Accountancy & Bookkeeping

Why Filing Your Tax Return Early Is a Smart Move

Why Filing Your Tax Return Early Is a Smart Move

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When it comes to your Self Assessment tax return, it’s tempting to put it off—after all, the deadline isn’t until 31st January. But here at SA Lee Accountancy, we always encourage clients to file early. Why? Because there are some serious benefits that can save you both money and stress.

  1. Know what you owe – and plan ahead
    Filing early gives you clarity. You’ll know exactly how much tax you owe, which means you can budget for it in advance. This is particularly helpful if you’re required to make payments on account—which are advance payments towards your next tax bill. These often catch people out, especially if they’re unaware of them until the last minute.
  2. Spread the cost
    Knowing what you owe earlier means you can start setting money aside or arrange to pay in instalments if needed. You’re in control, rather than facing a big bill just after Christmas.
  3. Avoid the January panic
    January is a busy month, and the last thing you need is a tax deadline hanging over you. HMRC’s systems are also under strain during this time, and mistakes or delays can happen. Filing early helps you avoid the mad rush and gives you peace of mind.
  4. Time to fix any issues
    If there are any errors in your paperwork or questions from HMRC, filing early gives you the breathing space to sort things calmly—without a looming deadline.
  5. Potential for a faster refund
    If you’re due a tax refund, you’ll usually get it quicker if you file early. That’s money back in your pocket sooner!

So, don’t get caught out. Filing early puts you in a stronger financial position and helps you stay one step ahead. And of course, if you need a hand with your Self Assessment, we’re here to help.

Making Tax Digital for the Self-Employed: What You Need to Know Before April 2026

Making Tax Digital for the Self-Employed: What You Need to Know Before April 2026

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The way self-employed individuals report their income to HMRC is changing. From April 2026, Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) will come into effect, meaning self-employed business owners and landlords earning over £50,000 will need to comply with new digital reporting requirements. If you fall into this category, now is the time to prepare.

What is MTD for ITSA?

Making Tax Digital (MTD) is an HMRC initiative designed to modernise the UK tax system by replacing annual Self Assessment tax returns with quarterly digital reporting. From April 2026, self-employed individuals and landlords earning over £50,000 will be required to:

• Keep digital records of income and expenses using compatible software

• Submit quarterly updates to HMRC instead of one annual return

• File an End of Period Statement (EOPS) and Final Declaration each year

This change aims to improve accuracy, reduce errors, and provide a clearer picture of your tax obligations throughout the year.

Who Will Be Affected?

• From April 2026, MTD for ITSA will apply to self-employed individuals and landlords earning over £50,000

• From April 2027, those earning between £30,000 and £50,000 will also be included

• General partnerships and businesses earning below £30,000 are not currently required to comply, though HMRC may expand the scheme in future

If you already use accounting software like QuickBooks, Xero, or FreeAgent, you may be in a strong position for a smooth transition. However, those relying on spreadsheets or manual records will need to switch to MTD-compatible software before the deadline.

Benefits and Challenges

The Pros:

• More accurate record-keeping reduces tax return mistakes

• Regular updates help manage cash flow and avoid unexpected tax bills

• Less paperwork at year-end, making tax admin easier

The Cons:

• Self-employed individuals will need to submit updates every three months instead of once a year

• Some will need to invest in new accounting software

• The transition may feel overwhelming for those used to manual methods

 

How to Prepare for MTD for ITSA

1. Review Your Current Record-Keeping – If you’re not using digital software, now is the time to explore MTD-compliant options.

2. Get to Know the Reporting Requirements – Understanding what you’ll need to submit and when will prevent last-minute stress.

3. Seek Professional Guidance – At SA Lee Accountancy Ltd, we can help you transition smoothly and ensure compliance with MTD regulations.

 

Need Help Getting Ready?

April 2026 might seem far away, but the earlier you prepare, the easier the transition will be. If you’re unsure how MTD for ITSA will affect your business, get in touch with us today. We can help you choose the right software, streamline your records, and ensure you stay compliant without added stress.

