Self Assessment Deadline Next Week- Act Now!

As we approach, what always feels like, the end of the longest month of the year, we are also approaching the self assessment return deadline. For those needing to file a return for the 21/22 tax year, these are due by next Tuesday (31st January 2023), so if you haven’t got yours done and dusted, it’s time to get cracking!

Do I need to complete a self assessment return?

The easiest way to check if you will need to complete a return is to use the tool on the HMRC website. However, in short, you will need to complete a self assessment return for the tax year if, during that year, you:

  • Were self employed and earned more than £1,000 in the tax year.
  • Were a partner in a business partnership.
  • Received more than £2500 in untaxed income (e.g. property rental). If less than £2,500, you should contact HMRC directly to discuss, or made any profit from selling shares, a second home/other assets and need to pay Capital Gains Tax.
  • Had income from savings/investments/dividends was £10,000 or more (before tax).
  • Had income (or your partner’s) was over £50,000 and one of you claimed Child Benefit.
  • Had foreign income, or lived abroad but received UK income.
  • Had taxable income over £100k.
  • You have received correspondence from HMRC saying you owe tax from a previous tax year (that has not been paid via tax code or specific payment) or stating that you need to complete a return.

Usually, you won’t need to complete a return if your own income is from wages/pension. If any of the above applies to you though, you will need to complete and submit a return for that tax year.

When does it need to be completed by?

If you are completing your return online, it needs to be filed by 31st January of the year after the end of the tax year in question. If you’re filing a paper return, you’re already late(!) as it need to be filed by 31st October 2022.

So, for example, for the 21/22 tax year, a paper return needed to be filed by 31st October 2022, and an online return by 31st January 2023.

The 31st January is also the date that any tax owed for the year is due. You will also be informed (by HMRC or your accountant if you have one) if you need to make additional ‘payments on account’ for the following tax year.

What if I am late submitting my return?

If you are anything up to 3 months late submitting your return, you will receive a £100 penalty. This increases the more overdue the return becomes, and will also increase if tax was owed and not paid on time.

So, make sure you aren’t caught out, and get that return filed asap!


PaperRocket are a multi award winning accounting practice, and Accredited FreeAgent Practitioners. 

We specialise in providing friendly, non-accounting jargon, services for contractors, freelancers, sole traders, and landlords across the UK.

Our fixed fee monthly accounting packages all include a FreeAgent subscription as standard and unlimited support from your allocated accountant.

To find out how we can help you please get in touch now.

Making Tax Digital for Income Tax Self Assessment Delayed

After its implementation was already delayed from April 2023 to April 2024 due to the pandemic, it was announced on Monday that once again, Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) has been postponed until April 2026.

What is MTD for ITSA?

Under the original MTD for ITSA rules, the self employed, and landlords who earn more than £10,000 per tax year will be required to submit regular updates with digital records using MTD compatible software to HMRC. This means that for these people, self assessment returns can no longer be submitted either via paper form or the HMRC online portal (in a similar way to how MTD impacted the submission of VAT returns in 2019).

What will need to be submitted, and when?

Under MTD for ITSA, instead of an annual self assessment return covering the entire tax year, there will now be 6 submissions required, namely:

  • 4 quarterly updates, due within 1 month of the end of each quarter.
  • An End Of Period Statement (EOPS), due by the 31st January following the end of the tax year in question. This statement will be used to make any final adjustments to the previous submissions made, and a separate EOPS will be required for each source of income.
  • A Final Declaration, once all of the above have been completed, and all income for the year has been declared, you must then submit the Final Declaration which is a statement to accept your final tax position for the year calculated by HMRC.
What the postponement means?

It is important to note that this is just a postponement, rather than a scrapping of MTD for ITSA. Therefore, notwithstanding any future delays, all of the above will still be implemented, just in April 2026 rather than April 2024.

