The calm before the storm…?

Paula Veysey Smith • 4 February 2015

So, with the deadline of the 31st January out of the way for self assessment returns, life in the accounting world changes from full steam ahead to calm sailing in warm tropical waters.  We all breath a deep sigh of relief and enjoy cocktails on the deck while waiting for the next whirlwind of activity that is likely to fill our sails.  And with the end of the payroll year becoming visible a whisp of wind already stirring up giving warning of the storm that may be approaching.

However, with PAYE being reported to the HMRC in real time from the 6th Apriil 2013 we no longer have to grapple with forms P35 and P14.  We have been told in no uncertain terms that they will be rejected if we do attempt to submit them! So what happens instead?

Well, at the end of the year you must make sure that you submit your final Full Payment Submission (FPS) and/or Employer Payment Summary (EPS) for the final pay period in that tax year. HM Revenue & Customs (HMRC) uses the information that you send to make sure that you and your employees have paid the right amounts of tax, National Insurance contributions (NICs) and student loan deductions for the tax year. The information is also used in the calculation of entitlement to state benefits, tax credits and pensions.

For most employers, this means you will send your final FPS on or before your last payday in the tax year, which ends on 5 April 2014. You must also indicate on your last FPS or EPS for the year that:

It is your ‘Final submission for the tax year’ and,

answer the end-of-year questions and declaration – you can find out more about these by following the link below to the section called ‘Final submission for the tax year and end of scheme information’ in the guide ‘What payroll information to report’

You must do this even if you have not made any deductions of PAYE tax or NICs from your employees in that pay period.

Simples! Although the use of the word “most” indicates that for some employers this two step year end process isn’t quite going to be enough.  The HMRC bulletin continues on with further help and guidance for the year end requirements under RTI which I will save you the pleasure of disseminating in the bog.  Suffice it to say that if you have any concerns regarding your payroll and the ability to meet HMRC year end requirements help is very much to hand here at M:Power Accounting.

Please contact us now to ensure that when the year end of the 5th April 2014 comes around your payroll is as water tight as an ocean going vessel and no HMRC storms are going to knock you off course towards the rocky shore.

 

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by Paula Veysey-Smith • 5 June 2025
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Working from home

Working from Home Expenses You Can Claim in 2025–26

by Paula Veysey-Smith • 22 May 2025
Do you work from home? If you do, either full-time or part-time, you may be eligible to claim certain expenses either against your own taxes or your Limited Company ones. Many factors will determine what you can claim such as working location, employment status (employee, self-employed, company director), and how much of your home is used for work. What can I claim as an employee of a company? You can claim: A flat-rate allowance of £6 per week (or £26 per month) without needing to provide evidence of expenses. This is the simplest method and can be claimed via your tax code or tax return. The actual costs (if you don't use the flat rate) which can include a proportion of the following: Heating and electricity Internet and phone bills Water (if it’s metered and usage is clearly work-related) You cannot claim rent or mortgage interest unless you're self-employed. These expenses can be claimed via HMRC’s online portal if they have not already been reimbursed by your employer! What can I claim if self-employed (sole trader or via a Partnership)? Here you have two options: 1. Simplified Expenses (Flat Rate) Based on hours you work from home each month: 25–50 hours/month → £10/month 51–100 hours/month → £18/month 101+ hours/month → £26/month 2. Actual Expenses Method You can claim a proportion of: Rent or mortgage interest (not capital repayments) Utilities (gas, electricity, water) Council tax Internet and phone Cleaning and maintenance Home insurance (if work-related) You’ll need to work out the percentage of your home used for business, usually by the number of rooms (not including bathrooms, corridors, storage space) or square footage. One word of warning is never claim the whole use of a room for business as every room will have duality in use. This is also important if you own your home as a room declared purely an office could attract Capital Gains Tax when the property is sold. We suggest that any room should only be claimed at 90% for business. And only one room can be used, not a multiple! These costs should be included on your Self-Assessment tax return. Can I make a claim for these expenses in my Limited Company? Yes, you most certainly can. At MPower Accounting we not only recommend using the actual expenses method as set out above, we provide our clients with a bespoke spreadsheet to calculate these expenses, and others such as mileage, on a month-by-month basis. These amounts can then be claimed as expenses to the Company and paid out to you. It is one of the tax efficient methods of taking money from your business. Capturing and calculating monthly your regular working from home expenses is the best way of ensuring they are recorded correctly. To help you do this we are offering a free download of the spreadsheet usually only available to our clients; please use the link below to get this. Paying taxes is a necessary evil but I am a firm believer in minimising this liability for both individuals and companies. Correctly claiming working at home expenses is one way to reduce your tax bill. Please do contact us if we can help you further identifying all the expenses you can claim and also for further assistance in how to correctly use and populate the downloaded template.

Tax Efficient Salary for Directors in 2025-26

by Paula Veysey-Smith • 28 April 2025
Key changes in Employer National Insurance (NI) rates and thresholds for the 2025-26 year have meant advice on the tax efficient salary for Directors has significant altered.
A box of receipts sits on a desk next to a lamp and calculator - Making Tax Digital

How will I be affected by Making Tax Digital for Income Tax (MTD for ITSA)?

by Paula Veysey-Smith • 23 March 2025
HMRC are starting to send out letters to sole traders and landlords in the initial steps towards Making Tax Digital for Income Tax. If you receive one of these letters do not panic, help is at hand. So let’s answer your most asked questions about Making Tax Digital. What is Making Tax Digital for Income Tax? Making Tax Digital for Income Tax (MTD for ITSA) is a UK government initiative aimed at modernising the tax system. It will require individuals and businesses to keep digital records and submit tax information to HMRC using compatible software. It is part of a broader initiative to digitalise tax returns and follows on from the changes already implemented for VAT reporting. Will Making Tax Digital affect me? MTD for ITSA will affect individuals who: Are self-employed (e.g. sole traders) and/or landlords (earning income from property). Have a total income over £50,000 per year (combined from self-employment and property). Are currently required to complete a Self-Assessment tax return. From April 2026 , MTD for ITSA will be mandatory for those earning over £50,000. From April 2027 , this threshold will reduce to £30,000. What will I have to do if my earnings are over the threshold? You will need to keep digital records for income and expenses which will mean using MTD compatible software. This will be a major change for those of you still keeping paper records. Instead of submitting an annual self-assessment return you will need to submit quarterly updates 4 times a year to HMRC. At the end of the tax year an End of Period Statement (EPOS) and a Final Declaration will need to be submitted which essentially replaces the current Self-assessment return. All of these will be required digitally, paper records and manual calculations will no longer be accepted. This means that instead of 1 annual return you will need to make 6 submissions! So what software do I need to use to keep digital records? Acceptable software include: QuickBooks Xero FreeAgent Sage or, HMRC-recognised spreadsheet tools with bridging software ( not highly recommended ) No more shoeboxes of receipts or manual books — everything must be digitally recorded. When will I need to register for MTD? You’ll need to sign up for MTD for ITSA before April 2026 . This is a deadline and not a target, signing up early is always advisable. HMRC will provide a service for you to do this but having the guiding hand of an accountant will make this a much easier task.
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