The Annual Tax Summary is a document provided by HMRC that shows details of the tax you pay and how this is used by government.

The Annual Tax Summary shows:

• your taxable income from all sources that HMRC knew about at the time that it was prepared;
• the rates used to calculate your Income Tax and National Insurance contributions; and
• a breakdown of how the UK government spends your taxes – this makes government spending more transparent.

HMRC makes it clear that the tax summaries are for information purposes only and neither taxpayers nor agents should take any action based on the contents of the summary. The summaries are available online via the Government Gateway.

Taxpayers cannot access an Annual Tax Summary if they have paid no income tax or if information is outstanding. The Annual Tax Summary might also be different from other HMRC tax calculations because a taxpayer's circumstances have changed, or sources of income were not included.

When a couple is separating or is divorced it is unlikely that they are thinking about the tax implications of their actions. However, apart from the emotional stress, there are also tax issues that can have significant implications.

The Capital Gains Tax (CGT) rules that apply during separation and divorce changed for disposals that occur on or after 6 April 2023. These changes extended the period for separating spouses and civil partners to make "no gain/no loss transfers" up to three years after they cease living together. The changes also provide for an unlimited time if the assets are the subject of a formal divorce agreement. Prior to this change, the no gain/no loss treatment was only available in relation to disposals in the remainder of the tax year during which the separation occurs.

There are also special rules that apply to individuals who have maintained a financial interest in their former family home following separation and that apply when that home is eventually sold. This allows for private residence relief (PRR) to be claimed when a qualifying property is sold.

It is also important, during divorce proceedings, to make a financial agreement that is acceptable to both parties. If no agreement can be reached, then proceeding to court action to make a 'financial order' will usually be required.

Accordingly, the couple and their advisers should give proper thought to what will happen to the family home, any family businesses as well as the inheritance tax implications of separation and / or divorce.

There are special VAT reverse charge rules for certain building contractors and sub-contractors. The rules, which came into effect on 1 March 2021, makes the supply of most construction services between construction or building businesses subject to the domestic reverse charge. The reverse charge only applies to supplies of specified construction services to other businesses in the construction sector.

The charge applies to standard and reduced rate VAT services:

• for businesses who are registered for VAT in the UK; and
• reported within the Construction Industry Scheme.

This means that where the rules apply, sub-contractors no longer add VAT to their supplies to most building contractor customers. Instead, contractors are obliged to pay the deemed output VAT on behalf of their registered sub-contractor suppliers. This is known as the VAT domestic reverse charge.

Please note, contractors who make the domestic reveres charge payments for their sub-contractors can, in most circumstances, claim the same amount on their VAT return as input VAT. Consequently, there is no cash flow effect; just the hassle of making sure the accounting entries are dealt with correctly.

The VAT domestic reverse charge applies to the following services:

• constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services;
• constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence;
• installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure;
• internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration;
• painting or decorating the inside or the external surfaces of any building or structure; and
• services which form an integral part of or are part of the preparation or completion of the services, including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works.

The deadline for submitting the 2023-24 forms P11D, P11D(b) and P9D is 6 July 2024. These forms can be submitted using commercial software or via HMRC’s PAYE online service. HMRC no longer accepts paper P11D and P11D(b) forms. Employees must also be provided with a copy of the information relating to them on these forms by the same date. P11D forms are used to provide information to HMRC on all Benefits in Kind (BiKs), including those under the Optional Remuneration Arrangements (OpRAs) unless the employer has registered to payroll benefits.

Payrolling benefits removes the requirement to complete a P11D for the selected benefits. However, a P11D(b) is still required for Class 1A National Insurance payments regardless of whether the benefits are being reported via P11D or payrolled. The deadline for paying Class 1A NICs is 22 July 2024 (or 19 July if paying by cheque).

Where no benefits were provided from 6 April 2023 to 5 April 2024 and a form P11D(b) or P11D(b) reminder is received, employers can either submit a 'nil' return or notify HMRC online that no return is required. Employers should ensure that they complete their P11Ds accurately, including all the details of cars and loans provided.

