Newsletter January 2011

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Do you need help dealing with the change to 20% VAT?
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Last year we advised our contacts about various issues that may affect VAT registered traders from 4 January 2011, when the standard rate increased to 20%.

Here's a quick recap.

1. If you have accounting software, be sure to make the appropriate changes to the standard VAT rate. You should have been advised by your software provider how to do this.

2. If you use the Flat Rate scheme for calculating your quarterly VAT you may need to apply a different flat rate from 4 January.

3. There are various complications to deal with if you use the cash accounting scheme. The first return to be affected will be the VAT return that includes the month of January 2011.

4. If you're providing a supply of goods or services that straddle the 4 January 2011 there are special arrangements you should follow to ensure that you charge VAT on the supply at the correct rate.

If you would like help in dealing with any of these issues please call.

And finally a couple of quick calculation tips:
 
If you want to increase prices to pass on the VAT increase to customers (e.g. if you are a retailer), multiply the previous VAT inclusive price by 48/47. For example - £117.50 (old price) x 48/47 = £120.00 (new VAT inclusive price), and

Instead of multiplying a VAT inclusive by 7/47 to find out how much VAT is included (up to 4 January 2011) you now simply divide the VAT inclusive figure by 6 - to reveal the 20% VAT included.

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More grief from HMRC
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You are no doubt aware, if not presently affected, that HMRC have been attempting to play catch up with the processing of PAYE records and the issue of annual statements of tax under or overpaid.

We now hear that HMRC have sorted out another aspect of taxpayers' records, the processing of P11D forms for 2009/10. P11Ds are the forms that notify the tax office of any taxable benefits in kind.

When these forms are processed there could be underpayments, and less likely overpayments, of tax for 2009/10. Underpayments of £2,000 or less will be coded out in 2011/12, underpayments in excess of £2,000 will need to be paid!

So if you had benefits in kind for 2009/10, use of a company car etc., watch out for a HMRC form setting out further tax due. You may also receive a revised Notice of Coding if an underpayment is under £2,000. Please let us check these forms for you. Confidence is not presently high that any adjustments will be made correctly...

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Increase in ISA limits published
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Increases in ISA limits are now determined by increases in Retail Price Index for the September prior to the tax year end. So the increase due April 2011 will be based on the RPI for September 2010.

This is now determined as 4.6%.

The new ISA limits from April 2011 for 2011/12 will be:

. the overall ISA limit increased to £10,680 (2010/11 £10,200)
. the amount that can be invested in a cash ISA is increased to £5,340 (2010/11 £5,100)

We are still waiting for details of the new Junior ISA to be published and will include details in a future newsletter.

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Tax Diary January/February 2011
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1 January 2011 - Due date for corporation tax payable for the year ended 31 March 2010.

19 January 2011 - PAYE and NIC deductions due for month ended 5 January 2011. (If you pay your tax electronically the due date is 22 January 2011)

19 January 2011 - Filing deadline for the CIS300 monthly return for the month ended 5 January 2011

19 January 2011 - CIS tax deducted for the month ended 5 January 2011 is payable by today.

31 January 2011 - Last day for electronic filing of Self-Assessment returns for 2010

31 January 2011 - Due date for payment of any balance of self-assessment liability for the tax year ending 5 April 2010, plus any payment on account due for the tax year ending 5 April 2011.

1 February 2011 - Due date for corporation tax payable for the year ended 30 April 2010.

19 February 2011 - PAYE and NIC deductions due for month ended 5 February 2011. (If you pay your tax electronically the due date is 22 February 2011)

19 February 2011 - Filing deadline for the CIS300 monthly return for the month ended 5 February 2011.

19 February 2011 - CIS tax deducted for the month ended 5 February 2011 is payable by today.