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Month: November 2023

VAT registration goes online only

Written by admin on . Posted in VAT. No Comments on VAT registration goes online only

HMRC is moving ahead with its ‘digital by default’ ambition by pushing VAT registration to online only. Any business unable to use the online registration service will have to call HMRC’s VAT helpline to obtain a paper registration form.

According to HMRC, more than 95% of businesses already register online, but there are some circumstances when registration by post is the only option.

HMRC recently made an almost immediate U-turn after concerns were raised when it tried to remove the option for downloading paper self-assessment tax returns. the forms continue to be available to download.

Paper-only option

Online registration is not possible where a business wants to:

  • Apply for an exemption from VAT registration (where turnover has gone temporarily over the registration threshold);
  • Join the agricultural flat rate scheme; or
  • Register a company’s divisions or business units separately for VAT.

In these circumstances, businesses must contact HMRC’s VAT helpline to ask for a VAT1 form. The digitally excluded will need to do likewise.

Other registration issues

The compulsory VAT registration threshold has been frozen at £85,000 since 1 April 2017, so not surprisingly the number of new registrations has risen considerably – over 300,000 in each of 2020/21 and 2021/22. The threshold will remain unchanged until 31 March 2026.

With more smaller businesses being drawn into the VAT net, it doesn’t help that HMRC closed its VAT registration helpline earlier this year. Anyone with a registration query can now end up waiting well over a month before HMRC responds.

Currently, it can take HMRC 30-40 working days (although sometimes longer) to process an online VAT registration. However, VAT must still be accounted for from the date when the obligation to register arose, so sending out invoices in the interim can be problematic.

HMRC’s guide to VAT registration can be found here.

Photo by Svetlana Gumerova on Unsplash

Handy hints ahead of self-assessment

Written by admin on . Posted in benefit-in-Kind, Company Car Tax, High Income Child Benefit Charge, self-assessment, Self-Employed. No Comments on Handy hints ahead of self-assessment

The 31 January 2024 deadline for submitting a 2022/23 self-assessment tax return is not far off, especially for those not yet registered.

Anyone who has not previously registered for self-assessment – but needs to submit a tax return for 2022-23 – should do so as soon as possible.

  • A self-assessment activation code can take a week to arrive (three weeks if overseas); and
  • It can take two weeks (again, three weeks if overseas) to obtain a unique taxpayer reference, although using a personal tax account or the HMRC app can speed things up.

For anyone who has not previously submitted a tax return, the deadline for informing HMRC of the need to do so for 2022/23 has already passed. Individuals who have missed the deadline might face a fine.

First-time registration

There are a number of reasons why a taxpayer might fall into the self-assessment system for the first time. For example, anyone who has:

  • Started part-time self-employment, including work in the gig economy, trading on eBay and similar websites, or earning money as an influencer (although the first £1,000 of self-employed income is exempt);
  • Disposed of cryptoassets (any profits are subject to capital gains tax); or
  • Rented out property for the first time, possibly through sites such as Airbnb (again, the first £1,000 of rental income is exempt).
  • Become liable to the High Income Child Benefit Charge as a result of their income exceeding £50,000.

Sooner rather than later

Leaving registration to the last moment will mean there is no time to deal with any unforeseen problems. You might need to consult HMRC’s self-assessment helpline, which is now available again after its summer closure.

There will also be little time before the related tax bill is due for payment, and this could be an issue if the amount payable is higher than expected.

More information about whether you need to submit a self-assessment tax return can be found here.

Photo by Markus Winkler on Unsplash

Free property alerts for landlords

Written by admin on . Posted in Property. No Comments on Free property alerts for landlords

Landlords in England and Wales might not be aware, but there is a free property alert service that monitors any significant activity on let property.

There is greater risk of a property being fraudulently sold or mortgaged if the landlord lives overseas, the property is empty or if there is no mortgage.

Signing up for a property alert will not automatically block any changes to the property register, but it will act as a warning when something changes, such as a new mortgage being taken out against the property.

Although property fraud is rare, HM Land Registry has prevented more than £100 million of fraud over the past five years.

Set-up process

An important first point is that a property can only be monitored if it is already registered with HM Land Registry, which may not be the case if acquired prior to 1990 and not mortgaged since then. A search of English and Welsh property can be made here.

