Anna’s Accountancy Alerts – Week 22 (30th August – 5th September 2021)

small business

TTS Demo

Penalty regime for VAT and income tax self-assessment

The new regime will apply to:

  • VAT businesses for accounting periods beginning on or after 1 April 2022
  • income tax self-assessment (ITSA) individuals with business or property income over £10,000 per year for accounting periods beginning on or after 6 April 2023
  • all other Income Tax Self Assessment (ITSA) taxpayers for accounting periods beginning on or after 6 April 2024

 

Under the new system, penalties will be points-based rather than automatic. Instead of getting an automatic fine, the taxpayer will get a penalty point. If a certain threshold of points is reached, a financial penalty of £200 will be charged.

The table below shows the penalty points threshold:

Submission Frequency

Penalty threshold

Annual

2 points

Quarterly (including Making Tax Digital for ITSA)

4 points

Monthly

5 points

Expiry of individual points over time

Points will have a lifetime of two years, after which they will expire.

After a taxpayer has reached the penalty threshold, all the points accrued within that points total will be reset to zero when the taxpayer has met both the following conditions:

  • a period of compliance
  • the tax payer has submitted all the submissions which were due within the preceding 24 months

The periods of compliance are shown in the table below:

Submission Frequency

Period of compliance

Annual

24 months

Quarterly (including Making Tax Digital for ITSA)

12 months

Monthly

6 months

Time limits

HMRC has the following time limit to apply points; it cannot apply a point after the times specified below:

Submission Frequency

Time limit for levying a point

Annual

48 weeks

Quarterly (including Making Tax Digital for ITSA)

11 weeks

Monthly

2 weeks

 

Student loan types

Following changes introduced in April 2021, there are now 4 types of student loans collected through Pay As You Earn and the Self Assessment system:

  • Plan 1
  • Plan 2
  • Plan 4 (introduced from April 2021)
  • Postgraduate loans

 

Each loan plan type have different thresholds and, in some instances, rates for calculating student loan deductions.

It is important that you:

  • check your online account for either student loan or postgraduate loan, or both, start and stop notices
  • let HMRC know immediately if your email or correspondence address has changed
  • take the correct action to start student and or postgraduate loan deductions as soon as possible
  • record the deductions correctly on your Full Payment Submission

Payment of National Minimum Wage to apprentices

All apprentices are entitled to be paid at least the National Minimum Wage.

Mistakes can be easy to make, and employers might not always realise when something has gone wrong.

The most common errors on apprentice pay are:

  • failure to pay the higher age-related minimum wage rate to those apprentices who are aged 19 and over and have completed the first year of their apprenticeship
  • paying the £4.30 per hour minimum wage rate before or after an apprenticeship actually starts or finishes
  • not paying for all of the time worked by an apprentice, training time is working time

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