Latest news with #RentaRoom
Daily Mirror
3 days ago
- Business
- Daily Mirror
Tax warning issued to freelancers ahead of shake-up next year
MoneyMagpie Editor and financial expert Vicky Parry warns self-employed workers and freelancers about the pitfalls of ignoring Making Tax Digital changes Making Tax Digital (MTD) has been slow to roll out, but it's nearing the end. And most freelancers and self-employed people have no idea what that means for them. This guide helps you understand what you need to know to avoid huge fines from HMRC. What is Making Tax Digital for income tax? HMRC reporting systems are outdated and unwieldy. Making Tax Digital is supposed to cut through the archaic system to help companies and freelancers manage their taxes more easily and accurately. The scheme has already rolled out for companies and sole traders registered for VAT. Making Tax Digital for Income Tax is the next stage in a years-long roll out of the new system. Rather than annual reporting with a deadline nine months after the end of the previous tax year, which is the current Self Assessment system, people will be required to submit quarterly assessments and the final, fifth, full report. The system is supposed to help freelancers and sole traders budget their taxes better. However, it does also add administrative burden to companies and freelance workers – and there is a requirement to use third-party software to submit, too. Who does it impact? By April 2028, all self-employed traders who earn over £20,000 a year will be part of MTD Income Tax. This will be rolled out in stages. For those earning above £50,000 a year, they will need to be registered for and using MTD for April 2026 – the next tax year from the one we're currently in. That means there are only ten months to get everything set up. Those earning £30,000 or above will need to comply by April 2027, and those earning £20,000 will be part of the scheme by April 2028. Landlords: You need to register too If you earn above the threshold amounts for any roll-out year of MTF for Income Tax from property rental income, you will need to register. If your property income is through the Rent a Room scheme, you won't need to register (unless your combined self-employed income also takes you over the threshold). You can ensure the tax-free portion of Rent a Room is managed on your final end of year full tax return. MTD for income tax exemptions There are some situations where you could be exempt from MTD for Income Tax. The first is if you know you will only use simplified expenses . Other exemptions include where HMRC cannot provide a digital service due to remote location, or a person cannot use a digital service due to age, disability, or location (i.e., it is too remote). You also do not need to register if you are under an insolvency procedure or your business is solely run by people of a religious order where electronic communication does not comply with religious beliefs. You may also withdraw from MTD for Income Tax if your business has received under the threshold income for three consecutive years, or your business is in a winding down procedure. Check the details of these and further possible exemptions on the Making Tax Digital Government pages . Self assessment and payments on account You will still need to complete an annual Self Assessment as well as file your quarterly reports. The Self Assessment is more detailed and will enable you to adjust for non-business income and other details. You're not penalised for adjustments between quarterly reports and your final Self Assessment. Payments on Account will still apply, too. This is where, if your tax bill is over £1000 for the year, you will need to pay the full tax bill plus 50% by January 31st, and the remaining 50% in July. PoA is supposed to estimate a regular annual income, so if you have an exceptional year – such as receiving an unusually large contract – you can apply to reduce these payments. However, if you apply to reduce the payment and then do manage to earn similar in the following tax year, interest can be applied on the difference in payments. Penalty points for late filing Late filing will still come with penalties, as with the usual Self Assessment process. However, in the trial years if you signed up to test the system early filing penalties will not apply. There is a new points-based penalty system for MTD Income Tax. You will not pay a fine for the first late filing, but cumulative errors will apply over ongoing tax years. Points will be applied for each late filing of quarterly and final reports, with a maximum fine of £200 for 4 points. The points will only reset when all filings are met to current dates. Points will expire after two years if you do not meet the threshold of 4 points. Penalties for late payments will also be changing under the new system. If you pay within 15 days of the due date, there is no fine. Within 16-30 days inclusive, the fine is 3% of the tax outstanding on the 15th day, and over 30 days the fine is 3% of the tax on the 15th day, plus 3% of the tax on the 30th day, and an extra 10% per annum charge until the payment is made. Interest will also be accrued daily. Standard fines for not maintaining accurate records, or for broken links in compatible software, will result in fines up to £3000. Choosing a third party software One of the rules of MTD for Income Tax is the use of third-party approved software. You can check which software is approved by HMRC here . You will need this software for your records even if you have an accountant filing on your behalf. While you can still keep spreadsheet records for your business, your filing must be done via one of these software platforms. Many business bank accounts now offer free access to integrated approved software, which could reduce the financial burden of your quarterly returns as well as make them faster as the software will have real-time information about your income and expenses. Sign up to free HMRC webinars While not widely advertised, HMRC does have some resources for freelancers and self-employed workers on their website. This includes a section about Making Tax Digital for Income Tax, including a recorded webinar or the ability to register for the next live webinar. It is strongly advised that freelancers, sole traders, and self-employed workers register for email updates from HMRC about Making Tax Digital, in case changes are implemented as the scheme rolls out through the trial phase. Some of the brands and websites we mention may be, or may have been, a partner of However, we only ever mention brands we believe in and trust, so it never influences who we prioritise and link to