Understanding Tax Implications of Selling on Platforms Like Vinted and TikTok

Understanding Tax Implications of Selling on Platforms Like Vinted and TikTok

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In the ever-evolving digital marketplace, platforms like Vinted, TikTok Shop, and others have made it easier than ever to sell items online. Whether you’re decluttering your wardrobe or running a small business, understanding the tax implications of your online sales is crucial. Here’s what you need to know about selling as a trade versus selling personal belongings.

 

Selling Personal Items

If you’re selling pre-owned personal items such as clothes or household goods, the profits from these sales are typically not taxable. HMRC views these sales as disposing of personal possessions rather than engaging in a trade. However, there are exceptions to consider:

  1. Valuable Items: If you’re selling items with significant value, such as antiques or jewellery, Capital Gains Tax (CGT) may apply if profits exceed the CGT allowance.
  2. Frequency of Sales: If you’re regularly buying items to “upcycle” or improve before selling, HMRC may classify this as trading, which can trigger tax obligations.

 

Trading as a Seller

If you’re using platforms like TikTok Shop or Vinted to buy and sell items for profit, HMRC considers you to be “trading.” In this case, you’ll need to account for taxes on your profits. Key considerations include:

  1. Trading Allowance: The UK offers a £1,000 tax-free trading allowance annually. If your trading income exceeds this, you must register with HMRC and declare your profits through a Self-Assessment tax return.
  2. Expenses: As a trade seller, you can deduct allowable expenses such as platform fees, packaging, and postage costs from your taxable profits.
  3. VAT Registration: If your sales exceed the VAT threshold of £85,000 in a 12-month period, you’ll need to register for VAT and charge it on your sales.

 

How SA Lee Accountancy Can Help

Navigating the tax implications of online selling can be complex, especially when distinguishing between personal sales and trading activity. SA Lee Accountancy Ltd is here to provide tailored advice, ensuring you comply with HMRC requirements while making the most of your allowances and deductions.

Whether you’re selling for profit or simply clearing out your wardrobe, our expert team can help you stay on top of your tax responsibilities. Contact us today to ensure your online selling activities are stress-free and compliant.

Stay informed and let us help you focus on what you do best—growing your business or enjoying your online selling hobby!

Navigating the Autumn 2024 UK Budget: Implications for Your Business and How SA Lee Accountancy Can Assist

Navigating the Autumn 2024 UK Budget: Implications for Your Business and How SA Lee Accountancy Can Assist

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The Autumn 2024 UK Budget introduces significant changes that will impact businesses across various sectors. Understanding these developments is crucial for maintaining compliance and optimising your financial strategy. At SA Lee Accountancy Ltd, we are committed to guiding you through these changes, ensuring your business remains resilient and well-prepared for the future.

Key Budget Changes Affecting Businesses

Employer’s National Insurance Contributions (NICs)

Effective from April 2025, the government will increase the rate of employer NICs by 1.2 percentage points to 15%. Additionally, the per-employee threshold at which employers start to pay National Insurance will be reduced from £9,100 per year to £5,000 per year.

Corporation Tax

The corporation tax rate remains at 25% for companies with profits over £250,000, while those with profits under £50,000 continue to be taxed at 19%. A tapered rate applies to businesses with profits between these thresholds. This structure necessitates careful tax planning to manage liabilities effectively.

Inheritance Tax (IHT)

The IHT nil-rate bands are set to remain at current levels until 5 April 2028. Additionally, from April 2027, pensions will be counted as part of the assets subject to IHT, potentially affecting estate planning strategies.

Support for Green Initiatives

The budget reinforces commitments to sustainability, offering incentives for businesses investing in renewable energy and energy-efficient technologies. Grants and tax breaks are available to encourage environmentally friendly practices.

Investment in Skills and Training

Addressing skills shortages, the budget introduces support for workforce training and development. Businesses can access funding schemes to upskill employees, enhancing competitiveness and productivity.

