IR35 Reform Repealed and Health & Social Care Levy Axed- Details of the 2022 ‘Growth Plan’

He may have only been in the job for 3 weeks, but on Friday 23rd September, new Chancellor Kwasi Kwarteng stood at the dispatch box and presented his ‘Growth Plan’… something that had been dubbed in the media as a ‘mini Budget’, and then turned out to not be so mini after all.

After an initial announcement the day before regarding the Health & Social Care Levy being cancelled (more on that below), and the (now fully expected) leaks of announcements the morning of the Growth Plan, it is fair to say that many weren’t expecting too many surprised from Mr. Kwarteng. However, no one seemed to be expecting his IR35 ‘rabbit in the hat’.

IR35 Reform Repealed

The background: In 2017 and 2021, IR35 rules were changed meaning that in the public, and then private, sectors, the responsibility for determining IR35 status was shifted from the worker to the client/fee payer. As a result of (some may say over) caution from many of the end clients to whom the responsibility had been shifted to, many contractors were forced to work via umbrella companies, or take contracts that clients had, perhaps overcautiously, deemed to be inside IR35.

However, today the Chancellor announced that, from 6th April 2023, this reform would be reversed in both the public, and private sector, with workers themselves, once again, being responsible for the determination of their IR35 status. It is therefore hoped that this will open back up the legitimate contracting market with more outside IR35 contracts being available.

Of course, IR35 wasn’t the only measure announced in the ‘not at all mini budget’:

Income Tax and National Insurance

• From 6th November 2022, the 1.25 percentage points increase in NICs rates (that was introduced from 6th April 2022) will be reversed.

• From 6th April 2023 (12 months earlier than originally announced), the basic rate of income tax will be reduced from 20% to 19%.

• From 6th April 2023, the additional rate of income tax (currently 45% on income over £150k) is to be scrapped entirely, meaning that the top level of income tax will be 40%.

This scrapping of additional rate tax will also apply tosavings and dividend income, meaning that the top level of dividend tax will be 32.5%.

Health & Social Care Levy Scrapped

The separate Health and Social Care Levy that was to be introduced from 6th April 2023 has been scrapped entirely. This means:

• The planned levy of 1.25% on income over the relevant NI thresholds will no longer be applied.

• The 1.25 percentage point increase in dividend tax will be reversed as of 6th April 2023.

Business Taxes

• The increase in corporation tax that was due to take place from 6th April 2023 (to 25%) has been cancelled, meaning that corporation tax will remain at 19%.

• The temporary increase in Annual Investment Allowance to £1million that was due to return to £200k as of April next year is to be made permanent.

Other Measures

Stamp Duty Land Tax– from 23rd September 2022, the threshold for SDLT will double from £125k to £250k. The threshold for first time buyers will also increase from £300k to £425k (as well as the maximum property value on which first time buyers relief can be claimed increasing from £500k to £625k).

Tax Simplification– The Office of Tax Simplification is to be abolished, with a mandate to the Treasury and HMRC set to focus on tax simplification themselves.

Alcohol Duty Rates– these are to be frozen from 1stFebruary 2023.

Bankers’ Bonuses– caps on bankers’ bonuses are to be axed.


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 YOU NEED TO KNOW ABOUT… TRIVIAL BENEFITS

For the next few weeks, our blogs will be focusing on the ‘All You Need to Know About…’ various different elements of running your own business.

This week, we are starting with all you need to know about Trivial Benefits.

What is a Trivial Benefit?

Essentially, a trivial benefit is a way for you to reward your employees (or even yourself!) without them being hit with an additional tax or NI bill, in the way that they would with a benefit in kind.

The Rules:

There are of course criteria that must be met to be able to claim a ‘trivial benefit’. These are that the benefit must not:

  • Exceed £50 (not even by 1p or the whole amount becomes taxable). If, for example, you take a number of staff out for a meal, this can be averaged out per head.
  • Be cash (although gift vouchers are allowable, provided they can’t be exchanged for cash).
  • Be a reward of normal employment duties.
  • Be part of any contractual obligation/salary sacrifice scheme.

