#TaxReturn

Time To Pay – Income Tax And VAT Deferred For The Self-Employed

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Time to Pay

Time to Pay will give self employed workers more time to pay their self-assessment tax bills. The Chancellor announced in his Winter Economy Plan that outstanding tax bills due by January 31 could be paid over the following 12 months. The extension is designed to help workers and businesses that are struggling to pay and cannot meet the January 31 2021 deadline because of COVID-19. In the latest article form Caroline Streatfield Bookkeeping, we give you a quick reminder of how self-assessment works, how you access the Time to Pay scheme, the instalment process, and how to get help should you need it.

You will still need to file your tax return by 31 January 2021

Those in the self-employed category usually fall within the Self Assessment system and have to file their tax return and pay their tax bill by 31 January every year. Some also have a second deadline date in July, which is known as payment on account. This had previously been extended until 31 January 2021. These payments can now be deferred further until January 2022. But if you do want to use the HMRC Time to Pay option, you must do it as soon as possible. HMRC does charge interest on late payments and penalties if you are more than 30 days late. However, businesses that can make their tax payments should do so.

Time to Pay

Paying in instalments – how Time to Pay works

Once you have filed your Self Assessment tax return, you may be able to pay instalments so the full amount is delayed until 31 January 2022. It should be noted that interest will be applied to the outstanding balance, starting from February 1 2021. However, additional penalties such as interest and any outstanding penalties will not be charged.

  • You owe £30,000 or less
  • You do not have any other payment plans or debts with HMRC

You will then be able to choose how much to pay straight away and how much you want to pay each month. This will be based on your individual circumstances, as you will need to complete an income and expenditure assessment. This will work out how much you can afford to pay and how much time will be required to pay the debt in full. Time to Pay is flexible and HMRC won’t usually ask you to pay more than 50% of your disposable income.

Setting up a payment plan

You can set up a payment plan online or call the Payment Support Service. When you set up online, you will need your Government Gateway User ID and password. In order to be eligible, you must not have any outstanding tax returns or other tax debts or any other HMRC payment plans set up. HMRC has changed its Time to Pay service for people who would incur financial hardship or personal difficulty, making it easier to set up an online plan. If you do need to talk to somebody, call 0300 200 3822 for the helpline, which is available form Mon-Fri 0800-1600. Ask to talk about Time to Pay.

Changes to the VAT deferral scheme

Businesses who chose to defer their VAT payments between March and June 2020 will now be able to make interest-free payments over the 2021-22 tax year. This option is available, rather than paying the full amount by March 2021. Again if you can make your payments you should do so. More information will be available soon.

How can Caroline Streatfield Bookkeeping Help Your Business

There really isn’t long to go before the deadline of 31 January to file your tax return online. If you want to take advantage of the Time to Pay scheme, you must do it now. The team at Caroline Streatfield Bookkeeping is here to help if you are struggling or require more information. Call us on 07982 682746 or 01323 885205 or email info@bookkeepereastbourne.co.uk to find out more.

Time to Pay

How Useful Is A Cash Flow Forecast?

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A Cash Flow forecast is not ‘an interesting piece of information’ to have, it’s an essential tool for your business planning. You could say that every business should have one. It will help to identify if there are peaks and troughs in your business. It will identify that perhaps more money comes in (inflow) or goes out (outflow) at a particular time of year. The forecast usually covers a period of 12 months with a month-to-month analysis, although some businesses may require a day-to-day analysis and larger companies may need to produce a cash flow forecast for 3-5 years. In the latest article from Caroline Streatfield Bookkeeping based in Eastbourne in East Sussex, we look into the definition of a cash flow forecast, how it will help your business and why you need one.

What is a cash flow forecast?

This predicts the net cash flows of your business for a future period. It determines what will be coming into your bank account and what will be going out. By discovering these figures, you will have an estimate of your bank balance for each period covered, for example each month. In the perfect scenario, you will be looking for your cash inflows to be more than your cash outflows. The elements involved in a cash flow forecast are the opening balance, monies received, monies going out, the difference between these which can be a negative or positive figure and of course your closing bank balance.

How will a cash flow forecast help your business?

