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Higher-earning parents risk Self Assessment penalties

16 - 01 - 2014

Higher-earning parents may risk an immediate £100 fine from HMRC if they fail to file a Self Assessment tax return by the deadline of 31 January 2014. 



Around 110,000 higher-earning parents, many of whom will be filing a Self Assessment for the first time, may face the tax charge because they receive child benefit.

 

 

Changes to Child Benefit

 

Under the new rules, families with one parent earning more than £60,000 a year will see their child benefit withdrawn completely and families with one parent earning above £50,000 will see their payments substantially reduced.  

 

If parents continued to receive child benefit after January 2013, then they must pay some of that back in a tax charge. If one parent has a taxable income of more than £60,000, then they must pay it all back.

 

Eligible child benefit claimants receive £20.30 per week for the first child and £13.40 a week for any subsequent children.

 

Although an estimated 90% of the 1.1 million parents affected have already registered for Self Assessment, or opted out of receiving child benefit, tens of thousands of people have yet to register.

 

Don’t miss the deadline

 

If you still haven’t filed your 2012-2013 tax return with HMRC, you will need to do it online and pay your tax liability by the end of January.

 

The initial penalty for late filing is £100. Under the new fines structure introduced last year, late filing penalties will apply even if people have no tax to pay or the tax owed is less than the penalty applied.

 

After three months, additional fines of £10 per day start to accrue. There are also additional new penalties for paying late of 5% of the tax unpaid at 30 days, 6 months and 12 months. 

 

Around 10.9 million people are expected to file tax returns online with HMRC for 2012-13.

 

In 2013, around 578,000 people filed their tax returns on the 31 January, only narrowly avoiding a late filing penalty.

 

 

Still need to file your tax return?

 

The final deadline for online returns is 31 January. Paper returns must have been completed and returned by 31 October.

 

Online filers will need to be registered for HMRC Online Services and have a valid Activation Code, which can take a few days to arrive in the post. To register for HMRC Online services, visit: www.hmrc.gov.uk/online.

 

If you already file online you should not need to re-register.

 

Further assistance can be obtained by calling the HMRC Self Assessment helpline on 0300 200 3310 (open 8.00am to 8.00pm, Monday to Friday, and from 8.00am to 4.00pm on Saturdays) or by visiting www.hmrc.gov.uk/sa.

 

HMRC also has an online calculator to allow people to check how much child benefit they need to include in their return.

 

Foremans can help

 

Short of time? The team of expert tax Advisors at Foremans LLP will be happy to assist you with your query. You can contact us on 01244 625 500.

 



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WEEKLY INCOME INFORMATION

Number Of Weeks
Tax Code
Primary Hours
Primary Rate In £
Secondary Hours
Secondary Rate In £
Other Hours
Other Rate In £
Weekly Bonus In £
Total Anticipated
Income For A Week
-
Anticipated Annual
Pre Tax Income
-
NORMAL WEEKLY EXPENSES
Miles Per Week
Other Expenses Per Week
Annual Mileage
-
Mileage Expenses
-
Total Annual Expenses
-
FLAT RATE VAT

Choose the Industry Sector that you work in. Use the drop down menu in the usual way.

The VAT Flat Rate Applied -

WARNINGS

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RESULTS TABLES

COMPARISON TABLE FOR NET INCOME

BUSINESS STRUCTURE
CORPORATE
SOLE TRADERS
UMBRELLA
AGENCY
Post Tax Weekly Pay
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-
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-
Avarage Hourly Take Home Pay
-
-
-
-
Annual Take Home Pay
-
-
-
-
Plus Taxed Holiday Pay Fund Less Higher Rate Dividend Tax
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-
-
-
Annual Take Home Pay
-
-
-
-