As with any business expense, you will also need to ensure that you retain the receipt(s) for the expense, and keep a note of what it was in respect of, to prove it did not breach any of the above. Provided that all of this criteria is met, the recipient will not have to pay any tax or national insurance on the benefit, and the company will receive corporation tax relief on the amount.

Good news for company directors… but not sole traders

If you are a company director then the good news is that you are also able to gift yourself trivial benefits. The only difference being that whilst for staff, there is no cap to the amount of trivial benefits that can be provided, for directors, there is an annual £300 cap. Again, each benefit must not exceed £50, and receipts must be retained.

Unfortunately, sole traders are not able to claim trivial benefits for themselves, although if they have employees then the employees can be gifted trivial benefits following the rules above.


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.

Second Self Assessment Payment on Account Due

We are now over halfway through 2022 (unbelievable I know!), and the end of this month brings with it the deadline for self assessment second payments on account. So what are they, and do you need to pay?

Payments on Account (POAs)

POAs are advance payments towards your next self assessment tax bill, which are calculated based on your previous year’s self assessment tax bill, with each POA will be calculated as 50% of that tax bill.

POAs are only required If your self assessment tax bill is over £1,000, and if you have already paid more than 80% of the tax owed (e.g. via salary taxed at source) then POAs will not be required.

So, as an example, if your 20/21 total tax bill was £4,000, you will be expected to make two POAs for the 21/22 tax year, each in the sum of £2,000. Then, when your actual 21/22 tax liability is calculated, you will need to either make a balancing payment  for any additional tax due, or you will receive a refund if you have overpaid.

When your 2020/21 self assessment return was completed and filed, it will have been advised to you (either by your accountant if you had one complete the return for you, or the online HMRC filing system when you filed it yourself) if any POAs were due. If you have an online account with HMRC, you can always login to this to check aswell.

When are they due?

Your first payment on account will be due with your current year’s tax liability by 31st January. The second payment on account will be due by 31st July.

So, using the above example, you would have paid £6,000 by 31st January 2022 (made up of your £4,000 21/22 liability plus your first 21/22 POA of £2,000). You would then pay £2,000 by 31st July 2022 in respect of your second POA. Any balancing payment for 21/22 would then be due by 31st January 2023, and so the cycle continues.

Do I still need to pay if my tax liability is going to be lower for 21/22?

If you know that your next year’s tax bill is going to be considerably lower than your current year (for example, if you had a large one off source of income one year that will not be repeated the next), and therefore by paying the standard POAs you will greatly overpay the actual tax due, you can put in a claim to reduce your payments on account. However, we would always recommend that you exercise caution when doing this as if this results in you underpaying, HMRC will charge you interest on the underpayment amount. If you have an accountant, it would be wise to ask them to work with you to calculate an estimate of the actual tax due so that this is not incorrectly underestimated.

If you POAs are paid late, HMRC will charge late payment interest, so with the deadline for the second POA less than 3 weeks away, if you haven’t already, make sure any second POA you may owe is paid asap!


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.

Here Comes The Sun, Here Come The Kids!

The sun is shining (although with the British weather, by the time you’re reading this, it’s fully likely that it’s raining again!) and July approaches. However, for many of us, the start of July also begins the countdown to the start of the school holidays, and potentially, the challenge of trying to juggle work and childcare.

In this week’s blog, we take a look at the ways in which you can help fund that childcare, because we all know, it isn’t cheap!

Voucher scheme/Direct Agreement

First off, it is worth noting that, since October 2018, both of these options are no longer open to new claimants. If you were already claiming either via your limited company before October 2018, then you are fine to continue claiming.

Voucher Scheme– with this scheme, vouchers are paid to employees which would then be used to pay for childcare. Your childcare provider will claim back their fees and there will be an admin fee from the company who issues the vouchers.

Direct Agreement– with this option, the employer will pay a provider for childcare costs on behalf of the employee. The amount paid will be set out in an agreement between the employer and employee (up to £243/month).

If, however, you did not sign up to either of these schemes before October 2018, then you can instead use the Tax Free Childcare Scheme.

