Are your PAYE payments reaching the right place?

Are your PAYE payments reaching the right place?

Sep 28, 2022 | Payroll

Are your PAYE payments reaching the right place?

HM Revenue & Customs banner

Have you ever received a letter chasing for payment of your PAYE when you know you have paid it?

When making PAYE payments, it is vital that your 13-character Accounts Office reference number is shown, or your payments may not be recognised and will languish indefinitely in a black hole until you ring and claim it.

If you are paying on time, you just need to quote your 13-character Accounts Office reference, this can be found on:

  • the letter HMRC sent you when you first registered as an employer
  • if you use a payment book, it is shown on the front of the booklet
  • your business tax account if you have added Employer PAYE enrolment to it
  • your payroll software
  • speak to your PAYE agent is someone runs your payroll for you

What to do if you pay monthly but are late making your payment

If you are not paying the current period, you need to add 4 extra characters onto the end of your reference.  These final 4 characters will show the year and month/quarter your payment is for this will make the reference 17 characters.

Example: for the tax year 2022/23 you are late paying 6 May to 5 June (Mth 2), your reference would be your 13-digit reference plus 2302 i.e., 111AB000000002302 (ref for example only)

As each tax period has a different payment reference number, if you have more than one payment to make, make two separate payments using the correct reference.

Tax Periods

  • 6 Apr to 5 May, use 01
  • 6 May to 5 Jun, use 02
  • 6 Jun to 5 Jul, use 03
  • 6 Jul to 5 Aug, use 04
  • 6 Aug to 5 Sept, use 05
  • 6 Sept to 5 Oct, use 06
  • 6 Oct to 5 Nov, use 07
  • 6 Nov to 5 Dec, use 08
  • 6 Dec to 5 Jan, use 09
  • 6 Jan to 5 Feb, use 10
  • 6 Feb to 5 Mar, use 11
  • 6 Mar to 5 Apr, use 12

What to do if you pay quarterly but are late making your payment

The same applies as above, except you will need to quote the tax year and the relevant quarter number as follows:

  • 6 Apr to 5 Jul, use 03
  • 6 Jul to 5 Oct, use 06
  • 6 Oct to 5 Jan, use 09
  • 6 Jan to 5 Apr, use 12

Example: for the tax year 2022/23 you are late paying quarter end 5 October 2022 (Qtr 2), your reference would be your 13-digit reference plus 2306 – i.e., 111AB000000002306 (ref for example only)

 

Do not fall foul of accruing interest payments for payments you have already made.  Use the correct reference and save yourself a whole lot of hassle trying to sort it out.

 

 

 

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ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call

 

 

 

Are you a VAT registered business not yet signed up to Making Tax Digital (MTD) – Your deadline is 31st October 2022

Are you a VAT registered business not yet signed up to Making Tax Digital (MTD) – Your deadline is 31st October 2022

Aug 26, 2022 | Making Tax Digital, VAT

Are you a VAT registered business not yet signed up to Making Tax Digital (MTD) – Your deadline is 31st October 2022

Photograph of Sue Haynes bookkeeper

 

There is no getting away from it, Marking Tax Digital (MTD) for VAT is fast approaching. All VAT registered businesses, regardless of whether they are under or over the £85,000 threshold, will no longer be able to use their existing VAT online account to file their quarterly or monthly returns after 31𝙨𝙩 𝙊𝙘𝙩𝙤𝙗𝙚𝙧 2022.

 For businesses that file yearly returns, they will no longer be able to use their existing VAT online account after 15𝙩𝙝 𝙈𝙖𝙮 2023.

 By law, if they have not already done so, all VAT-registered business must now sign up to Making Tax Digital (MTD) and use MTD-compatible software to keep their VAT records and file their VAT returns.

 

Using MTD software to keep digital records and file VAT returns

is not enough, you MUST sign up to MTD for VAT before

you file your next return.

  

Not yet signed up for MTD, check out the steps below to become MTD compliant and avoid possible penalties that may be levied 

  • Chose MTD-compatible software that is right for you and your business. Here at Cactus Bookkeeping we use FreeAgent, QuickBooks, Sage and Xero, however HMRC’s website has a huge list of MTD compliant software which can be found at https://bit.ly/MTDCompatibleSoftware

 It’s important to find software that is right for you and your business and if you are in any doubt about which one is right for you, speak to a bookkeeper or accountant who can offer an unbiased view based on you and your business requirements. 

  • Sign up for MTD at https://bit.ly/SignUpForMTD Remember, just using MTD compliant software is not enough, you must sign up for MTD. 

