Following the Bank of England’s announcement on 23 March 2023 that the base rate will rise to 4.25%, HMRC interest rates are also increasing by 0.25%, to 6.75% for late payment interest and 3.25% for repayment interest, from 13 April 2023.
Make sure you know what you need to pay and when to avoid unnecessary interest charges!
We will provide you with a ‘how to pay’ sheet with your accounts which will detail that you owe, but if you’re unsure then please contact your account manager.
On the other hand, if you’re able to pay your tax liabilities ahead of the deadline, HMRC will pay you credit interest up until the due date at 3.25%, perhaps a better rate of interest you’re getting on money sitting in your bank account.
The ‘Annual Tax on Envelope Dwellings’ (or ATED) charge is a tax levied on limited companies who own residential property with a value of £500,000 or over.
There are a range of exemptions from the charge, meaning your company won’t need to pay if the property is:
- let to a third party on a commercial basis and is not, at any time, occupied (or available for occupation) by anyone connected with the owner.
- open to the public for at least 28 days a year.
- being developed for resale by a property developer.
- owned by a property trader as the stock of the business for the sole purpose of resale.
Even if you fall under one of the above exemptions, a nil ATED Return still needs to be filed to HMRC, and you will receive a late filing penalty if it is not.
ATED Returns are prepared a year in advance, and so the deadline for the 2023-24 ATED Returns is the 30 April 2023.
Notifying HMRC of a qualifying property
Furthermore, many companies are caught out when they first purchase a qualifying property, as HMRC must be notified within 30 days of when the property first comes into charge to ATED (usually completion).
If your company is in the process of purchasing a residential property worth over £500k or already owns such a property and haven’t previously completed an ATED Return, then please contact Christie Inns to discuss.
It’s a common misconception that being either self employed or employed is the choice of the worker.
It is in fact determined by the economic reality of the working arrangement and HMRC will determine whether someone should be employed or self employed by reference to a number of factors, including:
- Mutuality of obligation – are you obliged to accept work and is your ‘employer’ obliged to give you work’
- Personal service – can you provide a substitute?.
- Control – do you control your day-to-day activities or does your ‘employer’?
- Provision of equipment – do you provide or does your ‘employer’?
Determining Employment Status
It’s always important when you’re taking on a new subcontractor or consultant to make sure you’ve determined their employment status.
HMRC have a handy tool – the CEST check ‘Check employment status for tax’ – to help you decide.
Getting it wrong
If you pay your worker as a self-employed subcontractor, but HMRC deem that they should have been an employee, then HMRC will seek to recoup any underpaid PAYE or Class 1 National Insurance from you in the first instance.
What is IR35?
IR35 is a piece of legislation that follows the same principles, but mainly applies to individuals who are working through a limited company on a contract, but in reality, operate as an employee for their contract provider.
Again, the responsibility of determining your IR35 status may rest on you, and HMRC will seek to recoup any underpaid tax from you accordingly if you make the wrong judgement.
Application of IR35 in the news
There have been 2 notable IR35 cases determined in recent weeks, the first being Gary Linkear, who won his case against HMRC and the other being Eammon Holmes, who lost his.
Both cases make for interesting reads and provide further insight into how HMRC determine the application of the legislation.
If you want to discuss IR35 or employment status further, then please contact your account manager.
The content in this blog is correct as at 6th April 2023 See terms and conditions.