There are penalties of £100 per 50 employees for each month or part month a P11D(b) is late. There are also penalties and interest if for late payments of Class 1A NIC.

Any tax or National Insurance due for 2023-24 under a PAYE Settlement Agreement (PSA) needs to be paid electronically to clear into HMRC’s bank account by 22 October 2024 (19 October 2024 for payments by cheque). This does not need to be reported on a P11D form.

We would like to remind our readers that HMRC is currently sending the annual tax credit renewal packs to 730,000 tax credit claimants. HMRC is encouraging recipients to renew their tax credits claim online. HMRC started writing to taxpayers on 2 May 2024 and expects all packs to be with recipients by the 19 June 2024. 

Renewal packs with a black stripe across the front page are automatically renewed. However, taxpayers must inform HMRC of any changes in circumstances not already reported during the year such as new working hours, different childcare costs or changes in pay.

A renewal is required if the pack has a red stripe across the first page and it says, 'reply now'. Families and individuals that receive tax credits should ensure that they renew their tax credit claims by 31 July 2024. Claimants who do not renew on-time may have their payments stopped. Around 10,000 taxpayers are expected to receive the packs with a red stripe and can renew their tax credits via GOV.UK or on HMRC’s app.

Universal Credit is expected to fully replace tax credits, and other legacy benefits (including Income-Related Employment and Support Allowance, Income-Based Jobseeker’s Allowance) by 5 April 2025. This means that claimants who receive tax credits will receive a letter from the Department for Work and Pensions (DWP) or the Department for Communities if they live in Northern Ireland telling them about the move to Universal Credit. This letter is called a Migration Notice and taxpayers are urged not to ignore it.

There have been a number of significant changes in Companies House fees. These changes took effect on 1 May 2024. The last significant change in fees occurred in April 2016. 

The new fees have been calculated on a ‘cost recovery’ basis meaning that the fees are calculated based on what it costs to provide the services in question. Companies House state that they do not make a profit on their fees. 

Companies House guidance entitled Companies House fees has been updated to reflect all the changes. Companies House have said that the new fees will help ensure adequate funding going forward to recover costs incurred as well as to help fund the cost of new powers introduced as part of The Economic Crime and Corporate Transparency (ECCT) Bill. 

Prices shown below are some of the main changes that took effect from 1 May 2024: 

The full list of changes can be found in the guidance mentioned above at https://www.gov.uk/government/publications/companies-house-fees/companies-house-fees

In a recent press release the Department for Education confirmed that parents of children from 9 months old can now apply to access government-funded childcare from September 2024, as England’s largest ever childcare expansion continues.

From 12 May 2024, eligible working parents of children who will be 9 months old by 31 August can apply to access 15 hours of funded childcare a week – set to benefit hundreds of thousands of families across the country.

This is the second step in the government’s long-term plan to support hard-working parents to balance their family and career. As the successful launch of the offer in April demonstrates, this plan is working.

Since the launch of the offer, 211,027 two-year-olds are already benefitting from government-funded places, providing parents with financial support to return to work or increase their hours and kick-starting the government’s commitment to grow the economy through affordable access to quality childcare.

Working parents whose children will be aged between 9-months and 23-months old on 31 August 2024 can apply for their government-funded childcare code via the childcare service, which they then take to their chosen childcare provider to validate. 

In this next stage, the historic rollout will deliver direct government support with childcare costs from the term after their child turns 9 months old, until they start school. By September 2025, support will increase to 30 government-funded hours a week, saving families an average of £6,900 per year.

Universal Credit claimants working less than half of a full-time week will have to look to increase their hours but will be able to benefit from extra work coach support. These changes will see 400,000 Universal Credit claimants receive more help to progress in work.

The changes come as the PM announces once in a generation welfare reforms to help people find work, boost their earnings, and grow the economy.

Before 2022, someone could work only nine hours a week and remain on benefits without being expected to look for more work.

The latest rise in the Administrative Earnings Threshold (AET) means someone working less than 18 hours – half of a full-time week – will have to look for more work.

