November Newsletter

I am pleased to say that we have already completed and submitted a considerable number of personal tax returns for our clients. As many of you will know, the filing deadline for 2023/24 personal tax returns is 31 January 2025. For those of you who are yet to complete and return your tax return checklist and send in your information, please can you let us have this without delay, to ensure that we still have plenty of time to meet the deadline. Thank you.

Less than 6 Months to Fill in National Insurance Gaps

You have until 5 April 2025 to fill gaps in your National Insurance records for all years from 6 April 2006 to 5 April 2018, which could boost your State Pension if eligible. After the deadline, you will only be able to make voluntary contributions for the previous 6 tax years, in line with normal time limits.

Click the link here – Voluntary National Insurance to quickly and easily check if you have gaps in your National Insurance record. You can calculate if making a payment would increase your State Pension and then make a payment if you wish to do so.

State Pension Entitlement

If you have any concerns about your State Pension entitlement, you may wish to check this sooner rather than later to ensure that your National Insurance contributions are up to date. 

Checking your record is generally an easy process. By clicking the link you can sign in or set up your Personal Tax Account. If you aren’t able to use this service, you can either apply online or complete an application form, both of which can be found here – Application for a State Pension Forecast.

This is particularly relevant to self-employed individuals who historically paid Class 2 NICs separately and in recent years paid via their self-assessment payments. With effect from 6 April 2024 Class 2 NICs were scrapped and although this won’t effect the State Pension entitlement for individuals whose profits are above £6,725, for self-employed individuals whose profits are below this, you will have no National Insurance credited to your record. You will have the option to pay Class 2 NICs voluntarily, if you wish to build your entitlement to State Pension and other contributory benefits.

Vantage Tax Fee Protection Cover

Each year HMRC undertakes an enormous number of tax enquiries into individuals and businesses to check they have paid the right amount of tax. HMRC has also invested a further £36m on initiatives and resources to crack down on people boosting their income through sideline businesses and online sales.

In addition, HMRC has increased its compliance checks for R&D Tax Credits. From previously reviewing about 1% of claims, HMRC has escalated this figure to an unprecedent 20%.

We offer our clients the option of subscribing to Tax Fee Protection cover, as our normal annual fees do not cover the costs of dealing with tax enquiries and compliance checks. If you are selected for an enquiry, you will need us to assist you every step of the way. We will always robustly defend you and demonstrate that you are paying the correct amount of tax. Even a very basic tax enquiry can easily result in hundreds or even thousands of pounds of additional fees, even if it is found that no extra tax is payable.

Annual renewal client invitation letters and new client invitation letters will be sent out in the post at the end of this month – please note that these will come directly from Vantage, the service provider. You can view a sample Summary of Service here – Vantage Summary of Service.

HMRC App

The HMRC app is a quick and easy way to obtain information about your tax, National Insurance, tax credits and benefits. It’s FREE to download and can be set up quite quickly. You can use it to check your:

• Tax Code
• National Insurance number
• Income and benefits
• Employment and income history from the previous 5 years
• Tax credits, when they will be paid and how much you will receive
• Unique Taxpayer Reference (UTR) for self-assessment
• Self-assessment tax and how much you owe
• Child Benefit
• State Pension forecast
• Gaps in National Insurance contributions and if you can make a payment

You can also use it to:

• Obtain an estimate of the tax you need to pay
• Make a self-assessment payment
• Set a reminder to make a self-assessment payment
• Report tax credits changes and complete your renewal
• Access your Help to Save account
• Work out your take-home pay after Income Tax and National Insurance deductions
• Track forms and letters you have sent to HMRC
• Claim a refund if you have paid too much tax
• Ask HMRC’s digital assistant for help and information
• Update your personal details

How to Access the App

Download the FREE HMRC app from either App Store for iOS or Google Play Store for Android then follow the onscreen instructions to complete the setup.

Open the app and enter your Government Gateway User ID and password to sign in for the first time. If you don’t have a user ID, you can create one via the app. You’ll then be able to access the app quickly and easily by signing in using either:

• A 6-digit PIN
• Your fingerprint
• Facial recognition

HMRC to Reduce Late Payment Interest

Late payment interest rates on underpaid taxes will soon decrease again, due to the recent reduction in the Bank of England’s base rate.

What are the New Charges?

On 7 November 2024 an announcement confirmed a reduction in the Bank of England base rate to 4.75% from 5.0%. As HMRC’s late payment and repayment interest rates are linked to the base rate, it has been confirmed that they will also come down.

From 18 November 2024 the following rates will apply:

• Late corporation tax paid quarterly – 5.75%
• Interest on overpaid corporation tax – 4.5%

From 26 November, the rates for other taxes will be:

• Late payment interest – 6.75%
• Interest on overpaid tax – 3.75%

Penalty interest can be avoided by paying your tax bill on time. As an added bonus to anyone expecting to receive interest on overpaid taxes, note that such interest is free from income tax.

How We Can Help

At Clear Vision, we’re always eager to guide and assist our clients – how ever you need us to support you through your journey as a business owner, we’re here for you!

If you have any specific questions about any matters within this month’s newsletter and how they may affect you or your business, do please get in touch with us.