Extended Deadline for Voluntary National Insurance Contributions

Jul 26, 2023

The deadline for making additional voluntary National Insurance Contributions (NICs) has been extended, providing taxpayers with more time to address gaps in their contribution records. This article discusses the recent extension, its significance, and potential benefits for individuals seeking to maximise their entitlement to state benefits.


Extended Deadline: A Welcome Opportunity

The original deadline for voluntary NICs allows taxpayers to pay contributions dating back to six tax years, with the cutoff set at 5 April each year. However, a specific extension has been granted for the tax years from April 2006 to April 2017. This extension was introduced as part of the transitional measures for the new State Pension.


Previous Deadline Extension

Initially, the deadline was scheduled to expire on 5 April 2023. But, due to the overwhelming influx of applications and information requests received by HM Revenue and Customs (HMRC), it was extended until 31 July 2023. However, considering the continuing challenges faced by HMRC in processing these requests, a further extension has been implemented.


Addressing Concerns and Managing Demand

The decision to extend the deadline is primarily driven by concerns surrounding HMRC's capacity to handle the significant number of applications and information requests from taxpayers aiming to fill gaps in their NIC records. By allowing more time for individuals to submit their contributions, the extended deadline aims to alleviate the burden on HMRC and ensure everyone has a fair opportunity to address any discrepancies.


Stability in Contribution Rates

Additionally, HMRC has confirmed that all relevant voluntary NIC payments will be accepted at the rates applicable in the 2022-23 tax year until 5 April 2025. This means that individuals can make contributions based on the current rates, providing stability and predictability for those considering taking advantage of the extended deadline.


Extending the deadline for voluntary NICs is a welcome opportunity for taxpayers to rectify gaps in their contribution records. With the added time and stability in contribution rates, individuals between the ages of 45 and 70 can assess their eligibility for increased state benefits. By taking advantage of this extension, taxpayers can make informed decisions to maximise their entitlements and secure a better financial future.


If you would like more advice and assistance, please contact us at info@gkaccountingservices.com or call us on 01269 518 815, where we will be more than happy to answer any of your questions.

Using the cash basis scheme

01 Mar, 2024
The cash basis scheme offers a streamlined financial management approach, particularly beneficial for sole traders and unincorporated businesses. However, it is important to note that this scheme is not applicable to limited companies and limited liability partnerships. The primary advantage of the cash basis is its simplicity in recording income and expenditure, catering to businesses with straightforward financial structures, particularly those offering services. For businesses contemplating the cash basis scheme, it is imperative to assess suitability. The scheme may not be the optimal choice if your business falls into any of the following categories: You intend to claim interest or bank charges exceeding £500 as an expense. Your business involves complexities, such as high levels of stock. Finance is required, as banks may request traditional accounts to assess the business's financial standing before approving a loan. There are losses that the owner wishes to offset against other taxable income (utilizing 'sideways loss relief'). The cash basis scheme is most suitable for uncomplicated businesses, particularly service-oriented ones. To qualify, businesses must have a turnover of £150,000 or less, and they can continue using the scheme until their turnover reaches £300,000. Earlier this year, HMRC initiated a consultation to explore potential extensions to the scheme. The consultation, which concluded on June 7, delved into various concepts, including raising turnover thresholds for cash basis eligibility and considering the cash basis as the default method, allowing an opt-out for accruals. Further details arising from the consultation will be published in due course.

What is an SA302 form?

16 Feb, 2024
The SA302 form, obtainable from HMRC, serves as a substantiating document validating one's earnings. Widely utilized for self-employed individuals, the SA302 tax calculation and tax year overview documents have become pivotal evidence of income for loan or mortgage applications, aligning with the heightened need for verifiable income in adherence to mortgage regulations. Covering the last four years of Self-Assessment Tax Returns, the SA302 delineates the breakdown of income declared in the taxpayer's tax return, encompassing commercial variations. Simultaneously, the tax year overview attests to the tax liabilities stemming from the submitted return to HMRC, detailing payments made and cross-referencing the Tax Calculation with official HMRC records. Self-assessment taxpayers can leverage HMRC's online service to requisition an SA302 tax calculation for the preceding four tax years. Post the online tax return submission, a 72-hour processing period precedes the availability of printable documents. Alternatively, those utilizing commercial software, either individually or through an accountant, can access their proof of earnings seamlessly.  Most lenders accept SA302 forms printed from online accounts or generated via the commercial software facilitating return submissions. HMRC, in collaboration with the Council of Mortgage Lenders and their affiliates, has actively expanded the pool of lenders embracing self-serve copies, streamlining the validation process for borrowers.

What is the Annual Investment Allowance

01 Feb, 2024
The Annual Investment Allowance (AIA) is a tax relief mechanism that enables businesses to deduct the entire qualifying expenditure on plant and machinery from their pre-tax profits. Eligibility for the AIA extends to individuals, partnerships, or companies engaged in a trade, profession, or vocation, as well as those involved in a UK non-residential property business, or a furnished holiday let. It is noteworthy that only partnerships or trusts with a diverse mix of individuals and companies within their business structure do not qualify for AIA. As of April 1, 2023, a substantial and enduring adjustment increased the AIA from £200,000 to £1 million. The transitional rules that were previously in effect for chargeable periods spanning April 1, 2023, have been eliminated, as they are no longer deemed necessary. The AIA encompasses a broad spectrum of assets acquired by a business, including but not limited to machines and tools, vans, lorries, diggers, office equipment, building fixtures, and computers. However, it's important to note that the AIA does not apply to expenditures related to cars.  To benefit from the AIA, a claim must be submitted within the period in which the item was purchased. This period is defined as either the date when a contract is signed (if payment is due within 4 months of signing) or the actual payment date (if payment is due more than 4 months later).
Share by: