Tuesday, 30 September 2014

Quick Guide to Tax Credits

Tax Credits are payments from the government that you could be entitled to if you have children.  There are 3 different types of tax credits:

Child Tax Credits: if you are responsible for children, you may qualify for Child Tax Credits. You don’t have to be working to claim Child Tax Credits.

Working Tax Credits: these are available for people who do or don't have children and who work 16 hours or more a week, but are on a low income.

Child Care element of Working Tax Credit: help with your childcare costs. 
You may qualify for these even if you don’t qualify for Working Tax Credits.

Your entitlement will depend on your household income.
Visit: www.gov.uk/qualify-tax-credits-quick-questionnaire to see if you qualify – you may be pleasantly surprised! 

Unfortunately you can not claim online so you will need to get a claim pack by phoning the Tax Credit Helpline:
0345 300 3900

It’s REALLY important to keep the Tax Credit office up to date with ANY changes in your personal circumstances and income as soon as they happen.  That way, you are more likely to avoid being in an overpayment situation and face having to pay large sums of money back, and you can ensure you are receiving the right amount.

For more information visit: www.gov.uk/child-tax-credit

Other help for families
To see if you qualify for any other help, use a benefits checker such as:


Wednesday, 30 July 2014

Self Employed? Protect Your Right to Maternity Allowance

Filling in a form to claim Maternity Allowance when you are a self employed Mum sounds pretty straight forward, but there is a MAJOR issue if you hold a Small Earnings Exemption Certificate.  A major issue that could see you losing out on thousands of pounds!

I came across this fantastic article by Frances Weir on Helen Lindop's great website www.businessplusbaby.com and felt I had to share it with you - it is too important to miss if you are a self employed mum-to-be or thinking of becoming one. 
A HUGE thank you to Frances and also Helen for letting me feature it.

The rules state that you must register with HMRC as self-employed within 3 months of starting trading. When you register, you will be given the choice of either:
  • paying Class 2 national insurance contributions (currently £2.75 per week),
  • completing a Small Earnings Exception Certificate (if you expect your earnings to be less than £5,885 a year), thus not pay any national insurance.

You can choose to pay Class 2 contributions regardless of how low you expect your income to be. But (if eligible) the obvious temptation for start-ups is to opt for the Small Earnings Exception Certificate – it saves you £2.75 a week at a time when you’re unlikely to be making any profit.
However, this has huge financial implications in terms of Maternity Allowance.

If you have been registered as self-employed for at least 26 weeks in your ‘test period’ (the 66 weeks before your due date), you’ll get some MA. If you have paid Class 2 contributions for at least 13 weeks in your test period, you’ll get the maximum rate (£138.18 a week for 39 weeks). But if you have held a Small Earnings Exception Certificate you’ll only get the minimum rate (£27 a week for 39 weeks); a huge £4,336.02 difference over the maternity period.
As a comparison, 13 weeks of Class 2 contributions costs £35.75 – go do the maths!

And here’s the important small print: for any week you have held a Small Earnings Exception Certificate, you’ll only ever qualify for the minimum MA, even if you have been voluntarily paying Class 2 contributions as well (this is to stop you getting pregnant and then paying Class 2 contributions in order to get maternity allowance!). If you want to work the system in this way, you must get your Small Earnings Exception Certificate cancelled first. The cancellation takes about a month to process so obviously you would want to do this soon after getting pregnant to ensure you have a clear 13 weeks of paying Class 2 contributions without holding a Small Earnings Exception Certificate, within your test period.

Not sure you will get pregnant? Opting to pay Class 2 contributions is a no-risk strategy – you’re entitled to reclaim the contributions made in a financial year if you subsequently find that your earnings fall below the £5,885 threshold of the Small Earnings Exception Certificate (if you plan to do this, look into it early on to ensure you meet the deadlines involved).

Don’t forget, Class 2 contributions also count towards other important benefits for the self-employed mum – the basic state pension, employment and support allowance and bereavement benefit.

I hope this clears up some of the confusion regarding MA. There is a great deal of mis-information on the internet – I’ve seen articles on mumpreneur websites recommending that start-up business mums opt for the Small Earnings Exception Certificate without any discussion of the impact it has on maternity benefits. Self-employed mums need to be aware of the financial implications of holding a Small Earnings Exception Certificate if there is any chance they might become pregnant in the future. And if anyone reading this is pregnant but holds a Small Earnings Exception Certificate, act fast to extinguish it!

This article is not applicable to women who are both self-employed and employed.
Please check the latest advice from the Department of Work and Pensions before relying on information presented here.

Frances and Helen are on a mission to make sure every self employed mother gets the maternity pay they are entitled to, so please spread the message!

Wednesday, 14 May 2014

How to Apply for a Tax Refund from HMRC

Millions of people paid too much tax in the last tax year which finished on April 5th.
Are you one of those people who are now entitled to a tax refund?
Read on and find out!

1)  Find your final Tax Code for 2014 / 2015
If you haven't had it already, your P60 (the end of year statement) detailing your earnings in the job you were in on 5th April should be handed to you soon (and legally you have to have it by 31st May).  
If you had more than 1 job on 5th April you should receive a P60 from each job as long as you earned more than £109 per week or £473 a month at least for one pay period.

On your P60 you will find your final tax code.  If you don't have your P60, dig out your final payslip from the last tax year or your P45 from the last job you had.  Is the tax code 944L with nothing after it?  In that case it is unlikely you are due anything back (but read on as it might be worth checking just in case!).

If the tax code has an X or a "month 1" after it, it is possible you may be due a tax refund.

2)  Is your code different to 944L and do you know why?  
Perhaps you had 2 or more jobs and your tax allowance was split.  Perhaps you paid Basic Rate (20%) tax at one job and had all of your taxable allowance at another.
Perhaps you received taxable benefits in your job (health care insurance etc).
Perhaps you receive a pension as well as income from your job.

If it is different and you don't know why, call HMRC on 0300 200 3300 and ask them to explain.

3)  Check the Figures
It's always worth checking the figures on your P60, even if your tax code seems to be correct.
HMRC have a useful tax calculator on their website.   

4)   Contact HMRC
If you think a refund is due, hopefully HMRC are already aware too, but it's definitely worth letting them know that you know as they are not fond of sending out cheques!
Give them a call on 
0300 200 3300 and tell them that you think you have overpaid tax for the last tax year.

Alternatively, you can write to them instead and enclose a copy of your P60, final payslip or P45.  
Send the letter to: 
HM Revenue & Customs
Pay as You Earn
PO Box 1970
L75 1WX

If you would like a FREE draft letter to send, please send an email to info@zestpayroll.co.uk and I will send you one.

It is up to you to keep HMRC informed if you change your name or address.  
If you need to update your information visit: 

©    www.zestpayroll.co.uk          May 2014