The Blog

Time’s ticking: Second Payment on Account due by July 31

You may recall that we explored the ins and outs of the world of Payment on Account in one of our recent blogs.

For those of you who may not have had chance to read it, click here.

For those of you who did see it, then you’ll most probably remember that we mentioned the fact that Payment on Account is made in two instalments.

Broadly speaking, Payment on Account is the payments individuals make towards their following year’s income tax and Class 4 National Insurance Contributions.

You may wonder why we’re writing another blog about these payments. Well, it’s to remind individuals that their second payment is due very soon – by midnight on July 31 to be precise.

Each of the payments equate to half of the amount due for the previous year. However, there are instances when it’s possible to reduce both of your payments, such as if you:

  • Think your tax bill is less for 2017/18 than 2016/17 because you had less self-employed income or;
  • Know you owe less this year than last year, having already done your tax return for the previous year

You’ll need a reasonable estimate of the amount you owe in order to bring your payments down. However, it’s important you take considerable care when carrying out these calculations, as individuals who reduce their payments too much often have to pay interest charges and a potential penalty if HMRC believe that their claim is fraudulent or negligent.

Word of warning – you must notify HMRC if you intend to reduce your payments. If you pay a lower amount without telling them first, you’ll show up on their systems as not paying enough. If this happens, then they’re more likely to contact you and you could be fined.

If you’re uncertain of what your payment should be for the forthcoming July 31 deadline, want to be certain that your figures are 100% correct or want to make sure that you meet the deadline, then it’s always best to seek expert advice.

We have 15 expert partners on hand, who can provide you with industry-leading advice on all financial matters, including your Payment on Account affairs. Contact them today on 01905 777600 or hello@ormerodrutter.co.uk.

The impact of the snap General Election on businesses – revealed

It may have been several weeks since Prime Minster, Theresa May, revealed there would be a snap General Election on June 8, but that doesn’t mean the many questions surrounding the announcement have been answered.

If anything, since news of the nation going to the polls broke, the election has been the subject of much discussion, debate and uncertainty for both individuals and businesses.

With just a week left to go until the General Election takes place, Julian Dyer, Practice Partner, shares his predictions for how the election looks set to impact businesses now, and going forward:

PREDICTION #1: Making Tax Digital slowdown

The Government has been forging ahead with its Making Tax Digital scheme for some time now, despite widespread speculation that it’s been delayed and is due to be scrapped.

But with opposition parties not in favour of the initiative, coupled with the distinct lack of Parliamentary time to implement the many rules and regulations associated with getting the scheme live, any progress could potentially slow right down.

If this is the case, businesses should use this time to ensure they have the necessary systems and processes in place to comply with Making Tax Digital once it does go live because it will still happen at some point. (For more information, check out, ‘Making Tax Digital commentary.’)

PREDICTION #2: Summer Budget

The sudden announcement of the General Election means there’s a distinct lack of time for the Finance Bill 2017 to be passed. In order for this to take place, there needs to be a dissolution of Parliament which, given the current timescales, there isn’t enough time for.

It’s therefore anticipated that there will most certainly be a new Budget announced this summer. Watch this space…

PREDICTION #3: Dividends delay

Currently, small business owners can pay themselves in dividends, with the first £5,000 being tax-free. However, Chancellor, Philip Hammond, plans to reduce this amount from £5,000 to £2,000, from April next year.

It would appear that the snap General Election has granted small business owners some extra time, as with Parliament being dissolved to make way for the election, it’s highly unlikely the proposal will go ahead on time and as originally planned.

PREDICTION #4:  Probate fees freeze

Several pieces of key legislation have been deferred by the Government in the wake of the General Election announcement. Among them include plans to increase probate fees of up to £200,000.

The Government is essentially looking to introduce a new tax that will see fees being linked to the size of estates, whereas they’re currently the same regardless of the scale of the property. It’s proposed that these news fees are paid upfront by the estate. In circumstances where the estate has little cash, but valuable property, the executors or beneficiaries will be liable to pay the fees themselves.

For now, the introduction of the new tax and heftier fees look set to remain on the backburner for a little while yet.

PREDICTION #5: Temporary pension reprieval

The controversial plans to reduce the Money Purchase Annual Allowance (MPAA) from £10,000 a year to £4,000 have been shelved, as part of the Government’s General Election campaign.

Due to the fact Parliament is being dissolved, the bill can’t be carried over and a new bill will therefore need to be introduced post-election. Here’s hoping the Government uses this time to rethink the policy and the impact it will have on people saving for their retirement.

The predictions detailed above are by no means an exhaustive list, but a quick overview of just some of the ways the General Election could impact UK businesses now, and over the coming weeks and months. For more information about any of the points or for more best practice advice, contact us on 01905 777600 or mail@ormerodrutter.co.uk.


DSC4325About the Author

Julian joined the Practice when he was a youngster and he has grown with us through the years. He now runs our office in Bromsgrove, where he enjoys looking after a varied range of clients across all sectors and of all sizes.


 

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