RELATIVE INCOME BY STRUCTURE

BUSINESS STRUCTURE
CORPORATE
SOLE TRADERS
UMBRELLA
AGENCY
Measured against PSC
Measured against PSC
Measured against PSC
Worse off
Weekly by :-
-
-
-
-
Worse Off
Annually by :-
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-
-
-
Measured against AGENCY
Measured against AGENCY
Measured against AGENCY
Worse off
Weekly by :-
-
-
-
-
Worse Off
Annually by :-
-
-
-
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Fixed Data

PAYE

Tax Code L between 0 and 999.
0
Tax Rate
Personal Allowance
£11500.00
0.00%
Lower
£0.00
0.00%
Basic up to
£33500.00
20.00%
Higher above
£33501.00
40.00%

Statutory rates

National Minimum Wage
£7.50
Holiday Pay
10.77%
Mileage Rates
Per Mile
Up to 10,000 miles
£0.45
10,000 miles
£0.25

CIS

Rate
Percentage
Gross
0.00%
Standard
20.00%
Higher
30.00%

Corporation tax

Small Company Tax Rate
19.00%

National insurance

Primary Threshold
£8164.00
Secondary Threshold
£8164.00
Employers NI between PT and UEL
13.80%
Employees NI above UEL
12.00%
Employees NI
2.00%
Class 4 NI between LPL and UPL
9.00%
Class 4 NI above UPL
2.00%
Class 2 NI
£2.85
Annual LEL
£5880.00
Annual UEL / class 4 upper profits
£45000.00
Class 4 Annual lower profits limit
£8164.00
Weekly PT
£157.00
Weekly LEL
£113.00
Weekly UEL
£866.00

UMBRELLA COMPANY

Holiday pay accrual
 
Is Holiday Pay being accrued?
Yes

AGENCY INFORMATION

Agency Uplift Applied
10.00%

Assumptions



General                                                                                                                              

  • The user is over 21 and subject to tax in the UK
  • The user wishes to minimise their tax liability
  • The user is subject to national insurance i.e.he/she is not over retirement age
  • Only current tax rates and limits are applied
  • No tax mitigation payments are made e.g. pension contributions
  • Only 3 digit letter 'L' tax codes shown in the drop down list can be entered 
  • The user does not have a turnover greater than £100,000 where fewer reliefs and or higher taxes may apply

Expenses

  • All miles claimed as expenses are for business use using a personally owned car or van
  • All other expenses claimed are wholly, necessarily and where appropriate exclusively for the benefit of the business

Foremans LLP Charges

  • Foremans fees associated with Limited Company, Sole Trader or Umbrella are as per published rates
  • Foremans current Service Costs are allowed for in all calculations.

Holiday Pay

  • Holiday pay is accumulated week by week by Umbrella or Agency employer but paid out during the year

VAT

  • Limited Company or Sole Trader will be VAT registered
  • Limited Company or Sole Trader will take advantage of Flat rate VAT
  • Flat rate applied includes the benefit of the additional 1% applicable to the first year of VAT registration

Limited Company Conditions

  • One director / one shareholder in a Personal Service Company
  • Director of Personal Service Company elects to vote for 100% dividend after salary, costs and expenses
  • Director's salary is maximum salary to the primary threshold for NI
  • The Limited Company is trading normally i.e it is not subject to IR35 and is not a Managed Service Company

NOTES

  • The Current tax rates are taken from the Fixed Data Table
  • The current Value Added Tax Rate is 20% and is applied to all invoices and expenses as appropriate
  • The Director's Salary is fixed in relation to National Insurance thresholds. Higher Rate Taxpayers should consider the advantages and disadvantages of a larger annual salary or bonus
  • Higher Rate Taxpayers may wish to consider the advantages and disadvantages of shared ownership of their business
  • Users with a tax code other than three digits and letter "L" may telephone or email our Development Department to request a detailed calculation
  • Generally the use of an Umbrella rather than an Agency payroll is only efficient if sufficient weekly expenses are allowable and claimed
  • The expenses claimed under an Umbrella should not prevent the proper operation of National Minimum Wage
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Foremans LLP
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