These Universal Credit claimants will move into the ‘Intensive Work Search group’, meeting with their work coaches more regularly to plan their job progression, boost their earnings and advance the journey off welfare altogether.

Combined with previous increases, 400,000 claimants are now subject to more intensive Jobcentre support – and with that the expectation that those who can work must engage with the support available or face losing their benefits.

The move comes as last month the Prime Minister announced a once in a generation package of welfare reforms to help thousands more people benefit from employment, building on the Government’s £2.5 billion Back to Work Plan providing extra help to over a million people to break down barriers to work.

Employees with more than one job may be able to defer or delay paying Class 1 National Insurance in certain circumstances.

This deferment can be considered when any of the following apply:

• You pay Class 1 National Insurance with more than one employer.
• You earn £967 or more per week from one job over the tax year.
• You earn £1,209 or more per week from 2 jobs over the tax year.

This deferral could result in NIC deductions at a reduced rate of 2% on your weekly earnings between £242 and £967 in one of your jobs, instead of the standard rate of 8%.

HMRC will check if you have paid enough National Insurance at the end of the tax year and will write to you if you have underpaid contributions.

Most self-employed people are also required to pay Class 4 NICs. It used to be possible to defer these contributions, but that is no longer the case. You may be able to claim a refund for previous tax years.

The Check a UK VAT number service is available at: www.gov.uk/check-uk-vat-number.

This service allows users to check:

• if a UK VAT registration number is valid; and
• the name and address of the registered business.

The service also allows UK taxpayers to obtain a certificate to prove that they checked that a VAT registration number was valid at a given time and date. This is especially important when you take on new suppliers. If the VAT number is invalid, HMRC could withdraw your ability to reclaim the input VAT you have paid. The certificate will also provide valuable evidence proving a taxpayer acted in good faith – should HMRC challenge input tax recovery or seek payment of lost VAT.

The European Commission website also includes an on-line service which allows taxpayers to check if a quoted VAT number from anywhere in the EU or Northern Ireland is valid. The on-line service is available at: https://ec.europa.eu/taxation_customs/vies/#/vat-validation

There are a number of reasons why you may need to close your limited company. This could be because the company structure no longer suits your needs, your business is no longer active, or the company is insolvent. You will usually need the agreement of all the company’s directors and shareholders to close down a company.

The method for closing down a limited company depends on whether it is solvent or insolvent. If the company is solvent, you can apply to get the company struck off the Register of Companies or start a members’ voluntary liquidation. The former method is usually the cheapest.

It is the responsibility of the company directors to ensure that all of a company’s assets and liabilities are dealt with before it is dissolved. For example, you have settled any outstanding bills and collected all debts owed to the business. Any assets or rights (but not liabilities) remaining in the company at the date of dissolution can pass to the Crown as ownerless property.

Where a company is insolvent, the creditors’ voluntary liquidation process must be used. There are also special rules where the company has no director, for example, if the sole director has died.

A company can also elect to become dormant. A company can stay dormant indefinitely, however there are costs associated with this option. This might be done if for example a company is restructuring its operations or wants to keep a company name, brand or trademark. The costs of restarting a dormant company are typically less than forming a new company.

An employee can obtain a benefit when provided with an employment-related cheap or interest-free loan. The benefit is the difference between the interest the employee pays, if any, and the commercial rate the employee would have to pay on a loan obtained elsewhere. These types of loans are referred to as beneficial loans.

There are a number of scenarios where beneficial loans are exempt, and employers might not have to report a benefit to HMRC or pay tax and National Insurance. The most common exemption relates to small loans with a combined outstanding value to an employee of less than £10,000 throughout the whole tax year.

This list also includes loans provided:

• in the normal course of a domestic or family relationship as an individual (not as a company you control, even if you are the sole owner and employee);
• to an employee for a fixed and invariable period, and at a fixed and invariable rate that was equal to or higher than HMRC’s official interest rate when the loan was taken out;
• under identical terms and conditions to those offered to the general public (this mostly applies to commercial lenders);
• that are ‘qualifying loans’, meaning all of the interest qualifies for tax relief; or
• using a director’s loan account as long as it is not overdrawn at any time during the tax year.