 

 

How SA Lee Accountancy Ltd Can Support Your Business

Navigating these changes requires strategic planning and expert guidance. SA Lee Accountancy Ltd offers comprehensive services to help your business adapt and thrive.

The Autumn 2024 UK Budget presents both challenges and opportunities. With SA Lee Accountancy Ltd by your side, you can confidently navigate these changes and position your business for sustained success. Contact us today to discuss how we can tailor our services to meet your specific needs and help you make the most of the new fiscal landscape.

Changes to Self-Assessment Filing Threshold: What You Need to Know

Changes to Self-Assessment Filing Threshold: What You Need to Know

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The UK government has introduced a significant change to the self-assessment tax filing process for high earners. Individuals earning over £150,000 per year through the Pay As You Earn (PAYE) system are now required to file a self-assessment tax return, marking a shift from the previous threshold of £100,000. This update simplifies tax obligations for many and could reduce the administrative burden. At SA Lee Accountancy Ltd, we’ll explain what this means for you and how to ensure you’re fully compliant.

 

Why Has the Threshold Changed?

The new threshold of £150,000 reflects the government’s aim to simplify tax filing for those whose tax is primarily handled through PAYE. Previously, earners over £100,000 were required to file a self-assessment, even when there was little complexity in their tax situation. This increase is expected to reduce the number of unnecessary self-assessment filings, giving taxpayers more time and reducing paperwork for both individuals and HMRC.

Impact on High Earners

For those earning between £100,000 and £150,000, this change means they no longer automatically need to file a self-assessment, provided their income is solely through PAYE. This can help streamline their tax process. However, if you have additional income sources such as rental income or dividends, you may still need to file a self-assessment. It’s always best to verify your tax obligations, even if your income falls within the PAYE system.

For individuals earning over £150,000, self-assessment remains essential. It’s important to file returns on time to avoid penalties and to ensure all income is correctly reported. You may also want to explore ways to optimise your tax situation, such as through pensions, charitable donations, or other available reliefs.

Key Considerations for Planning

Although the increased threshold reduces the filing requirements for many, this is no time to overlook your tax planning. Effective tax management remains important, particularly for those nearing the £150,000 threshold. By staying informed about deductions and allowances, such as pension contributions and investment reliefs, you can ensure that you’re maximising your financial efficiency.

 

At SA Lee Accountancy Ltd, we advise all high earners to review their tax situation regularly to ensure compliance and avoid any unnecessary penalties. We can help you understand your full tax obligations and offer guidance on managing your self-assessment process effectively.

Conclusion

The increase in the self-assessment threshold from £100,000 to £150,000 is a positive development for many high earners, reducing their tax filing burden. However, if you’re earning over £150,000, it’s crucial to stay proactive with your tax planning and compliance. If you’re uncertain about your filing requirements or want to explore tax-saving opportunities, contact SA Lee Accountancy Ltd for expert advice, we look forward to hearing from you.

Your Guide to Stress-Free Tax Returns: Making Tax Less Taxing

Your Guide to Stress-Free Tax Returns: Making Tax Less Taxing

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Welcome to our cosy corner of the financial world, where we believe managing your taxes shouldn’t be a source of stress. Whether you’re navigating your tax return for the first time or you’re a seasoned pro looking to refine your approach, we’ve got some tips to make this process as smooth as butter on warm toast. So, let’s dive in and demystify the tax return process together.

Embrace the Power of Preparation

The early bird not only gets the worm but also enjoys a much less frantic tax season. Getting a head start on gathering your financial documents can transform your tax return experience from a nail-biter to a breezy stroll. Keep a dedicated folder for all your tax-related documents, such as P60s, invoices, and receipts for deductible expenses. This way, you’re not turning your house upside down come deadline day looking for that elusive piece of paper.

Know Your Deadlines (And Stick to Them!)

The UK tax year runs from 6th April to 5th April the following year, with the deadline for online tax returns being 31st January. Missing this deadline can lead to unnecessary fines, starting at £100 for being just a day late! Circle it, highlight it, set a dozen reminders – whatever it takes to make this date as unforgettable as your own birthday.