However, as part of this postponement, the government have announced that now, MTD for ITSA will only apply to the self employment/landlords with income over £50,000 from 2026, rather than the original £10,000. Then, in April 2027, it will be introduced for those with income between £30,000 and £50,000, with a review being undertaken into whether this threshold should drop further after 2027.


PaperRocket are a multi award winning accounting practice, and Accredited FreeAgent Practitioners. 

We specialise in providing friendly, non-accounting jargon, services for contractors, freelancers, sole traders, and landlords across the UK.

Our fixed fee monthly accounting packages all include a FreeAgent subscription as standard and unlimited support from your allocated accountant.

To find out how we can help you please get in touch now.

All You Need To Know About… Staff Entertaining At Christmas

In the next of our blog series focusing on the ‘All You Need to Know About…’ various different elements of running your own business, and with Christmas mere weeks away, today we are going to be looking at entertaining your staff during the festive period, and how it could end up helping your tax bill, as well as showing your employees how valued they are by you!

How much can I spend, and what tax relief will the company get?

HMRC will provide tax relief on up to £150 per person per year. This can also include partners of employees.

Provided the amount does not exceed £150/head, your limited company will receive corporation tax relief on the expense, and it will not be treated as a benefit in kind (meaning employees will not have to pay additional tax/NI). This means that your corporation tax bill will be reduced by 19% of the allowable amount that you spend on staff entertaining for the year.

The Rules

Of course there are some rules (there’s always rules when it comes to tax!):

  • The event must be open to all members of staff.
  • The £150 can cover multiple events throughout the year, again, provided the total amount spent doesn’t go over £150/head. So, you could spend £50/head on a Christmas party for your staff, and then later in the year £100/head for a summer event.
  • If the £150 limit is exceeded, even by 1 penny, the whole amount will become disallowable and therefore treated as a benefit in kind for your employees, meaning additional tax and NI will be due.
  • The £150 is VAT inclusive and also includes any extra costs such as travel and accommodation.
  • The primary cause of the event must be to entertain employees. The total cost will be disallowed for tax if it is found that entertaining customers is indeed the primary function.
  • As with all company expenses, receipts must be retained.

So with Christmas fast approaching, now is the time to get your party hat on and show your employees a bit of festive spirit!


PaperRocket are a multi award winning accounting practice, and Accredited FreeAgent Practitioners. 

We specialise in providing friendly, non-accounting jargon, services for contractors, freelancers, sole traders, and landlords across the UK.

Our fixed fee monthly accounting packages all include a FreeAgent subscription as standard and unlimited support from your allocated accountant.

To find out how we can help you please get in touch now.

Autumn Statement – The Key Points

It feels like a mere few weeks ago that we were writing our last blog about a Chancellor’s announcements (and to be fair, that’s because it was!). After the rather catastrophic previous administration’s ‘Growth Plan’ back in September, on Thursday, the new Chancellor Jeremy Hunt announced his Autumn Statement. And in just 7 weeks, we have pivoted from tax cuts, to tax rises and threshold freezes.

Personal Tax Measures
  • From April 2023, the additional rate of tax threshold (above which, individuals pay tax at a rate of 45%) will decrease from £150,000 to £125,140.

n.b. Scotland set their own tax bands- the Scottish Government are expected to announce this on 15th December.

  • Existing thresholds for income tax (not including the additional rate mentioned above), inheritance tax and national insurance will remain frozen until 2028. This means that the personal tax free allowance will remain at £12,570 until 2028.
  • From April 2023, the dividend tax free allowance will decrease from £2,000 to £1,000, and then from April 2024, will reduce down to £500.
  • From April 2023, the capital gains tax free allowance will decrease from £12,300 to £6,000, and then from April 2024, will reduce down to £3,000.
  • From April 2023, the National Living Wage will increase from £9.50 to £10.42/hour (employees over 23).
Business Tax Measures
  • The VAT registration threshold is to remain frozen at £85,000 until 2026.
  • The Employment Allowance for Employers NI will remain at £5,000.
  • From April 2023, class 2 NI (national insurance payable on self employment income) will increase to £3.45/week.
Other Measures
  • From April 2025, electric vehicles will no longer be exempt from road tax.
  • From April 2023, means-tested/disability benefits and the state pension will rise by 10.1% (in line with inflation), with more one-off cost of living payments also due to these cohorts.
  • From April 2023, councils will be able to raise council tax by up to 5% (instead of 3%) without a referendum.
  • From 2025, recent stamp duty threshold rises made in September will be reversed back to £125,000, and £300,000 for first time buyers.
  • From April 2023, the energy price cap will rise from £2,500 to £3,000.

