Navigating the latest HMRC updates: What you need to know

HMRC have issued their latest updates, below is a summary of the tax notifications affecting business owners from the 6th April 2024.

Construction industry scheme (CIS)

• The gross payment status (GPS) is conditional upon maintaining good ‘tax compliance’. Compliance with VAT filing and payments (on time) will now be part of the compliance test for attaining the GPS.
• For current GPS holders, the compliance test will now take into account, ongoing VAT compliance.
• For landlords, payments made under a construction contract to a tenant will no longer be classed as a CIS payment.
• HMRC will no longer allow subcontractors to register for CIS or apply for the GPS by phone (unless you are digitally excluded).

National insurance contributions (NI)

• The previously (budget) announced reduction in rates of NI for employees (down to 8%) and the self-employed (down to 6%).

Payroll aspects

Student loans plan types and postgraduate loan thresholds rates:

• Plan 1: £24,990
• Plan 2: £27,295
• Plan 4: £31,395
• Postgraduate loan: £21,000

Deductions for:

• Plans 1, 2 and 4 remain @ 9%
• Postgraduate loan remains @ 6%

Basis year (accounts year-end) changes

• Self-employed year ends will be changing to the 31 March or 5 April (2024) and if your business has generated any overlap relief, the final year to claim this will be on your 5 April 2024 individual tax return.
• HMRC has released an online tool to assist in working out the ‘transition profits’ to help with the completion of tax return.
• Work out your transition profit – GOV.UK (www.gov.uk)
• All of the above changes are part of HMRC’s Making Tax Digital (MTD)

Tax refunds

• HMRC will cease notifying individuals of income tax refunds and companies of corporation tax refunds by post. 
• All refunds will go to the chosen bank account or credit card. HMRC claim that you should be able to view all of the transactions, on your HMRC online account.

Low-income estates and trusts changes

• Estates and settlements with incomes of less than £500 will not pay income tax on the income as it arises. When income exceeds the £500 threshold, tax will fall due on the full amount of income received in that tax year.
• For estates, the £500 threshold will apply to all income (after removing any ISA income that continues to be exempt up for to 3 years following the date of death).
• For trusts, the de minimis threshold is reduced by the number of trusts created by the same settlor.
• For accumulation and discretionary trusts, the basic rate and dividend rate will no longer apply to the first £1,000 of trust income.

Scott Whitmore is Dafferns’ Senior Corporate Tax manager and is happy to assist should you have any concerns with your tax affairs.