Moore Accountancy Update

Happy New Year!

Welcome to our first update of 2023.

We don't usually issue a January newsletter as we are full steam with personal Self Assessment Tax Returns but wanted to share the MTD update, in case you had not already heard.

STAFF UPDATES
* Poonam is on holiday from Friday 6th to Monday 16th January

* We have Bertha Keta starting from Monday 16th January, working part-time to support us during Ning's maternity leave. She will focus on Limited company accounts; and we are sure she will be a welcome addition to the team.

OTHER
Moore Accountancy continue with hybrid working, as it works with the team dynamics and their welfare, both mentally and physically.

Emails will continue to be passed to the relevant team member and dealt with as if they were in the office.

If you have missed any of our previous newsletters, then our website has them available to view here.

MTD for ITSA - FURTHER DEFERRAL

The mandatory use of software for Making Tax Digital for Income Tax Self-Assessment is being phased in from April 2026.

Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) was due to be phased in from April 2024. However, the government, recognising the current economic environment and the significant change that a transition to Making Tax Digital represents, has pushed this back to April 2026.

In addition, the previously announced £10,000 threshold for self-employment and property income has been raised, as detailed below.

Under MTD for ITSA, businesses, self-employed individuals, and landlords will keep digital records, and send a quarterly summary of their business income and expenses to HMRC using MTD-compatible software. In response, they will receive an estimated tax calculation based on the information provided to help them budget for their tax. At the end of the year, they can add any non-business information and finalise their tax affairs.

This will replace the need for a Self-Assessment tax return, but a similar End Of Year Declaration will be needed.

Making Tax Digital from April 2026
From April 2026, self-employed individuals and landlords with an income/rental/turnover of more than £50,000 will be required to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software.

Making Tax Digital from April 2027
Those with an income/rental/turnover of between £30,000 and £50,000 will need to do this from April 2027. Most customers will be able to join voluntarily beforehand, meaning they can eliminate common errors and save time managing their tax affairs.

Income below the £30,000 threshold.
The government has also announced a review into the needs of smaller businesses, particularly those under the £30,000 income threshold. The review will consider how MTD for ITSA can be shaped to meet the needs of these smaller businesses and the best way for them to fulfil their Income Tax obligations. It will also inform the approach for any further rollout of MTD for ITSA after April 2027.

Mandating of MTD for ITSA will not be extended to general partnerships in 2025 as previously announced.

See https://www.gov.uk/government/news/government-announces-phased-mandation-of-making-tax-digital-for-itsa for more information

SPRING BUDGET 2023

The Chancellor, Jeremy Hunt, announced on 19/12/22 that the 2023 Spring Budget will be held on 15/03/23.

The Office for Budget Responsibility (OBR) will also prepare an economic forecast to accompany the budget statement.

PENSION PLANNING

For most taxpayers the maximum pension contribution is £40,000 each tax year, although this depends on their earnings.

This limit covers both contributions by the individual and by their employer.

Under the current rules, the government adds to your pension contributions at the 20% basic rate.

For instance, if you save £4,000 in a personal pension the government tops this up to £5,000.

If you are a higher rate taxpayer there is a further £1,000 tax relief when your tax liability is calculated, reducing the net cost to £3,000. This can be even more effective if your income is between £100,000 and £125,140 where the effective tax rate is 60%.

Remember that pension fund investments can go down as well as up.

£12,300 CGT ANNUAL ALLOWANCE – USE IT OR LOSE IT

NEW VAT PENALTIES FOR LATE RETURNS

A new points-based system for late VAT returns starts for return periods commencing on or after 01/01/23.

A financial penalty will apply when a number of points have been accumulated, which will depend on how frequently the returns should be submitted.

For a trader preparing quarterly returns a penalty will be charged when four points have been accumulated.

See our blog for further details - https://mooreaccountancy.co.uk/new-vat-filing-penalty-regime-from-january-2023/

19/01/23 - PAYE & NIC deductions for month ended 05/01/23 (December payroll)

31/01/23 - Corporation tax due for year to 30/04/22

31/01/23 - Self Assessment balancing payment for 2021/22 and first Payment on Account for 2022/23 Note that if this liability is no more than £30,000 you can agree with HMRC to spread over 12 months

19/02/23 - PAYE & NIC deductions for month ended 05/01/23 (January payroll)

28/02/23 - Corporation tax due for year to 31/05/22