PaperRocket Accounting provide accounting and tax services to professional contractors, freelancers, and small businesses working in the UK.

We offer our clients a flexible choice of fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.

Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.

We pride ourselves on our client satisfaction and customer service and were awarded ‘Best Contractor Accountancy’ firm 2020 in The Contracting Awards and ‘Welwyn Hatfield Business of the Year 2019’ in the SME Hertfordshire awards.

To find out how we can help you please get in touch now.

All Change For The VAT Penalty System From 2023

From January 2023, HMRC are introducing a new penalty system for the late filing/payment of VAT returns, completely overhauling the current surcharge system.

The current system works on the basis that if you are late with either your VAT return filing, or payment, there is no penalty but instead, you are then put on a 12 month surcharge notice period. If you then default again within that 12 month period, the surcharge notice period will continue for the next 12 months, and you may be charged a penalty. How large the penalty is will be determined by factors such as business turnover, amount of VAT owed and number of defaults.

However, from 1st January 2023, this is all to be changed.

The new VAT penalty system

Under the new system, late filings of VAT returns will be penalized separately to the late payment of any VAT due.

VAT return filed late

For late VAT return submissions, a new ‘penalty points’ system is to be introduced. Every time a return is filed late, a penalty point will be applied. If you reach a penalty points threshold, you will be fined £200, and then £200 for every late submission after that. You can revert to zero points if all VAT returns are submitted by their due date within your compliance period.

The penalty points threshold is determined by how often your VAT returns are due:

  • If you submit annual VAT returns, the penalty points threshold is 2 points, with a compliance period of 2 years.
  • If you submit quarterly VAT returns, the penalty points threshold is 4 points, with a compliance period of 1 year.
  • If you submit monthly VAT returns, the penalty points threshold is 5 points, with a compliance period of 6 months.

Penalty points expire after 2 years.

VAT payment made late

If your VAT liability is paid late, the penalty is applied differently.

  • Up to 15 days late, no penalty will be applied (provided payment is made within 15 days, or a payment plan is agreed).
  • Between 16 and 30 days late, a 2% penalty (based on the VAT outstanding at day 15) will be applied.
  • 31 plus days late will have the above 2% penalty applied, plus another 2% penalty (based on the VAT outstanding at day 30).
  • There will also be a second penalty calculated at a daily rate of 4% per year for the duration of the outstanding balance (calculated once the payment is made/payment plan agreed).

There will also be interest charged on the late payment of VAT, calculated at 2.5% above the Bank of England’s base rate, and applied from the first day the amount is overdue.

The good news is that HMRC will also be paying repayment interest to customers who are owed a VAT refund from them. This will be calculated as the Bank of England’s base rate minus 1% (minimum interest rate to be 0.5%), applied from the date the submission is received/due (whichever is later) until the date payment is made by them.


PaperRocket Accounting provide accounting and tax services to professional contractors, freelancers, and small businesses working in the UK.

We offer our clients a flexible choice of fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.

Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.

We pride ourselves on our client satisfaction and customer service and were awarded ‘Best Contractor Accountancy’ firm 2020 in The Contracting Awards and ‘Welwyn Hatfield Business of the Year 2019’ in the SME Hertfordshire awards.

To find out how we can help you please get in touch now.