Tax Free Childcare Scheme

With this scheme, you are able to receive up to £500 every three months (up to £2000/year) per child (under 11) to help with the costs of childcare (this is doubled for a child with disabilities).

For every £8 that you pay into your childcare account, the government will pay in £2, and this account can be used to pay for approved childcare providers, which will include nurseries, childminders, after school clubs etc.

To qualify, there is a number of criteria, so it is best to check your personal circumstances here before claiming. If you are working through a limited company, you will need to ensure that you are earning at least the minimum wage (for 16 hours work per week) over the next 3 months, so you will need to have a salary set up. if you are self employed (and have been for more than 12 months), you will also need to expect to earn the equivalent amount over the next 3 months.

So, even if you don’t qualify for the voucher scheme or direct agreement via your limited company, there is an option for you to help with those summer childcare costs. Because let’s face it, after the last two years, many of us will be quite happy to see the back of having to try and juggle work and keeping the kids entertained!


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.

PaperRocket Senior Accountant Wins Best Contractor Accountant At The Contracting Awards 2022!

We are absolutely thrilled to announce that last night, at the first ‘in person’ Contracting Awards event since 2019, our senior accountant Nikki Norman was awarded ‘Best Contractor Accountant 2022’!

The awards were certainly back with a bang (after the last ceremony had to take place over Zoom!) with a glitzy bash held at the prestigious Montcalm Hotel in Marble Arch, London.

The Contracting Awards recognise the top contractor suppliers in the UK, from accountants, to banks and mortgage providers. These awards reflect the top service providers in areas that contractors most need excellent service.

A fantastic evening was had by all, with comedian Russell Kane compering the event, and it was a great opportunity to engage with the many suppliers (be it of accountancy services, software, insurances etc) that dedicate their services to contractors.

Upon awarding Nikki ‘Best Contractor Accountant 2022’, the judges stated that Nikki’s passion and commitment to going above and beyond for her clients truly shone through”.

Sarah Solo, director of PaperRocket Accounting says of the win, “I couldn’t be more proud of Nikki for winning this award, it is such an amazing achievement!  I may be a little bit bias, but I never doubted for one moment that she wouldn’t win on the night and I couldn’t think of another accountant more deserving.  Nikki fully embraces the PaperRocket client service ethos in all that she does and really is an exceptional accountant.  Congratulations Nikki, we are so thankful to have you in our PaperRocket team!”


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.

Confirmation Statements- What Are They And Do I Need To Complete One?

When you have a limited company, much of your focus may be on the accounting filings that are required of you, be that annual accounts, corporation tax returns, VAT returns etc. However, there is also another return which, whilst being relatively straightforward, could cause you a big old headache if you neglect it. And that is the company’s confirmation statement (previously known as the ‘annual return’).

What is a confirmation statement?

The company confirmation statement contains statutory information, including your company’s address, the directors’ names, shareholding information, and a record of PSC’s (People with significant control) over the company. The statement simply acts as a way for the director to confirm that Companies House is holding correct and up to date information on that company as of the date of the return.

Do I need to complete one?

If you are a director of a limited company, then yes you do! Whether your company is dormant or trading, you are required by law to complete a confirmation statement for your company. If you do not complete a confirmation statement when required, Companies House may start action to ‘strike off’ your company, and this is where the headache can be caused as, if the statement remains outstanding, and the company is struck off, this will lead to your company bank account being frozen and you no longer being able to trade, and trying to reverse this is a costly, time consuming process that, trust us, you could do without!

How do I file it?

The easiest way to file a confirmation statement is online via the webfiling service. This will cost £13. Alternatively, a paper statement can be completed, but this costs £40.

At PaperRocket, we will take care of the filing of your confirmation statement on your behalf, whatever fee package you may be on, ensuring that your statement is filed both on time, and accurately.

And when do I need to get it filed?

Unless you change the filing date, your confirmation statement will need to be filed around the anniversary of your company formation. The best thing to do is to check on Companies House as this will show you both the made up date (the date for which you are providing the information) and the filing deadline date. You will have 14 days from the made up date to file the statement. As we have mentioned above, failure to do so could lead to the company being struck off the register, and even prosecution.

