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:
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)
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.
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.
On 1st January 2023, changes were made to fines for late VAT filing and payments. Previously, the default VAT surcharge system was in place. This system meant that you would be fined a percentage of the VAT owed. This started at 2%, then increasing to 5%, 10%, and 15% every time a payment or VAT return was missed.
The new system implements a point system for late submissions, as well as new penalties and interest charges on late payments.
Late Filing Points System
The late filing point system works on the basis that every time VAT is submitted late, you will receive a penalty point. Once the penalty Point threshold is reached, a £200 penalty is applied. A further £200 penalty is issued for every late submission whilst at the threshold. The threshold is dependent on how frequently you submit your VAT return:
Accounting Period
Penalty Points Threshold
Annually
2
Quarterly
4
Monthly
5
HMRC will adjust both the threshold and the points you have been issued if you change your accounting period.
The penalty rules do not apply to the first VAT return, final VAT return, or one-off returns which cover a period other than those listed in the table above.
HMRC will issue a penalty decision letter to your registered business address if a penalty or penalty point has been given. This letter will offer a review with HMRC where you will be able to appeal the penalty. Also, penalties can be checked, and reviews can be requested through your VAT online account.
Late Payment Penalties
Late payment penalties have been introduced and can apply to any VAT that has not been paid in full by the due date. This is excluding payments on account and annual accounting scheme installments. The penalty you will receive is dependent on both the number of days that the payment is overdue, and if it is your first penalty:
First Late Payment Penalty
Second Late Payment Penalty
Payments up to 15 days overdue
None
None
Payments 16-30 days overdue
2% of the VAT owed at day 15
None
Payments 31 days or more overdue
2% of what was outstanding at day 15. Plus 2% of what is still outstanding at day 30.
Daily rate of 4% per year on the outstanding balance. This is charged from day 31 until the outstanding balance is paid in full.
A period of familiarisation has been implemented until 31/12/2023. This means that first late penalties will not take effect if a payment is made within 30 days of the payment due date.
Much like the late filing penalties, HMRC will notify you of a late payment penalty via a penalty decision letter and details of the penalty will be available through your VAT online account.
Late Payment Interest
Late payment interest will now be applied from the first day that a VAT payment is overdue until the day it is paid in full. The interest rate directly correlates with the Bank of England’s base rate. It is calculated as the base rate plus 2.50%. This means that the current interest rate is 7.75%.
Payments that are subject to interest include:
VAT Returns
Corrections and Amendments
HMRC VAT Assessments
Missed Payments on Account
Late payment penalties
Late submission penalties
If interest is being applied to an amount which should be paid in installments, the interest will be charged on the outstanding balance until the tax has been paid in full.
Unfortunately, HMRC does not have an appeals process for late payment interest. However, you can object to the interest for a variety of reasons, such as, you believe HMRC has caused a mistake or there has been any unreasonable delay, you dispute the relevant date or effective date of payment, or you are questioning the legislation. It is important to note that interest objections can only be accepted if the tax relating to the interest has been fully paid. To discuss interest objections with HMRC, contact the VAT General Inquiries Helpline.
VAT Repayment Interest
On the other hand, if you are owed a VAT repayment from HMRC will also be applied. Like the late payment interest, the interest rate is dependent on the Bank of England’s base rate. It is calculated as the base rate minus 1%; the rate is currently 4.25%. Interest will not be applied on early payments or payments made in error (such as paying £2,500 instead of £250).
If the VAT has already been paid to HMRC, the repayment interest is calculated from the later date of either when the VAT was paid or the payment deadline for the period.
If the VAT has not been paid to HMRC, the repayment interest is calculated from the day after the later date of either the payment deadline or when the VAT was submitted.
HMRC will only pay repayment interest if there are no outstanding VAT returns. Because of this, the interest will only be paid from the date that all outstanding VAT returns are received.
The end date for the interest will be when HMRC repays the VAT, or it is set off against a different VAT return. It can also be set off against other types of tax you may owe.
If You Cannot Pay
If you are aware that you will not be able to pay your VAT in full by a deadline, call HMRC’s Payment Support Service for guidance. They have a specific line relating to VAT payments. One option they may propose is a payment plan. You can find out what you will be asked during the set up process, or if you can set up a payment plan online, here. Setting up a payment plan could lead to penalties being reduced.
HMRC offer a flexible plan known as a Time to Pay arrangement which will cover any penalties and interest that has been applied. If this arrangement is put in place before a penalty deadline, the penalties will not be applied. However, if you do not adhere to the conditions of the arrangement and it is cancelled, the penalties will be applied. You can find out more about Time to Pay here.
Contact Us
If you require our services for VAT, or have any further questions regarding your accounts, please do not hesitate to contact us.
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