Claiming unpaid mileage

Claiming unpaid mileage by employer?

If your employer doesn’t pay for mileage allowance at all you are entitled to claim Mileage allowance relief (MAR) on your work-related mileage at the HMRC advisory mileage rates.

For the first 10,000 miles for cars and vans the rate is 45p, then the rate drops after 10,000miles to 25p per mile. for motorcycle this is 24p for all mileage and Bicycles is 20p per mile. Remember you can claim up to 4 years if you have not done the claim previously.

If you are reimbursed by your employer at a lower rate than the HMRC approved mileage rates, you are entitled to Mileage allowance relief (MAR) for the difference. For example, if you drive your own car and have been reimbursed at 30p per mile for 3000 miles, you can claim the mileage allowance relief on £450 (3000*0.15).

How do I claim mileage relief?

The are 2 ways you can claim for mileage tax relief:

  1. If you already complete a tax return (self assessment) the mileage claim can be added on the business travel (on the employment pages on your tax return)
  2. Submit your claim using a P87 form. This can be submitted online through the HMRC Government Gateway, or printed and sent by post.

Remember to claim mileage allowance you will need to keep a mileage log/record for all business trips done during the year. For record to be sufficient as per advisory you need the records to contain the following details:

  • Date of trip
  • Distance covered.
  • Start and finish point always good idea to included full address and post code.
  • Total mileage
  • Mileage allowance already received from employer.

With advanced technology nowadays you do have apps you can use to track your mileage, or a hard copy record is also sufficient. You can find more information on how to make a tax relief claim here.

For more information about mileage and expenses claim, or If you have any further questions about tax reliefs, or any other accounting matters, please contact us. We can offer this as a service, but it will incur a small fee.

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Autumn Statement 2023

On 22nd November 2023, the Chancellor of the Exchequer, Jeremy Hunt, set out the UK Government’s plans for the country’s economic growth in the 2023 Autumn Statement. This blog will outline the effects of these announcements on the public.

Growth, Inflation & GDP

It has been announced that forecasts produced by the Office for Budget Responsibility (OBR) show that the UK economy will grow by 0.6% this year and is now 1.8% larger than it was pre-pandemic. This is despite predictions in March that it would shrink by 0.2%. The rate of growth predicted earlier this year, however, was higher, meaning that the current forecast sees only a 0.6% improvement in growth for 2027 when compared with the March projections.

Inflation is currently at 4.6% and it is expected to fall to 2.8% by the end of 2024. A target of 2% has been set for 2025.

The Autumn Statement shows that GDP is expected to rise over the next four years, reaching 2% in 2027.

National Living Wage

From April 2024, the National Living Wage will increase to £11.44 per hour. This is a 9.8% increase from the current rate of £10.42. It is important to note that from April 2024, the rate bracket for ages 21-22 will be scrapped; workers aged 21 and over will be entitled to the National Living Wage.

Rates for the 2024 National Minimum Wage (workers aged 20 and under) are as follows:

  • Under 18s and apprentice rates – £6.40 per hour
  • 18–20 year-olds – £8.60 per hour

Please note that the apprentice rate only applies during the first year of the apprenticeship if the apprentice is aged 19 or over.

Employee National Insurance

Starting on 6th January 2024, Employee National Insurance will be cut to 10%. This is a 2% decrease from the current rate of NI. On an average salary of £35,000 a year, there will be a saving of £450. The government believes that decreasing employment taxes will increase employment rates as a higher net wage acts as an incentive to find work.

Taxing the Self-Employed

Self-Employed individuals currently pay Class 2 National Insurance at £3.45 per week (if your profits are over £12,570) and Class 4 National Insurance at 9% on profits between £12,570 and £50,270. The Chancellor has announced a reform for how the self employed are taxed. This means that, from April 2024, the Class 4 NI rate will be reduced to 8%. Class 2 NI will be abolished.

Pensions

In line with the pensions triple lock, the state pension will increase by 8.5% to £221.20 per week.

A call for evidence has been launched by the government relating to a “lifetime provider model” of pension schemes. This would allow contributions to be paid into an existing scheme when changing employers, rather than having several “small pot” pensions.

Benefits & Back to Work Scheme

It has been announced that Universal Credit and other benefits will be increasing by 6.7% from April 2024. This is in line with the September 2023 inflation figure.

£1.3 billion is set to be invested over the next five years to help those with health conditions find work. A new “Back to Work” scheme will also be introduced which will implement mandatory work placement for claimants who have been unemployed for 18 months. If this is not engaged with the claimant may have their benefits claim closed.

Full Expensing

Full expensing is a form of relief which allows businesses to claim 100% of capital allowances on investments in qualifying fixed assets. This was originally intended to cease in March 2026; however, it has been announced today that it will now be implemented permanently.

Research and Development

The Research and Development Expenditure and SME relief schemes will be merged in an effort to simplify tax. The tax rate applied to losses will be reduced to 19%. This will apply to R&D expenditure incurred during accounting periods beginning on or after 1st April 2024.

Additional Announcements

The following information has also been announced within the Autumn Statement:

  • The local housing allowance, which has been frozen for three years, will increase, being raised to the 30th percentile of local market rents.
  • The Small Business Procurement Act means that 30-day payment terms will now apply throughout the subcontract chain.
  • The small business multiplier has been frozen for another year. It has remained at 49.9 pence since the 2020-21 tax year.
  • Business rates relief for hospitality, retail and leisure has been extended for another year.
  • Alcohol duty will be frozen until August 2024.
  • Tobacco duty will increase from 22nd November 2023.
  • A further four investment zones will be introduced. These will be in the East Midlands, West Midlands, Greater Manchester and Wrexham, Wales. They hope to increase employment in those areas.
  • Increased funding has been proposed for apprenticeships, technology and AI development, and regeneration projects.
  • £4.5 billion has been proposed for supporting companies on the approach to the Net Zero deadline over the next 5 years.

If you have any concerns regarding the changes set out in the Autumn Statement and how they could impact you and your business, do not hesitate to contact us. You can find our contact information here.

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Student Loan Changes 2023

Last year, the government announced several significant changes to student loan plans. You may have noticed that your own loan deductions have changed since April 2023, or that a new plan will be implemented for this year’s students. In this blog we discuss how these updates will affect you.

Current Student Loan Schemes

Currently, there are four student loan repayment schemes. The scheme you pay through is dependent on criteria such as the country where you are based and when you started your studies. The current schemes are:

  • Plan 1 – Applies to all students, UK-wide, whose loans were taken before September 2012.
  • Plan 2 – Applies to English and Welsh borrowers from September 2012.
  • Plan 4 – Student Award Agency Scotland Loans
  • PGL – Postgraduate loans for England and Wales (PGL can also be called Plan 3)

You will only make repayments when your rate of pay passes the annual threshold. This, and the rate of deduction, is dependent on your loan scheme. The thresholds applied from April 2023 are in the table below:

Loan PlanPrevious Annual ThresholdAnnual Threshold from April 2023Rate of Deduction
1£20,195£22,0159%
2£27,295£27,2959%
4£25,375£27,6609%
PGL£21,000£21,0006%

Plan 5

A new student loan scheme called Plan 5 will be introduced for English individuals taking student loans from 1st August 2023, in place of Plan 2. The deduction rate shall remain at 9% of pay, but the threshold shall fall to £25,000 per year. This works out to £2083 per month, or £480 per week. This threshold shall remain until April 2028, after which it shall increase in line with the retail price index. This scheme will also increase the repayment period so that loans will be cleared after 40 years, rather than the usual 30.

Students on Plan 5 will not be expected to make payments until April 2026 at the earliest. This includes students who leave their courses early. The scheme will only apply to English borrowers as Welsh students shall remain on Plan 2.