To sign up for MTD you will need the following:

  • your business email address
  • a Government Gateway ID, if you do not have one, you can create this when you use the service
  • your VAT registration number and latest VAT return

You will also need:

  • your National Insurance number if you are a sole trader
  • your company registration number and Unique Taxpayer Reference if you are a limited company or registered society
  • your Unique Taxpayer Reference and the postcode where you are registered for Self-Assessment if you are a general partnership
  • your Unique Taxpayer Reference, the postcode where you are registered for Self-Assessment and your company’s registration number if you are a limited partnership 
  • Keep digital records for your current and future VAT returns. Nothing has changed in this regard, you need to keep paperwork relating to everything you buy and sell (including zero-rated, reduced and VAT exempt items). Also keeping bank statements, cash books, cheque stubs, paying-in slips and till rolls. 

You must keep some VAT records digitally, unless you are MTD exempt, and these can be found at https://bit.ly/DigitalRecordKeeping

  How to apply for an exemption from using software

 If you are already exempt from filing VAT returns online or if your business is subject to an insolvency procedure, you are automatically exempt.

 You can check if you can apply for an exemption at https://bit.ly/ExemptionfromMTD if it is not reasonable or practical for you to use computers, software of the internet. HMRC will consider each application on a case-by-case basis.

 

 If MTD for VAT is filling you with dread, please get in touch for a chat to see how we can help.

 

 

 

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call

 

 

 

When should you register for VAT?

When should you register for VAT?

May 20, 2022 | All Categories, VAT

When should you register for VAT?

You are required to register your business for VAT with HM Revenue and Customs (HMRC) if: 

  • your total VAT taxable turnover (your sales) over the last 12 months was over £85,000, the current threshold for 2022/23 tax year 
  • you expect your turnover to go over £85,000 in the next 30 days

 You have 30 days from the end of the month you go over the threshold to register for VAT.

 Your effective date of registration is the first day of the second month after you go over the threshold.

 From your effective date of registration, you must: 

  • Charge the right amount of VAT
  • Pay any VAT due to HMRC
  • Submit VAT Returns
  • Keep VAT records and a VAT account

 ___________________________________________________________

 Value Added Tax (VAT) is charged on the majority of goods and services provided by VAT-registered businesses in the UK. It also applies to certain goods and services imported into the UK from the EU and non-EU countries.

As a business owner it is your responsibility to keep track of your turnover (sales) over a consecutive 12-month period, not over the 12 months of your financial year. Remember, if you are getting close to the VAT threshold you must register within 30 days of reaching the current threshold of £85,000 (2022/23 tax year).

When making this calculation any sales which are zero rated need to be included in your calculation to identify if you have reached the threshold for VAT registration. The only rate of VAT you ignore are VAT exempt sales.

When you register for VAT, it is your responsibility as the business owner to apply the correct rate of VAT on the sales you make. For the majority of businesses, it will be 20% (the standard rate at 2022-23). However, for example, in the hospitality industry the rate of VAT to be charged varies depending on what is being sold and where it is to be eaten, (eat in or takeaway, hot and cold food). It is therefore vital for business owners in this industry to fully understand the VAT rates for the food and drink they sell.

HMRC have provided guidance on VAT rates for different goods and services, and this can be found using the following link: VAT rates on different goods and services – GOV.UK (www.gov.uk)

Many small businesses with a turnover below the VAT threshold volunteer to register for VAT as they deem it to be advantageous:

  • VAT can be reclaimed on goods and services purchased from other businesses.
  • If their customers are VAT registered, they will be able to reclaim the VAT, which may give them an advantage over a non-VAT registered business
  • Voluntary registration can be backdated by up to four years, which will allow VAT to be claimed back on equipment and set up costs if you still have those items and can provide the invoices/receipts.

Late Registration

If you register late, you must:

  • pay VAT on the sales you have made since the date you should have registered AND
  • you may need to pay a penalty depending on how much you and how late your registration is.

VAT is not a one size fits all and there are too many variables to cover in this blog.

The most important thing to do if you are not VAT registered, is keep track of your sales over the last 12 months and if you are creeping up on the VAT threshold, take advice from a qualified bookkeeper or accountant.

 

 

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call

 

 

 

Minimum Wage, Statutory Pay and Deduction Thresholds 2022-23

Minimum Wage, Statutory Pay and Deduction Thresholds 2022-23

Apr 2, 2022 | All Categories, National Minimum Wage, Payroll

Minimum Wage, Statutory Pay and Deduction Thresholds 2022-23

Computer screen and keyboard

Minimum Wage Rates

 The rates change on 1st April each year and the hourly rate for the minimum wage depends on your age and whether you are an apprentice.

