The deadline for the payment of tax under the Simple Assessment regime is the same as that for Self-Assessment; 31 January. The exception to this is where the notification is received after 31 October 2017, in which case payment will be due three months after the date of the notification.

Payment in respect of tax under the Simple Assessment regime can be made either by way of a cheque or by logging into your Personal Tax Account online.

Link: How simple is Simple Assessment?