The harrowing scenes showing the destruction caused Typhoon Haiyan has brought a solemn day at The Den. Fox will donate today’s earnings to the Phillipines Red Cross. Our sympathies go out to all those who have been affected by this tragedy, both here and abroad, and our thanks and respect go to all those who are working tirelessly to provide aid.
Higher income parents currently receiving Child Benefit have just four weeks to register for Self Assessment with HM Revenue and Customs (HMRC) in order to avoid a penalty.
Parents who stopped receiving Child Benefit payments before 7 January 2013 do not need to take any action. However, parents who did not stop their payments until after 7 January or who are continuing to receive Child Benefit, and with income over £50,000, must register for Self Assessment for the 2012-13 tax year by 5 October 2013. This will enable them to declare the Child Benefit received, pay the tax charge on time and avoid penalties for failure to notify HMRC on time.
Letters are currently being sent to around two million higher rate taxpayers, including those affected by recent changes to Child Benefit. These will remind them they must declare any additional income or register now with HMRC for Self Assessment, in order to pay the High Income Child Benefit Charge, if they have not already done so.
HMRC’s Chief Executive, Lin Homer, said:
“HMRC wants to ensure that people avoid possible penalties and pay the right amount of tax. If you had any additional income last year, or have been affected by the changes to Child Benefit, you have until 5 October to register for Self Assessment.”
Over 400,000 people with higher incomes have already opted out of receiving Child Benefit payments. Those who did not receive any payments relating to the period after 7 January do not need to register for Self Assessment.
People who fail to register could face a penalty of up to 100 per cent of the tax due, depending on the circumstances. They might be able to come out of Self Assessment in future years if they (or their partner if they are the Child Benefit recipient) choose to opt out of receiving Child Benefit and avoid incurring the tax charge. People who want to opt out should go to hmrc.gov.uk/childbenefitcharge
An exciting day at the Den, today! We have been nominated for
The Bookkeepers Network - “Most Innovative Accounting Firm” award.
If you would like to show your support, you can vote here:
The cash basis is essentially a money-in, money-out approach. A business using the cash basis only needs to record sales when the money is actually received and payments when the money is actually paid out. The cash basis does not
change the rules for the deductibility of expenses, only the time at which the deduction is given. What’s more, no account is taken of money owed to the business or that the business owes.
Under the cash basis, there is no need to take account of debtors, creditors, stock, prepayments and accruals, making it much simpler for a business owner without an accounting background to understand and operate. They just pay tax
on money that has been received, helping the business manage cash flow.
The cash basis is open to sole traders and partnerships whose income is below the VAT registration threshold. This is set at £79,000 for 2013/14. VAT registered businesses qualify as long as their income is below that threshold.
Once a business has opted to use the cash basis, it can continue to do so even if its income rises above the VAT threshold, as long as income does not exceed £158,000. Above this level, the business must leave the cash basis and return to
the accruals basis.
The cash basis rules will not suit every business and there are some restrictions. It may not be the best option if a business has losses to relieve against other income in the same year or if it has high borrowings and deductible interest of
more than £500 – neither of these are permitted under the cash basis. Certain types of business are also precluded from using the cash basis. A full list is available at www.gov.uk/simpler-income-tax-cash-basis/who-can-use-cash-basis.
Qualifying businesses can switch to the cash basis from 2013/14 by simply starting to use it and ticking the cash basis box on the self-assessment return.