HMRC has updated the guidance on how to work out national insurance contribution (NIC) payments for directors.

Directors have to use an annual earnings period to work out their liability for Class 1 NICs. This figure must include all the director’s earnings when working out NICs, including fees and bonuses. Directors are classed as employees and pay National Insurance on annual income from salary and bonuses over £9,568.

Although the NIC is calculated on an annual basis, directors can make payments on account of directors’ NICs during the tax year based on the actual intervals of payment – usually weekly or monthly – in the same way as for other employees.

Directors who have an account with their company may arrange for the company to settle their personal bills and then charge the amount to their account. If you meet a director’s personal debt in this way and then debit the amount to the account, this may be subject to NICs especially where this creates or increased the overdrawn balance on the director’s account with the company.

Personal Tax Accounts

If you do not already have a personal tax account, get it done so you can monitor your tax position with HMRC.

HMRC have renewed their commitment to PTAs as part of a proposed single digital account for taxpayers, at their annual stakeholder conference, held at the end of last month. This shows PTAs are a key part of HMRC’s 10-year strategy.

A PTA lets you check and manage your tax affairs. It was launched in November 2015 and HMRC reports that over 14m people accessed their account in the last tax year (2020/21). That saw a 21% increase in PTA sessions compared to 2019/20, with over 53m user sessions.

1. Check your state pension and history of National Insurance contributions

You can see your National Insurance record which counts towards your state pension. You can see how many qualifying years you have recorded and if there are any gaps.

2. Avoid queuing on helplines

 There are many simple tasks that can be completed quickly and easily online via the PTA. Avoiding the need to try to contact HMRC helplines. You can change your address or confirm and print your National Insurance number. You can also claim tax reliefs such as marriage allowance and keep track of your applications for other reliefs or allowances.

3. Complete your tax return

You can complete your tax return online through the PTA. It is easy to monitor your progress and, when complete, you can see your tax calculation, how much you have to pay and when. It is also easy to update your return and claim reductions in payments on account if your circumstances have changed and your income has fallen.  

4. Report a change in circumstances for tax credits

It is possible to report changes of circumstances quickly and easily to HMRC through the PTA to ensure that you receive the correct amount of tax credits and do not end up running up over or underpayments as your circumstances change. 

5. Check your PAYE details

You can use the PTA to check the details of your employment(s), pension(s) and other income information which HMRC holds and correct anything that is wrong. It is also possible to view details of how your tax code has been worked out and claim tax relief for home working.

Jeremy Coker, president of the ATT, said: ‘We urge anyone who is yet to sign up for their

One in Three Accountants and Tax Advisers are Unregulated.

A recent survey revealed that the majority of MPs would support increased regulation of high street accountants and tax advisers.

There is currently no register of bona fide accountants and tax advisers, with anyone allowed to run a business offering specialist services.

There is presently some pressure to establish a legal requirement that anyone offering paid-for tax advice should be a member of a relevant professional body. There is currently no requirement to be appropriately qualified or to be a member of a professional body and as such a third of the accountancy sector is effectively unregulated.

Just so you know we are members of 2 professional bodies, one is the Institute of Chartered Accountants and the other if the Institute of taxation. So, we will have no issues with regulation.

The YouGov survey shows that over three-quarters (78%) of the MPs surveyed are in favour of introducing compulsory membership of a professional body for anyone offering paid-for tax and accountancy services. This included 75% of Conservative MPs and rose to 85% among their Labour counterparts. Just 6% of MPs disagreed with the proposal.

In another survey Tit was found that that most people who had used an accountant or tax adviser thought it should be compulsory for anyone offering paid-for tax advice to be a member of a relevant professional body, and in fact, six out of 10 people were unaware that no formal qualifications are required to practice as an accountant or tax adviser offering paid-for tax advice.

In a recent article it was stated that unregulated agents account for most agent-related complaints to HMRC and contribute to tax evasion and money laundering activities, while their mistakes and errors leave many taxpayers with large and unnecessary fines and penalties. Likewise, unregulated agents who overclaim or wrongly claim various tax reliefs cost the Exchequer hundreds of millions of pounds a year.

However, nothing is going to happen unless this support is translated into action, including for Treasury ministers to listen to their colleagues and legislate accordingly.

The government is currently consulting on proposals to require unregulated accountants to just hold professional indemnity insurance, with a closing date of 15 June. Does not sound as if anything is going to happen anytime soon.

Changes to furlough scheme from 1 May 2021

For pay periods that start on or after 1 May 2021, employees who were employed on 2 March 2021 can be furloughed, provided the organisation has made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee.

Organisations will therefore be granted much more flexibility in furlough decisions in the future and being able to furlough those who were recruited between 31 October 2020 and 2 March 2021.

Organisations will not have to have previously claimed for an employee before 2 March 2021 to claim for periods from starting on or after 1 May 2021.

Calculating claims for periods starting on or after 1 May 2021

The government will still provide 80% of furloughed staff wages for the time they are not working in May and June 2021. They are not due to start reducing the amount they provide until 1 July 2021. From July, the government will introduce an employer contribution towards the cost of unworked hours of 10% in July, 20% in August and 20% in September, while the government will contribute the balance up to 80% of total salary.

Claiming for staff previously made redundant.

For periods beginning on or after 1 May 2021, organisations will no longer be able to furlough staff who were previously made redundant.

Furlough after TUPE

From 1 May 2021, organisations can furlough employees if they were included on any PAYE Real Time Information (RTI) submission to HMRC on or before 2 March 2021.

Bounce Back Loan Repayments

Where businesses have been contacted by their banks about repayment of Bounce Back Loans and if repayments are not affordable, you should consider your options.

One key decision will be whether to take advantage of the Pay As You Grow (PAYG) options announced last year, which allow you to extend your loan terms, reduce repayments or take a repayment holiday. Many banks have highlighted PAYG options to their customers in advance.

To consider your options, get in touch with your own bank.

Questions?

If you have any questions about any of these, you know where to find us. If you prefer, just give me a ring on 07770 738770 or email me at alan.long@thelongpartnership.co.uk.