The easiest thing to do to ensure that you do not miss the deadline is to sign up for email reminders from Companies House. This can be done online via their webfiling service, and will mean that you will receive a reminder when it becomes due.


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.

Choosing an Accountant- Why it’s Important to Get it Right

It’s fair to say that when you first set up your own business, your ‘to-do’ list will most likely be full of important jobs to get done, things like purchasing insurances and obtaining business contracts. And one of the items that should be at the top of that list is making sure that you have a great accountant. Not only will they be there to save you time and assist with the necessary filing requirements you will have for yourself and your business, they will also be able to keep you up to date with legislation that could otherwise pass you by.

So, with so many options out there, what should you be looking for in an accountant?

Personal recommendation

If you have friends working in the same sector, then a great first step is asking them who their accountant is, and whether they would recommend them. Nothing really beats a personal recommendation from someone that you already trust.

Another good option is to check out review sites to read first hand reviews from current/previous clients. There are various review sites for accountants out there, (such as this one), and most firms will also have a number of Google reviews if you search for them.

Reasonable, fixed fee

We specifically use the word ‘reasonable’ here, rather than ‘cheap’ because it is fair to say that when it comes to choosing an accountant, there is an element of ‘you get what you pay for’, so simply picking one because they are cheap may well not work out best in the long run. The best thing to do is to have a look around various different accountants, and check exactly what they are offering for their fees. A firm offering a ‘too good to be true’ fee may be doing so because they’re going to then charge you extra for various essential services, or perhaps they have recently gone through some negative publicity and are desperate to reinstate a dwindling client base.

We would always recommend choosing an accountant who has a fixed fee as well, so that you know how much you will be paying each month, and for what. The last thing you want is to find yourself being hit with hidden charges, or unexpected fees partway through your engagement, so it is always worthwhile checking exactly what you are going to be getting for your money.

A cyber conscious and secure firm

We live in an age where so much of our data is online. And whilst this is incredibly handy, it can also be risky if it isn’t protected adequately. If your data is leaked or hacked, you could be at risk of identity theft, or even financial theft if certain information including passwords becomes accessible. In recent months, certain accountancy firms have found themselves the target of cyber attacks, leaving their clients’ information at risk.

If you have an accountant, then chances are, they hold a lot of personal information on you, be that address, date of birth, national insurance number, bank account details etc, so it is highly important to ensure that whoever you choose to appoint as your accountant can give you reassurance as to how they protect your data.

You are still in control

In 2007, MSC (Managed Service Company) legislation was brought in to prevent accountants having ‘too much control’ over their client’s businesses. Recently, this has reared its head, as certain accountancy firms have been deemed by HMRC (under appeal) to be MSC providers, leaving their clients hit with PAYE bills from HMRC. Therefore, it is important that you check that your accountant is not an MSC provider, and that you still have control over things like raising invoices, obtaining new work contracts, paying salary/dividends etc.

Dedicated, qualified accountant

There are a number of accountancy firms out there that, each time you contact them, you will be speaking to someone different. However, we believe that it’s really important for you to have a consistent point of contact for your accountant. When you are busy running your own business, the last thing that you want is to be speaking to someone different every time you ring up, or worrying that deadlines may be missed as you get passed from pillar to post. So, you should always check that you will have a dedicated accountant and find out exactly who you will be dealing with on a day to day basis, and also check whether they have a direct dial that you will be able to contact them on, rather than reaching a call centre.

It is also worth checking that your accountant is suitably qualified, whether that be through years of experience, or professional qualifications such as AAT, ATT ACCA, ACA or CIPFA, and that they have good experience in the contractor market. You should also ensure that the accountancy practice itself is regulated. That way, if you do have any problems, you will have the option to escalate these to their professional body (something that you wouldn’t be able to do if the firm is not regulated).

It is also important that your accountant is approachable and on hand to answer any question you have, no matter how big or small. Accounting and taxation can be complicated, and whilst of course, you don’t want to be having to be undertaking some sort of accounting qualification yourself, you will want an accountant who is able to explain anything that you are unsure of so that you have confidence in what is being submitted in your name.