Example:

If you were paid a salary of £26,000, you would only need to repay the 9% on the £1000 exceeding the threshold. This equates to £90 per year. If your salary was £30,000, you would be paying £450 per year.

By using this rule of £90 to pay per £1000 over the threshold you will be able to predict the contributions you are due to pay per year.

How are Student Loans Paid?

If you are employed, repayments are taken from your salary by your employer, much like tax and National Insurance. The amount deducted per pay period will be displayed on your payslips.

If you are employed but also complete a tax return you must include the total amount paid during the tax year. This figure will be reflected on a P60.

If you are self-employed the amount you owe will be calculated and included on your Self Assessment, and you will pay the amount at the same time as your tax. The figure can either be calculated before submission by your accountant, or by HMRC once it is submitted.

If you are self-employed and in need of advice, or if you are unsure if you need to complete a Self Assessment, please review the information on our page.

How to Apply for Student Loans

HMRC offer a step-by-step guide on applying for student loans. It will allow you to check if you are eligible and how large your loan can be. It also gives advice on reapplying during your study (which must be done each year of your course) and what happens with payments once you leave education. This guide can be found here.

FAQs

  • “Will my student loan go on my credit file?” – No, it doesn’t. This means that taking out student loans will not affect your ability to apply for a mortgage, for example.
  • “Is there interest on my loan?” – Yes, for Plan 5 loans the interest rate will be set at the rate of inflation for the current year.
  • “Does how much I owe on my loan affect how much I pay?” – No, as the amount you pay is solely related to your earnings. The remaining balance is not a factor.
  • “Can I make additional payments towards the loan?” – Yes. Additional payments can be made at any time during the repayment period; however, these payments cannot be refunded. You can find more information from HMRC here.
  • “Will I need to make repayments if I move abroad?” – Yes, you must still pay 9% on all earnings exceeding the currency equivalent of £25,000.
  • “When will I start repaying my student loan?” – If you are earning over the annual threshold, repayments will start the April after you leave university, but Plan 5 repayments will only start from April 2026.
  • “Are student loan contributions calculated before or after tax?” – Before tax. They are calculated the same way as National Insurance contributions.
  • “Will student loan repayments affect my pension contributions?” – The student loan repayment will be deducted before the pension contribution is calculated.

If you are usure of how your loan will affect your pay, please do not hesitate to contact us.

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September Mini Budget Breakdown

On 23rd September 2022, Chancellor of the Exchequer, Kwasi Kwarteng, announced a new growth plan.

This blog will provide a breakdown of the changes announced by the Chancellor and how they will impact you and your business.

 

Income Tax

The basic rate of income tax is set to receive its first cut in 15 years, reducing from 20% to 19%. This means that less tax will be applied to your non-dividend and non-saving income. This cut had been previously pledged by Rishi Sunak in the Spring but has been brought forward from 2024 to 6th April 2023. The government are currently estimating the average basic rate tax payers will save £130 per year.

 

When the growth plan was first announced, the decision was been made to scrap the 45% Additional Rate, which would have seen those earning more than £150,000 per annum being  charged at the current Higher Rate of 40% from April 2023. This has since been reviewed and, on 3rd October, a U-turn on the removal was announced; the 45% rate will now stay in place.

 

The 20% rate will stay in place for Gift Aid until April 2027.

 

Corporation Tax

The rate of corporation tax was initially expected to rise for companies with profits over £250,000 from 19% to 25% from April 2023. This increase has now been scrapped, meaning all companies will be paying at the 19% rate. The government hopes that this will encourage business owners to invest more into their companies, further improving and diversifying the UK economy.

 

National Insurance

At the beginning of the current tax year, National Insurance rates saw a 1.25% increase with the introduction of the Health & Social Care Levy. This aimed to increase funding for the worst affected sectors of the COVID-19 pandemic. It has now been announced that the levy will be reversed from 6th November 2022, and the National insurance rate will return to 12%. Plans to introduce the levy as a separate tax in the next tax year have also been scrapped.

