VAT and Making Tax Digital

VAT and Making Tax Digital

On 1 April 2019 (this was not a joke!!) HMRC introduced Making Tax Digital (MTD) for VAT.  Businesses above the current VAT threshold of £85,000 have since needed to submit their VAT returns using “functional compatible software”.

As of 1 April 2022, all VAT registered businesses will be required to use MTD for their VAT accounting and to submit their VAT returns.  This will include an extra 700,000 businesses that are currently VAT registered but are below the current threshold.

Many of these businesses may not have the software available to do this but here at Hawsons, we can help.

Please contact us should you require any information on this or any other VAT problems you may have.

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Tony Nickson

VAT Consultant, Sheffield

01604 645 600

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Christmas parties and staff gifts – a tax guide

Christmas parties and staff gifts – a tax guide

Christmas parties and staff gifts – a tax guide

With the festive period now approaching, we are often asked by employers about the tax treatment of providing a staff Christmas party or giving gifts to employees. Here is a quick reminder of the rules for the tax year 2021/22.

 

STAFF PARTIES

 

What is exempt?

There is a tax exemption for employee entertaining if the event is all of the following:

  • an annual party or social function, such as a Christmas party or summer barbecue
  • it is open to all employees (or all employees based at one location)
  • the cost does not exceed £150 per head (inclusive of VAT)

HMRC have confirmed that Virtual Christmas Parties are eligible for the annual function exemption.

 

Calculating the cost

The total cost of the party is the whole cost of the event, from the start to the end.  It includes food, drink, entertainment, taxis home, overnight accommodation, etc.

The limit of £150 per head applies to all those attending the function, not just employees.  So, if employees are allowed to bring guests, the total cost should be divided by the total number of employees and guests.

 

Two or more functions

If there are multiple annual events, they will still be exempt as long at the combined cost is no more than £150 per head.

If you’ve already used up the £150 exemption on an event, you’ll have to report and pay tax on the full costs of any additional events, even if they cost less than £150 per head on their own.

 

Reporting obligations

A taxable benefit in kind will arise if either the limit is exceeded, or the function is not open to all staff or it is not an annual function.

Please be aware that the £150 per head limit is an exemption not an allowance – go just a penny over the £150 and the full cost becomes taxable.

The benefit must be reported on each employee’s form P11D.  The employee will pay income tax on the benefit, and the employer will be charged Class 1A national insurance.

Alternatively, the employer can apply to pay the grossed-up tax through a PAYE Settlement Agreement (PSA).

 

Are costs tax-deductible?

Client entertaining is generally not an allowable expense for corporation tax purposes.  However, the cost of employee entertaining is an allowable expense, and therefore the cost of the staff Christmas party can be deducted.

 

VAT

Input tax on employee entertaining is generally recoverable.  However, please note that the definition of employees for VAT purposes does not include partners/spouses of staff or former employees.  Therefore, if guests are invited it will be necessary to apportion the relevant costs appropriately.

Please also note that if an event is provided only for directors, partners, or sole proprietors, HMRC will not accept that input tax has been incurred for business purposes.

 

GIFTS TO EMPLOYEES

 

Cash bonuses & vouchers

Christmas presents paid in cash to staff will be taxable as earnings in the normal way (subject to tax and national insurance). The same tax treatment also applies to vouchers exchangeable for cash, with the employee taxed on the full value of the voucher.

Vouchers exchangeable for goods and services only (non-cash vouchers) are also taxable and must be reported on the employee’s form P11D.  Class 1 national insurance will normally need to be deducted through the payroll.

Make sure you tell your accountant or the person who prepares the payroll, so they can report the correct figures to HMRC.

 

Seasonal gifts

The employer may wish to give employees a seasonal present, such as a turkey, a bottle of wine, or a box of chocolates.  Provided the cost of the gift is ‘trivial’ – typically less than £50 ahead – the gift will usually not be taxable.

If the gift exceeds this value, it will be taxable and it will need to be reported to HMRC on either a form P11D or through a PSA.

 

Third parties

Employees may receive gifts from third parties as a result of their employment.  As long as the gift does not exceed £250 in cost, it should not be taxable for the employee.

 

How we can help

At Hawsons we have a dedicated team of tax specialists at our offices in Sheffield, Doncaster, and Northampton. Our experts provide proactive, well rounded, technically robust tax advice to businesses and individuals. If you are interested in what tax services Hawsons can offer you please visit our tax services webpage.

If you have any questions on how to treat your festive finances or would like more detailed advice, please do get in touch with us here at Hawsons.

We hope you enjoy the festive period!