Modern, reliable technology

Luckily, gone are the days when accountants worked solely on paper or excel spreadsheets. Now, there is so much amazing accounting software out there, meaning that the hassle of maintaining accounting records has all but gone, and that both you and your accountant will be able to access your accounting records at any time. Using well established cloud software, such as FreeAgent, is much less time consuming not only for you, but also for the accountant which will leave them with more time to be proactive with the advice that they give.


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.

Managed Service Company Legislation- Should I Be Worried?

If you keep up to date with the latest HMRC or contractor goings on, you may have heard recently about HMRC targeting contractors with large tax bills, having accused their accountant of being a Managed Service Company (MSC). So, what is an MSC, and should you be worried?

What is a Managed Service Company?

Before 2007, MSCs were a popular alternative for contractors to setting up a limited company. Essentially, they worked in a way that meant that the contractor got the tax benefits of working through a limited company, without the responsibility, which was left to the MSC service provider. An MSC will be involved in the company, possibly benefiting financially from it’s successes, as well as influencing/controlling the running of the business and provision of the services. Before 2007, it was common place for these MSCs to raise invoices on behalf of their clients and control their company bank accounts issuing salary/dividends to them.

However, in April 2007, MSC legislation was introduced to outlaw this practice, with anyone deemed to be working under an MSC to be subject to PAYE tax and National Insurance as though they were working as a payrolled employee.

So, what’s happened now?

As a result of this legislation, previously defined MSCs had to change their ways (usually converting to act as an umbrella company) or risk being put out of business. And most did. However, in March this year, apparently out of the blue, contractors using the accountants Churchill Knight and Boox started receiving tax demands from HMRC, accusing them of being Managed Service Companies and the accountants of being Managed Service Providers, something which both accountancy firms deny strongly, and are appealing against.

Should I be worried that my company may be seen as an MSC?

It is very important that when it comes to your limited company, you are the one that is in control. Your accountant should not have access to your bank account, they shouldn’t be raising invoices on your behalf nor negotiating terms of your contract for you (or receive any sort of commission for contracts that you take on).

Depending on the outcome of the Churchill Knight & Boox probes, HMRC may well target other contractors and accountancy firms and agencies in the future. However, here at PaperRocket Accounting, we are confident that we would not be deemed to be a MSC provider. We ensure that we never do anything that could be interpreted as helping to run, or influence our client’s businesses.


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.

P11ds- What They Are And Whether You Need To Complete One

Now that we are a few weeks into the 2022/23 tax year, it’s time to start getting everything tied up in order to say goodbye to the 2021/22 tax year. And one of the first things you’ll want to see to is your P11d for the year- if, that is, you need to complete one.

What is a P11d?

A P11d is a filing used to report any Benefits in Kind.

So, what are Benefits in Kind?

Generally, any items or services that you or your employees receive from the company in addition to your salary, or any expenses that have been put through the company that are not wholly, exclusively, and necessarily for the purpose of the business, will be deemed to be a benefit in kind. Some of the most common examples are:

  • Interest free (or below HMRC interest rate) loans (over £10,000)
  • Company cars
  • Private healthcare
  • Gym membership
  • Assets provided to an employee with significant personal use
  • Non business travel/entertainment expenses
Do I need to file one?

If you’re an employer with a PAYE scheme open, then most probably yes. It is the responsibility of the employer for filing a P11d, not the employee (if contracting through your own company, this will fall to you). If you had a PAYE scheme open at all during the tax year in question then you will be required to submit a P11d for the year. Even if there have been no benefits in kind during the year, you will still need to file a ‘nil’ P11d.

Will the employee/employer need to pay anything?

If an employee has received a benefit in kind, then yes. As a benefit in kind effectively increases the employee’s salary, there will be National Insurance contributions payable on them. This currently stands at a rate of 13.8% and will be payable by the employer (n.b. this will increase from 13.8% to 15.05% for the 22/23 tax year to account for the Health and Social Care Levy). However, what this 13.8% will be charged on depends on the benefit, so it is always advisable to have an accountant assist with the completion of this form. You will also need to bear in mind that because it effectively increases salary, this will need to be included in any tax planning, as tax and employees national insurance will be due on the benefit.