This change will be reflected by a blended National Insurance rate on Self Assessments upon submission to ensure that the correct contribution is made.

This change will reduce the National Insurance bills of companies, giving a potential for further investments.

Dividends

Dividend tax rates will also fall by 1.25% in the next tax year following the removal of the Health & Social Care Levy.

 

Annual Investment Allowance

The Annual Investment Allowance (AIA) available to claim is set to permanently be £1,000,000. Plans had previously been put in place to reduce this to the previous amount of £200,000 in March 2023. AIA allows you claim 100% tax relief on assets up to the set amount. By having this as the higher amount, businesses will be able to claim more relief, reducing their tax.

 

Stamp Duty

Significant cuts to Stamp Duty have been announced, and all have come into effect as of midnight on 23rd September. Stamp duty is a form of tax applied when documents are recognized, most commonly through the purchase of houses.

The Nil Rate Band has doubled, increasing from £125,000 to £250,000, allowing more people to buy homes without paying any stamp duty. It is expected to save the average buyer £2500.

First-time home buyers will not have to pay stamp duty up to £425,000 and can claim relief on properties up to £625,000.

 

Additional Changes

  • Universal Credit Claimants who earn less than 15 hours per week at the National Living Wage will be required to meet with a Work Coach to help increase their earnings. Their benefits could be reduced if these meetings are ignored. Extra support will be offered to jobseekers over 50.
  • New legislation will be implemented to decrease planning and building times for new roads and energy infrastructure.
  • Changes in regulations on private investments are set to allow more funding from pension funds. This is expected to boost economic growth and see a particular increase in science and technology investment.
  • Alcohol duty will be frozen for another year and is expected to be reviewed and modernised.

 

It is expected that in the coming weeks, like with all changes in government, further plans will be announced, tackling issues like the reduction of childcare costs and the housing supply, as well as a review on digital infrastructure.

 

If you have any concerns regarding these changes and how they could impact you and your business, do not hesitate to contact us. You can find our contact information here.

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Dividends and Income Tax Changes April 2022

Changes to Dividends

As the new tax year begins, many changes will be made to reflect the current economic climate of the United Kingdom. One such change that shall come into effect from the 6th of April 2022 is a 1.25% increase in the Income Tax rates applied to dividends.

What are Dividends?

Dividends are the payments made out to the shareholders of a company, such as directors and investors. The dividends will come from the remaining value after the Corporation Tax that is due is taken from the total profit for the period. Because of this, the total dividends issued must not exceed the company’s profits from the current, or previous, periods.

Paying Dividends

The amount that each shareholder will be paid is dependent on the number of shares in the company that they hold. The dividends they receive will be proportional to their shares.

For dividends to be paid, a directors’ meeting must be held to the payment to be declared, even if the company only has one director, and a dividend voucher must be completed. The dividend voucher will include the date, the company name, the shareholder’s name, and the amount of dividend they will be paid. Dividends are usually paid quarterly but can also be paid in other installments such as annually or bi-annually.

Many companies will choose to pay their directors through a mix of both salary and dividends. This is because National Insurance contributions are not deducted from dividends; they are more tax efficient.

The New Income Tax Rates

The rise in Income Tax is being introduced as a part of a government scheme to increase funding for the health and social care sector, after it was hit hard by the pandemic over the last two years. Please view the table below to see how your tax rate will be impacted by the increase:

Tax Brackets Thresholds (£)

 

 Dividend Tax Rate
2021/22 2022/23
Personal Allowance

(If no other income)

 0 – 12,570 0% 0%
Basic-Rate 12,571 – 50,270 7.5% 8.75%
Higher-Rate 50,271 – 150,000 32.5% 33.75%
Additional-Rate Exceeding 150,000 38.1% 39.35%

The £2,000 dividends allowance introduced in April 2018 will still be available, meaning that any dividends within that amount will not be subjected to any tax deductions.