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

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Government Announces Plan to Almost Double UK Exports

Government Announces Plan to Almost Double UK Exports

The government has recently launched it’s ‘Made in the UK, Sold to the World’ plan.

 

What is the aim of the plan?

The aim of this plan is to almost double UK exports around the world to £1 trillion per year. Last year the UK exported £600 billion in goods overseas. However, it is reported that only one in ten GB businesses currently export abroad. The UK government wants to support exporting as research conducted in 2016 found that exports support 6.5 million UK jobs and businesses that export pay higher wages. In addition, businesses that export goods are found to be 21% more productive on average. The announcement of this plan comes after Boris Johnson said he would transform the UK into a ‘high wage, high skill, high productivity economy’ at the Conservative Party conference in October.

 

How will this benefit businesses?

The 12-point strategy will enable businesses to access the tools they need to benefit from the free trade deals and increase the number of goods exported from the UK. This will open new opportunities for small businesses across the UK.

The 12-point strategy includes:

  • An Export Support Service: An exporting helpline on selling goods and services.
  • The UK Tradeshow Programme: Designed to help businesses promote their products outside of London and the South East.
  • Export Academy: The academy will invite business owners and managers to business events to help them with the challenges of first-time exporting.
  • The European Regional Development Fund: This fund will support 7,500 SMEs in England to export and internationalise.

To find out more about the plan please read the full government publication here

 

How can we help?

At Hawsons we have a dedicated team of manufacturing and engineering accountants at our offices in Sheffield, Doncaster, and Northampton.

Our specialist team offers a wide range of services which are tailored to meet your individual needs. Our understanding of the issues faced by the manufacturing and engineering businesses means that we can proactively seek out ways for you to maximise your profitability and minimise your tax liabilities.

 

More from our manufacturing experts

You can find all of our latest manufacturing sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Chris Hill

Senior Partner, Sheffield

0114 266 7141

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Staff at our three offices in Sheffield, Doncaster, and Northampton swapped their usual office attire for something more casual last Friday to fundraise for Children in Need 2021. The money raised will help support disadvantaged children and young people across the UK.

There was also a bring and buy cake sale for those aspiring bakers to raise money and it is safe to say that they did not disappoint as their colleagues took up the challenge to consume as much cake as possible on the day!

Children in Need

 

Our fundraising activities throughout the day managed to raise a total of £331.35 across our three offices.

We would like to thank everyone at Hawsons for their efforts fundraising for such a worthy cause.

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The UK has confirmed that all new HGVs in the UK will be zero-emission by 2040. Furthermore, by 2035, the UK has committed to phasing out all-new non-zero-emission HGV’s weighing 26 tonnes or less. This is in addition to the UK’s 2030 phase out for petrol and diesel cars and vans. At COP26 a group of industry leaders and ministers committed to working towards 100% zero-emission new car and van sales by 2040 globally and 2035 in leading markets. At the World Leaders Summit, 30 countries agreed to make zero-emission vehicles the new normal by 2030 as part of the new Glasgow Breakthroughs. This included making them more accessible, affordable, and sustainable.

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The UK government has revealed its new design for electric vehicle charge points. A design that could become iconic in years to come much like the Great British red post box or the London black cab. The aim was to design something inclusive and easy to use much like the traditional petrol pump. The concept also aims to increase excitement and awareness surrounding electric vehicles as the UK starts to build one of the most affordable and reliable charging networks across the globe. Currently, zero-emission vehicles are less expensive to run in the UK than petrol or diesel vehicles. In addition, it is expected that they will become less expensive to purchase in years to come as zero-emissions vehicles become more popular.

Transport Partner Paul Wormald commented:

The ability for goods and people to travel quickly and conveniently is key to an efficient economic system, however, this needs to be combined with a focus on sustainability and how our modes of transport, and transport infrastructure impact on the wider environment. The recent COP26 summit gave an opportunity for world leaders to set a framework as to how this may be achieved.

The commitment to phasing out conventionally fuelled motor transport will present a wide range of opportunities and challenges for many businesses across the whole economic spectrum, and it will be interesting to observe how these play out on a practical level over the coming years.

How can we help?

At Hawsons we have a dedicated team of transport and logistics accountants at our offices in Sheffield, Doncaster, and Northampton. We act for a large number of clients in this sector across our three offices, ranging from hauliers to international couriers, and understand the challenges this dynamic sector faces.
With our experience in the transport and logistics sector we are able to develop a close understanding of your business and, through active year round involvement, we can help you anticipate and deal with challenges quickly and effectively.

More from our transport and logistics experts

You can find all of our latest transport and logistics sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Paul Wormald

Partner, Doncaster

01302 367 262

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