13th September 2024 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

Do you need to register for self-assessment?
HM Revenue and Customs (HMRC) have issued a press release debunking some common myths about whether or not someone needs to register to complete a self-assessment tax return.

The basic requirement is that anyone who needs to complete a self-assessment return for the first time to cover the 2023-24 tax year, needs to tell HMRC by 5 October 2024.

Here are the myths and the realities highlighted by HMRC:

Myth: I don’t need to file a return because HMRC hasn’t been in touch.
The reality is that it is each taxpayer’s responsibility to determine whether or not they need to complete a tax return.

You may need to register and complete a tax return if you:

• have started to be self-employed and earned gross income of more than £1,000.
• earned below £1,000 but want to pay voluntary Class 2 National Insurance contributions to protect your pension and benefit entitlements.
• have become a new partner in a partnership.
• have received untaxed income above £2,500.
• need to pay the High Income Child Benefit Charge because you receive Child Benefit and you or your partner earned more than £50,000.

Myth: Tax has to be paid at the same time as the return is filed
The deadline for paying tax for the 2023-24 tax year is 31 January 2025. Tax can be paid any time before this date, it does not need to be paid at the same time the return is filed.

Myth: I don’t need to file a return because I don’t owe any tax
Tax returns need to be completed to claim tax refunds and to claim tax relief on business expenses, charitable donations, and pension contributions. A return also needs to be completed to be able to pay voluntary Class 2 National Insurance Contributions if you want to protect your pension and benefit entitlements.

Myth: HMRC won’t expect a return from me if I don’t need to file one
Taxpayers need to tell HMRC if they no longer need to file a tax return, perhaps because they’ve stopped being self-employed or stopped renting out a property. Especially if HMRC have sent you a notice to file a tax return they will expect one and keep reminding you and may charge a penalty if they don’t receive it.

If you think you don’t need to complete a return it is best to tell HMRC as soon as your circumstances change.

Myth: I have to file a tax return and pay tax on things I sold after clearing out the attic
Although there has been speculation on this, the tax rules are that selling old clothes, books, CDs and other personal items through online marketplaces do not trigger a requirement to file a return or pay income tax on the sales.

If you are not sure whether you need to file a tax return for the 2023-24 tax year, please just get in touch with us. We’ll be happy to let you know what you need to do and to contact HMRC on your behalf.

See: https://www.gov.uk/government/news/need-to-register-for-self-assessment-top-5-myths-debunked
 
October budget to be “painful”
The Prime Minister, Sir Keir Starmer, speaking from Downing Street last Tuesday, has said that the budget in October will be “painful” and the government would be making “big asks” of the country.

He said that the country would need to be prepared to “accept short-term pain for long-term good” and that those with the “broadest shoulders should bear the heavier burden”.

However, no details were given about what the measures would be, other than Sir Keir reiterated that national insurance, VAT and income tax would not go up.

What could change?
There are a number of areas of tax that may be increased, and these could include the following:

• Focus on tax thresholds: By freezing thresholds – the amount of money at which any tax starts to be paid – the government collects more tax as more people are caught by higher rates of tax as their wages rise. Income tax thresholds are already frozen until 2028 and this could be extended. 
• Increases in capital gains tax – Capital gains tax rates are lower than income tax rates, so the government may look to increase these.
• Reduce pension tax relief – Currently pension savers receive tax relief at the same rate as their income tax. However, there has been speculation that a flat rate of pension tax relief could be brought in and this would raise funds for the government. 
• Raise inheritance tax – The government could raise the rate of inheritance tax or remove some of the reliefs that are available.

If you are concerned about how the budget may affect your situation, please feel free to talk to us at any time and we would be happy to advise you. We will be monitoring the October 30th budget very closely and update you on all the changes!

See: https://www.bbc.co.uk/news/articles/clyn01p5npgo
 
Government crackdown on illegal employment: What business owners need to know
Last month, the Home Secretary, Yvette Cooper, announced a significant government crackdown on employers hiring migrants illegally.

Overview of the government's crackdown
From Sunday 18 to Saturday 24 August, Immigration Enforcement teams carried out a series of targeted visits to businesses suspected of employing illegal workers, with a particular focus on car washes. Over this intensive week of action, more than 275 premises were targeted. Of these, 135 businesses were issued notices for employing illegal workers, and 85 illegal workers were detained.

Potential consequences for non-compliant businesses
The penalties for employing illegal workers are severe. Businesses found in violation can face substantial financial penalties. The maximum civil penalty for employing illegal workers is £45,000 per worker for a first offence and £60,000 per worker for repeat violations.

Key takeaway for business owners
In view of the potential penalties, it’s vital you ensure that your business is fully compliant with all employment laws. This includes conducting the necessary right-to-work checks on all employees to ensure they have the legal right to work in the UK.

If you have any concerns or need advice, please get in touch with us. We will be happy to help you.

See: https://www.gov.uk/government/news/hundreds-of-rogue-employers-targeted-in-illegal-working-crackdown
 
Lessons from the Labour Party's reprimand on information requests
As a business owner or manager, it's important to respond promptly to information requests, especially when it comes to Subject Access Requests (SARs).

The recent reprimand issued to the Labour Party by the Information Commissioner’s Office (ICO) serves as a reminder of the legal obligations and potential consequences of failing to meet these requirements.

What happened?
The Labour Party was reprimanded by the Information Commissioner’s Office (ICO) for repeatedly failing to respond to SARs in a timely manner. SARs are requests from individuals asking an organisation to provide any personal information it holds about them and details on how it is being used.

Under data protection law, organizations must respond to these requests within one month, with a possible extension of up to two months for complex cases.

However, an investigation by the ICO found that the Labour Party had a significant backlog of SARs following a cyber-attack in October 2021. By November 2022, they had 352 outstanding SARs, 78% of which had not been responded to within the mandatory three-month timeframe. Alarmingly, over half of these requests were delayed by more than a year.

Moreover, a previously unmonitored ‘privacy inbox’ was discovered, containing approximately 646 additional SARs and 597 requests for personal information to be deleted. None of these requests had been addressed.

What can you do?
While the number of information requests received by most businesses are likely to be much less than the Labour Party, you still need to be careful about responding to requests in a timely way.

To do that you could consider:

• Writing down clear processes for handling SARs and making all staff aware of these procedures and the importance of timely responses.
• Deciding whose responsibility it is to monitor and handle SARs, and making sure they have the resources available to handle the task.
• Regularly monitoring all communication channels, such as designated email addresses, to your business where a SAR might be submitted.
• Regularly reviewing the ICO’s guidance on SARs so that your business stays informed about legal requirements and best practices.

The reprimand issued to the Labour Party by the ICO serves as a good reminder of the importance of responding to SARs in a timely manner. As a business, failing to comply with these requirements can result in legal consequences, damage to your reputation, and a loss of trust among your customers and the public.

By making sure you implement procedures to deal with SARs, you can avoid these risks and demonstrate your commitment to data protection and individuals’ rights.

See: https://ico.org.uk/about-the-ico/media-centre/news-and-blogs/2024/08/action-taken-against-labour-party-for-failing-to-respond-to-requests-for-personal-information-on-time/