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Newsletter MTD pilot scheme
July is tax payment time
Employment-related securities & P11D/PSA reminder
Making Tax Digital for Corporation Tax
Newsletter MTD pilot scheme
While much is known about the new MTD scheme coming in 2024, not many are aware that you can already use the system through the pilot scheme. The pilot scheme has been operating under restricted conditions which has meant that many people were not eligible until now.
HMRC have now announced changes to the making tax digital for self-assessment pilot scheme. Starting from 1 July 2022 HMRC have widened the availability of the scheme to include more individuals. We are excited at Henderson Loggie to start!
MTD applies to individuals with a gross self-employment or rental turnover of £10,000 or more. Starting from April 2024, they will be required to keep their records electronically and report the income and expenses to HMRC on a quarterly basis. Originally, to use the pilot scheme, there had to be no other sources of income, and now the scheme is open to those with pensions or employment income, interest, dividends and gift aid.
The pilot scheme is a great opportunity to get to grips with the requirements in an environment free of penalties. It will allow the income and expenses to move onto digital record keeping. An example of digital record-keeping would include the Zero package.
If you are interested in signing up for the scheme or have any questions relating to making tax digital please get in touch.
July is tax payment time
July is the time when many taxpayers are due to make their second payment on account. If you are self-employed and complete tax returns each year, the tax payments on account are due in January and July each year. The payments on account are based on the previous tax year so payments due in July 2022 will be towards the tax due for the year to 5 April 2022 and will be based on the previous tax year.
If you have a payment becoming due in July this year, this is a gentle reminder that this is approaching but it is also a reminder that if your income in the year to 5 April 2022 is likely to be lower than in the previous year, it may be possible to reduce your payment on account. To determine if the payment can be reduced, you can complete your tax return before the July payment deadline which will provide a more accurate basis for payment.
If there are any clients who would like us to complete their tax returns in time for the 31 July deadline, please get in touch.
Employment-related securities & P11D/PSA reminder
The submission deadline for ERS returns for the year ended 5 April 2022 is 6 July 2022. If the return is late, a £100 penalty will be issued, with further penalties being applied if it is more than 3 months late.
Businesses should be aware that the deadline for submitting P11Ds and P11D(b)s to HMRC reporting non-cash benefits provided to staff during the year ended 5 April 2022 is only days away – the deadline is 6 July 2022. If the filing is late, a penalty of £100 per 50 employees per month (or part month) is applied until the P11D(b) is filed.
Where the forms have not been submitted by the deadline, HMRC can charge a penalty of £100 per 50 employees for every month the forms are late as well as interest and penalties where the Class 1A NIC is paid late (19 July if paying by cheque, 22 July if paying electronically).
Companies wishing to settle the tax on the employees behalf via a PAYE Settlement Agreement (PSA), and pay the national insurance on non-cash benefits have until 5 July to have a PSA in place with HMRC. The calculation of the tax and NI payable must be submitted to HMRC, as well as payment being made, by 19 October if paying by cheque and 22 October if paying electronically.
Making tax digital for corporation tax
Starting in 2026, businesses will be affected by HMRC’s new Making Tax Digital (MTD) approach for corporation tax reporting. April 2019 to April 2022 saw the introduction of HMRC’s MTD for VAT. Currently, all VAT-registered businesses must now make online MTD VAT return submissions, with corporation tax now being targeted with a similar initiative.
The introduction of MTD for corporation tax will see businesses be required to make quarterly submissions detailing key accounting data points as well as continuing to submit the annual corporation tax return.
Currently, only a small amount of companies (those who are classed by HMRC as “large”) pay corporation tax in quarterly instalments. The move to MTD, resulting in corporation tax accounting data to be reported quarterly for companies of all sizes, will require companies to align their VAT and corporation tax processes closer together.
Historically, this alignment is uncommon given the many differences between corporation tax and VAT reporting. For example, data sources used for corporation tax analysis are more high level than the more detailed transaction-based data for VAT. At present, there are also different reporting deadlines and frequencies of submissions. The corporation tax return must be submitted twelve months after the accounting year-end whereas most UK companies submit their VAT returns thirty business days after the quarter or month-end.
From now until 2026, it is expected that there will be technological advances allowing businesses and their outsourcing agents to work more seamlessly together as well as further HMRC consultations with businesses and charities, resulting in an easier transition into MTD for Corporation Tax.
Get in touch
Dawn MacDougall
Lucy Crow