You must be at least:

  • school leaving age to get the National Minimum Wage
  • aged 23 to get the National Living Wage – the minimum wage will still apply for workers aged 22 and under

 

✻ National Living Wage (aged 23 and over) has increased 6.60% to £9.50 per hour

✻ 21 to 22 will receive a 9.80% rise to £9.18 per hour

✻ 18 to 20 will receive a 4.10% rise to £6.83 per hour

✻ Under 18’s will receive a 4.10% increase to £4.81 per hour

✻ Apprentices will receive a 11.90% rise to £4.81 per hour**

 

Apprentices are entitled to the apprentice rate if they are:

  • aged under 19
  • aged 19 or over and in the first year of their apprenticeship

Example – An apprentice aged 21 in the first year of their apprenticeship is entitled to a minimum hourly rate of £4.81.

Apprentices are entitled to the minimum wage for their age if they both:

  • are aged 19 or over
  • have completed the first year of their apprenticeship

Example – An apprentice aged 21 who has completed the first year of their apprenticeship is entitled to a minimum hourly rate of £9.18.

 

Statutory Pay Rates

Statutory Sick Pay (SSP) is £99.35 per week, with the amount due based on the number of working days in the week.

Statutory Maternity Pay (SMP) and Statutory Adoption Pay (SAP) remains the same at 90% of the employee’s average weekly earnings (AWE) for the first 6 weeks. The statutory weekly rate for all weeks after this will be the lower of 90% of AWE or £156.66.

Statutory Paternity Pay (SPP), Statutory Shared Parental Pay (ShPP) and Statutory Parental Bereavement Pay (SPBP) all have the same weekly rate of £156.66 or 90% of AWE, whichever is lower.

 

PAYE Rates

Personal Allowance is £12,570 for the year. Employees can earn £1,048 monthly or £242 weekly free of tax

The standard tax code is 1257L

20% tax is due on earnings between £12,571 and £37,700 per year

40% tax is due on earnings between £37,701 and £150,000 per year

45% tax is due on earnings in excess of £150,000 per year

NIC Rates

Employer National Insurance contributions at 15.05% (including 1.25% increase for social care) are due on employee’s earnings over £9,100 per annum, £758 per month or £175 per week

No Employer NI contributions are due on earnings of apprentices under 25, employees aged under 21, or veterans of the Armed Forces in the first 12 months of their civilian employment

Employee National Insurance contributions at 13.25% (including 1.25% increase for social care) are due on their earnings over £9,880 per annum, £823 per month or £190 per week

 

 

If you require any further assistance with payroll and compliance, please get in touch via https://www.cactusbookkeeping.uk/contact/

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call

 

 

 

Making Tax Digital (MTD) for VAT- 1st April 2022 deadline

Making Tax Digital (MTD) for VAT- 1st April 2022 deadline

Mar 3, 2022 | All Categories, Making Tax Digital, VAT

Making Tax Digital (MTD) for VAT- 1st April 2022 deadline

There is no hiding from it, MTD for VAT becomes mandatory for all VAT registered businesses from April 2022, even if you are VAT registered but under the £85,00 VAT threshold.  What does this mean for your business?

 

 

  • You will now be required to file your VAT returns directly from the accounting software you use to record your day-to-day transactions.

 

Accounting software can be specific software such as FreeAgent, QuickBooks, Sage or one of the other 549 compatible software providers listed on HMRC website (https://bit.ly/3HwfQve), or, if you use  spreadsheets to calculate your VAT figures, you will need to use bridging software to report these figures to HMRC.

Records you must keep include:

  • your business name, address, and VAT registration number
  • any VAT accounting schemes you use
  • copies of all invoices/credit notes you issue
  • copies of all invoices/credit notes you received (originals or electronic copies)
  • name, address, and VAT number of any self-billing suppliers
  • import and export records
  • records of any items you cannot reclaim VAT on – e.g., business entertainment
  • records of all zero-rated items, reduced or VAT exempt items you buy or sell
  • a VAT account
  • any adjustments you make to a return

 

If you are not already using software, now is a great time to check into this.  Accounting software would be a positive move forward as you have the ability to download bank transaction into the software and attach your documents to the transactions in your software, this means everything is stored in one place.  The software will then calculate your VAT and link direct to HMRC to file the return.

 

If you bank with NatWest, RBS or Mettle business banking, you can use FreeAgent software for free.

 

Please remember your account transactions are only as accurate as the information entered and the knowledge or the person recording the transactions.  If you are unsure of what is required to comply with MTD or require assistance with choosing software, please get in touch and book a discovery call.

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call