For registered property, it is simply a matter of:

  • Creating a property alert account; and
  • Adding the properties to be monitored.

Up to ten properties can be monitored. However, you don’t need to own a property to monitor it, so it is easy enough to enlist family members to get around this restriction.

Unregistered properties

There is also more risk if a property is not registered, so it is recommended that an application be made to have such property registered. Although registration can be done by a landlord, many may prefer to use the services of a solicitor or conveyancer.

Restriction on title

Going a step further, putting a restriction on a property’s title will prevent a sale or mortgage being registered unless certified by a solicitor or conveyancer. The request itself is free for landlords, although a fee will likely be payable should a certificate be required.

The starting point for setting up a property alert, along with some guidance, can be found here.

Photo by Tiffany Tertipes on Unsplash

An uncertain future for the Triple Lock

Written by admin on . Posted in Pensioners, Pensions, Wealth. No Comments on An uncertain future for the Triple Lock

In mid-September, the Office for National Statistics (ONS) published the latest earnings data, covering the period May to July 2023. Earnings data has been the focus of much attention recently because a fall in the pace of pay growth is seen as a pre-condition for the Bank of England to consider a pause – and eventually cuts – in interest rates. However, the data that emerged in September was doubly important as, in theory, it sets the level of increase for the old and new state pension from April 2024.

Both the old and new state pensions are subject to the Triple Lock, which means they are due to increase by the greater of:

  • Annual earnings growth (including bonuses) for the May to July period;
  • Annual CPI inflation to September; or
  • 5%.

Given the publicity it receives, you may be surprised to learn that the Triple Lock is nowhere to be found in pensions legislation. The Triple Lock is a discretionary feature that the government can ignore, although with an election almost certain in 2024, it would be difficult to imagine that it would depart much from its requirement this year.

May to July earnings total earnings growth this year was 8.5%, 0.3% higher than expected, a surprise that the ONS attributed to NHS and civil service one-off payments in June and July. That means from next April the old state pension will rise by £13.30 to £169.50 a week and the new state pension (applying to those who reach state pension age after 5 April 2016) will increase by £17.35 to £221.20 a week, unless the government decides to suspend the Triple Lock. It did so in 2022/23, when Covid-19 distorted earnings data and for 2024/25 it could tweak the earnings definition to exclude those one-off payments.

Whether the Triple Lock will survive beyond the next election is unclear. Shortly before the earnings data was published, the Prime Minister refused to commit to the Triple Lock being in the Conservative manifesto. At about the same time, the Institute for Fiscal Studies published a critical report saying that the Triple Lock created uncertainty both for the government and for individuals planning their retirement.

If you find yourself thinking you could retire on £221 a week, think again. It represents less than two thirds of this year’s 35-hour week National Minimum Wage.

Source: IFS.

Energy efficiency targets shelved. Will some landlords benefit from this?

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The government’s backtracking over the introduction of energy performance targets for property let out in England and Wales is facing criticism, but it will be welcome news for landlords with older properties deemed too expensive or difficult to upgrade.

Let property must currently have an energy performance certificate (EPC) rated E or above. Without this, the property cannot be legally let regardless of whether the tenancy is an existing one, a renewal or a new let. The government’s intention was to raise the EPC requirement to C or above by 2028.

The penalty for not having a valid EPC is £5,000. Under the now scrapped proposals, the penalty was going to be £30,000.

The cost

The cost of moving from a D or E rating to a C would typically be in the region of £10,000 to £20,000. There were reports that the government would have covered anything over £10,000, but that would still leave a significant burden for many landlords. As capital expenditure, most upgrades would not even have qualified for tax relief against rental income.

  • Raising energy efficiency to the required standard might have required improving insulation, installing double glazing or replacing old gas boilers.
  • However, it would have been very difficult, if not impossible, to bring some older properties up to an EPC C rating.

One concern considered by the government was that costs would have been passed on to tenants by way of higher rents.

The future

Although new EPC rules are off the agenda for now, there is every chance this could change if Labour wins the next election. Regardless of future changes, however, landlords should be aware that a good EPC rating makes a property more attractive to tenants given current high energy costs.

For Scottish landlords, it looks as if the Scottish Government still intends to go ahead with a move to an EPC C rating by 2028.

A useful guide to energy performance certificates can be found here.

Photo by American Public Power Association on Unsplash