Utilise Your Allowances and Reliefs

Did you know the UK tax system is peppered with various allowances and reliefs designed to reduce your tax bill? From the Personal Allowance (the amount you can earn before paying tax) to savings allowances and even tax relief on charitable donations, there are numerous ways to lighten your tax load legally. It’s worth taking the time to understand what’s available to you.

Consider the Magic of Digital Tools

Gone are the days of tackling your tax return with just a pen, paper, and a calculator. The digital age has brought us a treasure trove of online tools and software designed to make tax returns easier. Platforms like HMRC’s own online services can guide you through each step of your tax return, ensuring you don’t miss a beat. Plus, digital records are not only environmentally friendly but also much easier to keep organised.

When in Doubt, Seek Professional Help

Sometimes, despite our best efforts, tax can still feel like a maze. This is where a good accountant comes into play. Whether you’re self-employed, own a small business, or just want to ensure you’re making the most of your tax situation, professional advice can be invaluable. Think of an accountant as your tax guide, leading you through the complexities with ease.

Remember, It’s Not Just About the Numbers

Lastly, while tax returns are fundamentally about finances, they’re also an opportunity to reflect on your financial health and plan for the future. Taking stock of your income, expenses, and savings can provide crucial insights into your financial habits and goals. So, while you’re crunching those numbers, take a moment to consider the bigger picture and how you can make your money work best for you.

There you have it – our guide to tackling your tax returns with confidence and, dare we say, a bit of joy. Remember, tax doesn’t have to be taxing, and with a bit of preparation and the right mindset, you’ll have it sorted in no time. Here’s to a smoother tax season ahead!

 

Please note, that all figures are correct at the time of writing

Navigating the New Tax Year: Essential Tips and Insights

Navigating the New Tax Year: Essential Tips and Insights

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As the new tax year rolls around, it’s an opportune moment for individuals and businesses across the UK to assess their financial strategies and ensure they are optimising their tax situation. With the landscape of tax legislation constantly evolving, staying informed and proactive can significantly impact your financial health. Here are some vital tips and insights to consider as you navigate the tax year.

  1. Maximise Your ISA Allowance

Individual Savings Accounts (ISAs) remain a cornerstone of tax-efficient saving. With the annual allowance currently standing at £20,000, ensuring you maximise this opportunity can yield significant long-term benefits. Remember, the allowance resets with each new tax year, so it’s use-it-or-lose-it!

  1. Pension Contributions: A Double Win

Pension contributions not only secure your future but also offer immediate tax relief benefits. Contributions up to £60,000 annually (or 100% of your earnings, whichever is lower) can be made tax-free. For higher-rate taxpayers, this is particularly advantageous, as it effectively reduces the cost of contributions.

  1. Capitalise on Marriage Allowance

For married couples or those in civil partnerships, the Marriage Allowance allows you to transfer £1,260 of your Personal Allowance to your partner in 2023/24, reducing their tax bill by up to £252 a year. This is often overlooked but is a simple way to save money for eligible couples.

  1. Stay on Top of Record Keeping

For self-employed individuals and small business owners, meticulous record-keeping is crucial. Not only does this make it easier to file accurate tax returns, but it also ensures you can claim all allowable expenses, reducing your taxable income. Leveraging digital tools can simplify this process significantly.

  1. Understand Changes to Dividend Taxation

With recent changes affecting the taxation of dividends, it’s important for business owners and investors to review their investment structures. The tax-free dividend allowance remains at £1,000 for the 2023/24 tax year, with rates increasing for amounts above this threshold. Planning and advice in this area can lead to substantial savings.

6. Seek Professional Advice

Finally, while it’s beneficial to have a solid understanding of tax basics, the complexity of tax legislation often means that professional advice can result in significant savings. Whether it’s exploring specific tax relief options, planning for the future, or ensuring compliance, the value of expert guidance cannot be overstated.