Irish Times
20-05-2025
- Business
- Irish Times
Social welfare fraud does not necessarily die with you
Could you please advise me what would happen to a will in the following hypothetical scenario relating under Irish law? The deceased person did not declare all cash assets when applying for the old age noncontributory pension. The full old-age pension was subsequently drawn for a number of years. Upon the death of this person, it was identified that at the time the State pension was granted, total cash assets were underdeclared. By the time of the person's death, all cash assets had been transferred to joint accounts. How can the State now recoup these costs? READ MORE Can the overpayment be recouped from a joint account, which is now in the sole name of another person (following the death of the individual who received the pension overpayments)? Additionally, can the State look to recoup the overpayment from the primary residence, which is the only asset left in the estate even though it was not taken into account for the purposes of considering eligibility for the pension in the first instance? Ms MJ The interesting thing about hypothetical cases is that they are rarely entirely hypothetical. And I suspect your scenario is closer to the real world than you might be letting on. But no matter. The noncontributory State pension is a social-welfare payment made to people who do not have a sufficient PRSI contributions at retirement to qualify for a contributory pension. The maximum weekly payment currently stands at €289, not far short of the €289.30 payable to those in receipt of a full State contributory pension. You've clearly done some research on the means test this person will have had to undergo in their application for a noncontributory State pension. As you say, the family home is not taken into account in the means test, although if it had delivered rental income, either through being rented out entirely or in part, any rental income over €14,000 – the level of tax-free income available under the Rent a Room scheme – will be taken into account in a means test for someone in receipt on the noncontributory pension unless the person would otherwise be living alone, in which case all rent is disregarded. That aside, pretty much all income is included in the pension means test, apart from social welfare payments. [ I bought shares in the company I worked for but how do I figure out any tax liability Opens in new window ] In terms of savings, the first €20,000 is disregarded. Thereafter, the next €10,000 is considered to yield €1 in income per week per €1,000 of savings. Savings of €30,000-€40,000 are assessed as yielding €2 of income per week per €1,000, while anything above €40,000 is seen as giving you €4 per €1,000 in weekly income. The situation you outline is one of fraud – the deliberate misstatement of assets in a means test as part of an application for the noncontributory pension. That certainly presents a problem. The executor(s) of the estate have a legal duty to gather all the assets in the estate and to assess all liabilities that must be paid ahead of any distribution of net assets by inheritance under the estate. Failure to perform that function properly can leave the executor(s) legally liable to claim. Aside from that, the Department of Social Protection habitually requires three months postmortem to assess whether there has been any overpayment to the deceased that requires repayment. Of course, if they were lied to, they could hardly be expected to pick it up at that point. That does not absolve the executor(s) in their duty. [ Will having all our savings in joint names make things more difficult when one of us dies? Opens in new window ] Once notified, the department will require repayment of any overpayment as a result of fraud. It can also prosecute, although that's hardly a realistic prospect when the person engaging in fraud has died. The fact that the cash assets have been transferred to a joint account does not necessarily ringfence them. Some joint accounts pass to the other named account holder under survivorship but others do not – especially those of elderly people where the second named person is not a spouse but some other family member who was given access to the account for convenience of meeting the deceased's bills and living expenses. In survivorship, the accounts will transfer automatically and are not part of the deceased's estate for the purposes of probate. Otherwise they cannot be transferred to the other named account holder outside the probate process. In any case, even if the cash savings are no longer accessible, the Department of Social Protection would have a claim against the assets of the estate – in this case, the family home – before it is passed on to anyone under the will. The fact that the property was not included in the original means test is irrelevant. Any outstanding debts must be repaid, and if that requires the sale of the property in the absence of the cash being found some other way, then so be it. The ultimate question, I suppose, is whether the department – having been hoodwinked thus far – discovers the fraud. Probably not. But are you – or more accurately, the executor(s) – prepared to take that chance? Guess wrong and it will be they who will be liable for any repayment down the line. There's really no reason why they should take that chance and it is, in any case, an abuse of their role once they are aware of the fraud. Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to with a contact phone number. This column is a reader service and is not intended to replace professional advice