The government have predicted that the average loss that will be suffered because of the increase will be around £335 for those affected but has stated more than 50% of shareholders may not even need to pay any Income Tax on their dividends as they fall within the personal allowance or dividend allowance thresholds.

 

If you are interested in learning about the other changes brought in with the new tax year, please refer to our previous blog.

If you require assistance or any further information about how your dividends may be affected, please do not hesitate to contact us.

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Changes From April 2022

With the new tax year comes several changes brought forward by HMRC. Here is a short guide to help you navigate the updates that may affect you and your business from April 2022.

 

Reduced VAT is Ending

The reduced VAT rate of 12.5% will be increasing back to its pre-COVID rate of 20%. The reduced rate was initially introduced in July 2020 at 5%, rising to 12.5% in October 2021, to help businesses within the hospitality sector to help with their finances after the drastic impact of the Coronavirus pandemic on their trade. This return follows the timeline set in the Spring 2021 budget.

VAT Surcharges

The changes to penalties and interest rules which were due to come in place from April 2022 has now been delayed to January 2023

Making Tax Digital

Making Tax Digital (MTD) will apply to all VAT-registered businesses from 1st April 2022. This means that, for any VAT periods starting on or after this date, VAT registered businesses must keep all of their VAT records digitally and submit VAT returns using software that is MTD accordant.

Changes to National Insurance

National Insurance (NI) is going to increase by 1.25% from 1st April 2022. Those receiving a State Pension will also receive a levy of 1.25%. This increase in tax will be in place until 31st March 2023 and has been put in place to help contribute to increased health and social care costs incurred over the pandemic.

New PAYE Thresholds

From year 2022-2023 to tax year 2025-2026, the personal allowance will be £12,570 per year

In England, Wales, and Northern Ireland the basic tax rate of 20% will be applied to annual earnings above the threshold, up to £37,700 a year. The higher tax rate will be 40% on annual earnings between £37,701and £150,000, with the additional tax rate of 45% will be applied to earnings above this.

In Scotland, their starter tax rate of 19% applies to earnings above the threshold and up to £2,162, the basic rate of 20% applies to annual earnings between £2,163 and £13,118, and the intermediate rate of 21% applies to annual earnings between £13,119 to £31,092. Scotland’s higher rate of 41% applies to annual earnings between £31,093 and £150,000, and the top rate applied to earning above this is 46%.

Increase on Statutory payments

Statutory maternity pay (SMP), Statutory paternity pay (SSP), Statutory parental pay (SPP), Statutory adoption pay (SAP) and bereavement pay will change on April 2022. All will see the weekly rate of statutory pay increase from £151.97 to £156.66 per week.

From 6th April 2022, the rate of statutory sick pay (SSP) will also increase from £96.35 to £99.35 per week.

Any employee who earns more than (or equal to) the lower earnings limit, that will increase to £123 on the same date, is entitled to statutory pay.

 

Please do not hesitate to contact us regarding any of the above changes and how they may impact your business

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HMRC Self-Employment Income Support Opens on 13th May

The Self-Employment Income Support Scheme (SEISS) opens on the 13th of May 2020. This new scheme is designed to provide income support for self-employed workers who have been adversely affected by the coronavirus (COVID-19) outbreak. Read on to find out if you’re eligible, how much you could claim, and how to apply.

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UK Budget 2020: The Key Points

On 11th March 2020, Rishi Sunak announced the new UK budget. He presented several announcements that are set to affect businesses, the self-employed, and working families. Here is a summary of the main points from the latest budget.

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Planning for the New Tax Year

As we near the end of the tax year, it is important if you are self-employed to start planning for the new tax year. This guide explains when the tax year ends and provides a year-end tax planning checklist.

We have provided a summary for the main 2020/2021 tax year changes to help guide you through the main changes that will come in to force. Taking action at the start of the tax year may give you an advantage. Here’s what you need to know about the 2020/2021 tax year. 

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