 

The tax year can bring both challenges and opportunities. By staying informed and proactive, you can navigate the fiscal landscape effectively, ensuring you’re not only compliant but also maximising your financial potential. Remember, it’s not just about paying taxes; it’s about paying the right amount of tax.

 

Please note, that all figures are correct at the time of writing

Health & Social care levy

Health & Social care levy

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The health and social care levy comes in to practice in April 2022 which will affect employees and employers. The levy will raise extra funding for the NHS and social care and the contributions will be an additional 1.25%.

With the health and social care levy it will be important to be aware of the following:

  • For the first year from April 2022 the 1.25% increase for Class 1, Class 1A, Class 1B, and Class 4 (self-employed) will be included in your national insurance contribution.
  • In 2023 the 1.25% levy will be replaced with a standalone contribution and the national insurance contribution rates will drop to the usual levels.
  • Employers and employees will be subject to the levy.
  • The additional cost to employment will be 2.5%.
  • Individuals who only pay Class 2 and Class 3 National Insurance contributions are unaffected.
  • Individuals above the state pension age will not be affected by the temporary National Insurance increase but will be liable to pay the levy from 2023.

The new health and social care levy will be subject to the same reliefs, thresholds, and requirements of the qualifying National Insurance contributions (Class 1, Class 1A, Class 1B, or Class 4) In respect of which the levy is payable.

If you’d like to learn more please contact me on info@saleeaccountancy.com or at https://saleeaccountancy.com

 

 

Sarah Lee

MAAT CIMADipMA

 

Please note, that all figures are correct at the time of writing

Self-employed Vs Limited company

Self-employed Vs Limited company

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When setting up your own business people are often unsure whether to register as Self-employed or as a Limited company. There is no right or wrong choice, but there may be better opinions for you based on the company you plan to set up.

Self-Employed

Being self-employed means that you have unlimited personal liability, you will be the single owner of a business (unless there is a partnership agreement). Owners would register themselves as self-employed through the government gateway and register for Class 2 National insurance. Self-assessments must be filed by the 31st January, these can be filed before this date but any tax and National Insurance due must be paid by the 31st January. This includes the 1st half of the on-account money due, with the remainder being due on the 31st July. Late submission of self-assessments and payments will result in fines and interest charges.

Tax Allowances are currently £12500, this means you can earn up to this amount without being taxed. National Insurance Class 4 allowance is £9569, this means you can earn up to this amount without paying any Class 4 National Insurance. The allowance for Class 2 National Insurance is £6515. Class 2 National insurance is taxed at £3.05 per week.

Advantages of being self employed

> You get 100% of your profits.

> It is easy to get started with your business.

> You make the decisions.

> Less admin involved.

> You can offer a personal touch to customers.

Disadvantages of being self employed

> You have unlimited liability

> You’re fully responsible for your business.

> You can only raise limited finance.

>There is a limited scope of expansion.

> You take on all liability.

Limited company

A limited company divides ownership between 1 or more people. Directors have a limited liability on their business, debt & losses. Most directors would be paid by PAYE, if a director takes drawings from the company, then a self-assessment must be completed.

Being a shareholder could mean you are entitled to a dividend if the company is making a profit after the tax liability has been met.

£0-£2000 dividends are tax free.

Dividends over £2000 will be taxed depending on your tax bracket.

Basis rate threshold 7.5%

Higher rate threshold 32.5%

Additional rate threshold 38.1%

Limited company profits are subject to corporation tax at 19%.

Advantages of a limited company.

> You can be more tax efficient.

> It is easier to leave the business.

> Losses & Debt are not personal.

> You are better perceived.

> You won’t be personally sued.

Disadvantages of a limited company.

> You must prepare annual accounts.

> There is more financial admin.

> You have less privacy.

> Taxation rules are more rigid.

> You have less input.

However you decide to run your business is up to you as the owner, but please be aware that whether you are self-employed or a limited company you must register for value added tax (VAT) if you are approaching £85,000 on turnover (Not Profit).

 

Please note, that all figures are correct at the time of writing