Tell HMRC you are no longer self-employed

Closing or selling a business

The decision to close or sell a business can be difficult and stressful. But careful planning can help.

It is important to let HM Revenue & Customs (HMRC) know as soon as possible if you stop trading or close your business. This is so that they can help to get your tax and National Insurance in order. If you owe tax or National Insurance and have difficulty paying it, you may be able to negotiate an agreement with HMRC for more time to pay. And in some circumstances, you may even be able to claim back some tax or National Insurance.

How to tell HMRC and finalise your tax

There are different areas of HMRC that you need to tell that you’ve stopped trading or you’re selling your business. This depends on your circumstances, such as whether you have employees or you’re VAT registered.

If you’re self-employed

If you’re a self-employed sole trader or business partner you can tell HMRC you’ve sold or closed your business using an online form. The form covers Self Assessment and National Insurance.

Complete the online form

 

Deadline looms for paper tax returns

There are just days left to send your 2011/12 paper tax return to HM Revenue & Customs (HMRC), if you want to beat the 31 October deadline and avoid a penalty.

Paper tax returns received on or after 1 November will result in a £100 penalty – even if there is no tax to pay or the tax due is paid on time.

If you’re not able to submit a paper return by the end of the month, you can avoid a late-filing penalty by sending your return online by 31 January.

As well as having an extra three months to file, if you file online your tax is calculated automatically and your tax return is processed faster, so any money you’re owed is repaid more quickly. Registering for HMRC Online Services is simple – just go to www.hmrc.gov.uk/online

If you are sending a paper return close to the deadline, HMRC recommends you obtain proof of posting, as this provides evidence of your posting date in the event of any appeal against a late-filing penalty.

For general help and advice on completing a return, visit www.hmrc.gov.uk/sa or call the Self Assessment helpline on 0845 9000 444.

 

Good news for EU-resident seamen: HMRC finally allows SED claims retrospectively

It now appears that the efforts of numerous tax agents and tax lawyers in the UK have yielded some results. The HMRC have agreed that their decision to allow SED claims to EU-resident seamen ONLY from 6 April 2011 onwards is discriminative, and they will now allow for such claims to be made RETROSPECTIVELY - practically this covers all years back to 2006/07. Until 5 April 2011 SED was only available to seafarers who were ordinarily resident in the UK. From 6 April 2011 SED was extended to non-UK resident seafarers who were resident in a European Union or European Economic Area state and performed duties partly in UK waters on which they paid income tax in the UK. The change in the law to extend entitlement to SED to EU/EEA seafarers did not include any reference to retrospective entitlement for years before 2011/12. Consequently it was HMRC's practice not to admit claims to SED from EU/EEA seafarers for earlier years.

Change of practice

HMRC now considers EU law requires that claims for SED for tax years before 2011/12, by those who were not UK resident or ordinary resident in the relevant tax year, should be allowed where the claims are made within the same time limits that apply for making such claims by those who were UK resident or ordinary resident in the relevant tax year.

Time limits

In view of the date of the making of this announcement, HMRC will extend by approximately 4 months the time limits for making claims for overpaid tax relating to claims for SED that would otherwise expire on 31 March or 5 April 2012. Accordingly, provided it is made on or before 31 July 2012, HMRC will consider retrospective claims relating to SED made -
  • in respect of the tax year 2007/08 by a person who was not UK resident or ordinary resident for that year (whether or not that person's tax affairs were, for that year, determined in accordance with Self Assessment); and
  • in respect of the tax year 2006/07 by a person who was not UK resident or ordinary resident for that year provided that person's tax affairs were, for that year, not determined in accordance with Self Assessment.
The relaxation of the time limits described above does not have effect in relation to any other claim. Claims relating to SED in respect of the tax year 2008/09 and later tax years must be made within the normal time limits for making claims in respect of such tax years (i.e. within 4 years of the end of the tax year in question).

 

New HMRC video urges employers to dump the dummies

HM Revenue & Customs (HMRC) has launched a new online video to help employers reduce the problems caused by inaccurate employee data.

Every year, HMRC receives thousands of employer returns, containing the details of millions of employees, including names, dates of birth and National Insurance numbers. While the vast majority of the employee data is correct, in some cases dummy, incomplete or incorrect information is included.

For example, a recent study of employer returns found that 128 staff were entered as Mr, Ms or Mrs Dummy, while 824 employees had the surname “Unknown”.

Another 40 employees, according to their dates of birth, were aged over 200. Many other employees had their forenames and surnames swapped around, or their first names replaced by initials, which can make it more difficult for HMRC to identify the individuals.

The short YouTube video discusses how inaccurate employer returns can affect employees, employers and HMRC, and offers basic advice on how employers can help reduce errors.

Jim Harra, HMRC’s Director of Customer Operations, said:

“It’s really important that employers get their employees’ information right, so that HMRC can match it to the right tax records. Otherwise, it can lead to more contact from staff, trying to sort out their tax, and from HMRC, trying to sort out the data issues.

“So, if you’ve got a spare few minutes, watch the video and see what you can do to help your organisation get things right, for you, your employees and HMRC.”

The video can be viewed on the YouTube website at http://bit.ly/xVazur

For more information on improving payroll data go to www.hmrc.gov.uk/rti/dip/index.htm

 

2010/11 Tax repayments – check your cheque

HMRC have announced that from mid-July they will start sending out PAYE tax calculations for the 2010/11 tax year, starting with repayments where HMRC think too much tax has been paid

Will you be getting a calculation?