When is it due?

Regardless of your company accounting year, all P11d filings cover the standard tax year (6th April – 5th April). All P11ds must be filed by 6th July following the end of the tax year. Any payment due must reach HMRC by the 22nd July (19th July if paying by cheque). The deadline for filing the 21/22 P11d is 6th July 2022. If your P11d is late, you will receive a penalty of £100 per 50 employees for each month (or part month) it is late. If payment is late, you will also receive penalties and late payment interest on that.

Important Note- Trivial Benefits

As an aside, one thing that doesn’t need to be included on your P11d are Trivial Benefits. Provided certain rules are adhered to, trivial benefits paid to your employees will not need to be declared and therefore not be taxed as a BIK. The rules are that the benefit must not:

  • Exceed £50 (not even by 1p or the whole amount becomes taxable). If, for example, you take a number of staff out for a meal, this can be averaged out per head.
  • Be cash (although gift vouchers are allowable, provided they can’t be exchanged for cash).
  • Be a reward of normal employment duties.
  • Be part of any contractual obligation/salary sacrifice scheme.
  • If the benefit is paid to a company director, then there is an annual cap of £300 (again, each individual benefit can’t exceed £50).

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.

Happy New Tax Year!

We have now bid adieu to 2021/22 and stepped foot into the 2022/23 tax year, which runs from 6th April 2022 to 5th April 2023. In this week’s blog, we break down what the start of the new tax year means for you, and what allowances are available to you in 2022/23.

Personal allowance

The personal allowance for 2022/23 remains the same as 21/22 at £12,570.

Rates of income tax

Again, the income tax bands remain the same as last year, at:

Personal allowance-        Up to £12,570                   0%

Basic rate-                          £12,5711- £50,270          20%

Higher rate-                       £50,271- £150,000          40%

Additional rate-                £150,001 +                        45%

The above assumes entitlement to the standard personal allowance.

National Insurance Rates

To take into account the new Health and Social Care Levy, NI rates have increased.

Class 1 (employees)- Assuming a standard NI category, this now means earnings over the primary threshold (see details below) up to the upper earnings limit have NI applied at 13.25%, and over the upper earnings limit at 3.25%.

Class 1 (employers)- this has now increased to 15.05% on employee wages over the secondary threshold.

Class 2 (sole traders)– This is £3.15/week for profits over the Small Profits Threshold.

Class 4 (sole traders)– For profit over the Lower Profits Limit, the NI rate increases to 10.25%, and over the Upper Profits Limit, increases to 3.25%.

National Insurance thresholds

As detailed in the Spring Statement, the Primary Threshold will be increasing from July 2022 (the below figures are annual):

Lower Earnings Limit-     £6,396

Primary Threshold-         £9,880 increasing to £12,570 in July

Secondary Threshold-     £9,100

Upper Earnings Limit-     £50,270

Small Profits-                    £6,725                 

Lower Profits Limit-         £9,881

Upper Profits Limit-         £50,270

Tax free dividend allowance and dividend tax rates

This also remains the same for the new tax year, with the first £2,000 of dividends received being tax free.

However, the rates at which subsequent dividends are taxed have also increased, to take into account the Health and Social Care Levy:

Basic rate-                          8.75%

Higher rate-                       33.75%

Additional rate-                39.35%

Personal savings allowance

Again, this remains the same as 2021/22, with basic rate tax payers being able to receive up to £1,000 interest tax free, and up to £500 for higher rate tax payers.

Employment Allowance

In the Spring Statement, it was announced that this would increase to £5,000 per year per eligible employer for 2022/23.

Capital Gains Tax

Neither the rates of CGT have changed, nor the Annual Exemption Allowance which remains at £12,300.

Business Asset Disposal Relief (previously Entrepreneurs Relief)

This is still available at 10%, with a lifetime limit of £1million.

S455 tax (on director’s loan accounts)

This has increased in line with the higher rate dividend tax to 33.75%.


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.