 If you are a new business, it will initially help you to identify how much capital you need for your start-up costs and cover initial trading.

  • Highlight any shortfalls in your cash balances
  • Identify any increases in costs
  • Give the trading performance of your company
  • Analyse your business to check it is performing as you want it to

An early warning system for you to take the necessary action

If there is a potential shortfall in income, a cash shortage or increases in your costs are expected, it will act as an early warning system and give you the opportunity to take action. This could determine if you need a loan or an overdraft and if you do need to borrow money, how much your business can afford. It will also act as a guide so that you can stay on track and remain within your financial limits.

Why do you need a forecast?
  • To pay suppliers and employees
  • Your bank may want to see it
  • Helpful for financial planning
  • Keep track of overdue payments
  • Plan for shortfalls
  • Manage surplus cash

The bottom line is that you need a healthy cash flow

It may be a clichéd saying but in business, “Cash is King”! Without a healthy cash flow, your business won’t survive. And it is particularly important for SMEs and start-ups to know where they stand in financial terms. If you know in advance that you have a potential shortfall looming, you can do something about it.

Contacting Caroline Streatfield Bookkeeping for your cash flow forecast

Used effectively, a cash flow forecast is a very valuable tool to have for your business. It is in essence central to maintaining the financial stability of your company. If you need help with your cash flow forecast, why not talk to the experts at Caroline Streatfield Bookkeeping? We work with a lot of start-ups and SMEs who find keeping track of their finances essential for keeping their companies running smoothly. For more information, call Caroline on 07982 682746 or 01323 885205 or email info@bookkeepereastbourne.co.uk

January 31st Is Looming – Last Call To File Online And Pay Your Taxes

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Christmas and New Year have come and gone and January 31st 2020 will soon be here. Here at Caroline Streatfield Bookkeeping based in Eastbourne with clients throughout Sussex, we’ve been helping you with Self Assessment including articles about Allowable Business Expenses and Capital Expenses and in our latest blog, we’re going to clarify a few more points including, who needs to file, how you register and send, some helpful tips for filling out the form and the penalties that you might incur if you don’t file and pay.

Who Needs To Send A Tax Return?

You are required to send a tax return if during the last tax year, 6th April 2018 to April 5th 2019, you find yourself in the following categories:

  • You are self-employed as a ‘sole trader’ and you have earned more than £1,000
  • You are a partner in a business partnership

You may also need to send in a self assessment form if you have any other income that is not taxed including:

  • Monies received for renting out a property
  • Tips and commission
  • Income from savings, investments and dividends
  • Foreign income

Registering and Sending

The online service is available so that you can fill out and send your tax return to HM revenue and Customs (HMRC) and if you don’t finish it, don’t worry as you can go back to it at anytime. You’ll also be able to check all of your details, view your return and print your tax calculation.

If you haven’t filed before, you will need to register and once you have done this, you will be sent your Unique Taxpayer Reference (UTR). Once you have set up your account, you will receive an activation code in the post.

 

Filling Out The Form

This can be somewhat daunting and there is certain information that you will need. The HMRC does provide help sheets and supplementary pages or you can contact your bookkeeper for help.

  • 10 digit UTR
  • National Insurance number
  • Untaxed income details
  • Records of expenses relating to your self employment
  • P60
  • Any contributions to pensions or charities that might be eligible for tax relief

Penalties

Let’s face it, nobody wants to be hit with a penalty and you will get one if you miss the deadline for submitting your self assessment form or you fail to pay the tax you owe. The penalty is £100 if your tax return is up to 3 months late or your payment is not received in time and you will also be charged interest on late payments.

Conclusion

There really isn’t long to go and if you haven’t done it yet, this is your last urgent call. If you are filing online you need to submit your return by midnight on 31st January 2020 and you must pay any tax that you owe by this date as well.

What To Do Next

If you’re not sure, please do get in touch with Caroline Streatfield Bookkeeping in Eastbourne. Call us on 07982 682746 or email to find out how we can help you. We will visit your home or workplace within East Sussex and can also work remotely to cover other locations, which are further afield.

Keep looking at our website for future tax changes that will be coming into force in 2020.