Not everyone will get a P800 tax calculation. Some people fill in tax returns, so their tax affairs will be sorted out in that way. For most others, PAYE works well so that you pay everything you owe during the year. Based on their information, HMRC estimate that more than 80% of people will neither owe tax nor be due a repayment. But watch out – HMRC might not know everything they need to know to get your tax right, so check your position even if you don’t receive a calculation.

Sometimes, however, PAYE doesn’t quite work, particularly if you have more than one job or source of pension income, change jobs frequently or move in and out of work. In some (hopefully few) cases, employers or pension providers make mistakes so the wrong tax is deducted. And in some cases, HMRC also get things wrong.

This means that, after the end of each tax year, HMRC have to ‘reconcile’ individuals’ records to tally up your income taxed under PAYE and check that the tax which has been collected matches the amount they think you should have paid overall.

The repayments

HMRC will begin 2010/11 reconciliations in mid-July, issuing calculations if they think you have paid too much tax, closely followed by a cheque.HMRC hope to have dealt with most repayments by September. They will then start issuing calculations to those who they think have not paid enough tax.

It is important to note that the P800 is only an estimate, produced by HMRC’s computer. So the calculation is only as good as the data held on the computer. Therefore it is vital to check you calculation.

Source: http://www.litrg.org.uk

 

Budget – March 2011

On Wednesday 23 March 2011, The Chancellor of the Exchequer, George Osborne, presented his budget to parliament. Below you will find some of the key announcements on tax and national insurance contributions that will affect both private individuals:

Income Tax Allowances
The personal allowance for those aged under sixty five for 2012-2013 will be £8,105 and the basic rate limit will be reduced to £34,370 for 2012-2013. All other income tax, personal allowances and limits that are subject to indexation will be increased in line with the retail prices index.

IR35
The Government has considered the three options on IR35 (the anti-avoidance Intermediaries legislation in Chapter 8, Part 2 of the Income Tax (Earnings and Pensions) Act 2003) set out in the Office of Tax Simplification’s report on its review of small business, published on Thursday 10 March 2011 on the HM Treasury website. The Government has decided that it cannot put substantial tax revenue at risk and has therefore decided to retain IR35 and to achieve simplification by making improvements to the way in which it is administered.

Restricting pensions tax relief
The Government announced on Thursday 14 October 2010 that the annual allowance for tax relief on pension savings for individuals will be reduced from £255,000 to £50,000 from 2011-2012 and the lifetime allowance will be reduced from £1.8 million to £1.5 million from 2012-2013. Following consultation, the Government published additional draft legislation on Thursday 3 March 2011 containing provisions to enable individuals to meet high annual charges from their pension benefits. Individuals with charges above £2,000 will be able to elect for their liability to be met from their pension benefit. In these situations, the tax will be paid at the point the charge arises.

 

New PAYE Coding Notices

During January, February or March 2011 you may get a PAYE Coding Notice from the HMRC telling you what your new tax code will be for the tax year 2011-12. Your new tax code will be used by your employer or pension provider from the 6 April 2011 to make sure you pay the right tax and get the tax allowances and reliefs to which you are entitled.

Not everyone needs to get a Coding Notice, so don’t worry if you don’t receive one – your employer or pension provider will still be able to update your tax code on the 6 April.

Your Coding Notice is for you to keep. The HMRC will tell your employer or pension provider what your new tax code is – if you have an agent acting for you make them aware of the change.

 

Six million revised tax calculations from HMRC

The UK tax authority, HMRC, is preparing for a mass of enquiries after having sent out new tax calculations.

The first 45,000 of about six million taxpayers will receive letters informing them that they have paid the wrong amount of tax; the remaining new tax calculations will be posted by the end of the year.  The mistakes were brought to light following the introduction of a new computer system.

Refunds and additional tax will generally be recovered by a tax code change in the following financial year.  However, if the amount due is over £ 2,000, taxpayers could be asked to pay a lump sum.

For those who receive the letters tax experts strongly recommend checking the documents to make sure the new calculations correlate properly to their personal and professional situation.  In some case it may be possible to contest claims for additional payments.

Source: http://www.aegistaxswitzerland.com/

 

New tax forms 2009/10 and online calculator for 2010/11

We are glad to confirm that the new SA Tax Return and most popular supplements for 2009/10 have been uploaded in our Tax Forms section.

If you need any form or tax return supplement which is not listed, please do not hesitate to contact us on query@taxundo.com

You can also visit our Tax Calculator section, where you will find a selection of handy tools to calculate your tax online. The rates and allowances for the current year 2010/11 have been implemented, so you can make calculations for the whole period up to 5 April 2011.

 

SEAFARERS’ EARNINGS DEDUCTION: EU AND EEA RESIDENTS

Who is likely to be affected?
1. EU and European Economic Area (EEA) residents who pay UK tax on their earnings as a seafarer. Broadly speaking a seafarer is a person who works on a ship.
General description of the measure
2. Legislation will be introduced in Finance Bill 2010 to extend the Seafarers’ Earnings Deduction to EU and EEA resident seafarers, ensuring the provisions are compatible with the EU Treaty.
Operative date
3. The measure will have effect on and after 6 April 2011.
Current law and proposed revisions
4. Seafarers’ Earnings Deduction can provide 100 per cent UK tax relief for the earnings from carrying out duties as a seafarer wholly or partly outside the UK, during an eligible period. One of the qualifying conditions for Seafarers’ Earnings Deduction is that the claimant must be ordinarily resident in the UK. This condition will be extended so that seafarers who are EU or EEA residents can claim Seafarers’ Earnings Deduction on their earnings as a seafarer that are liable to UK income tax. There are no other changes to the provisions for Seafarers’ Earnings Deduction.