Are you and your workforce ready for the new tax year?

As the end of the tax year is fast approaching on 5 April 2024, it’s important for you as the main contractor and your subcontractors to get your tax obligations in order. This will ensure you and your workforce remain compliant and avoid penalties from HMRC.

Indigo has summarised what you and your workforce need to do to prepare for the new tax year, including what to submit to HMRC and key deadline dates.

The new tax year will begin on 6 April 2024.

Self Assessment Tax Return

Any self-employed subcontractors (sole traders) you engage with will be responsible for completing their own Self Assessment tax return online by 31st January 2024 (the deadline for paper returns was October 2023). 

Read more about Self Assessment tax returns on our guide here. 

As a main contractor, if you are a director of a limited company then you must also complete a personal Self Assessment tax return online by the 31st January 2024. This is only relevant if you have worked on contracts placing you outside of IR35. Tax must be paid on income received above the Personal Allowance threshold (£12,570 for 2022/23). Include this information on your personal Self Assessment tax return. 

Read more about IR35 on our guide here.

The payment deadline for any tax owed is also 31st January 2024. This includes tax owed for the previous tax year (also known as the balancing payment) and your first payment (advance payments towards your tax bill) on your account.

Any late filing of tax returns and late payments will incur penalties from HMRC. 

Read more about late filing penalties on our guide here. 

Dividends

Directors of limited companies that are planning on taking dividends from company profits must do this before 5 April 2024. This information needs to be included in your personal Self Assessment tax return. 

Full Payment Submission

If running payroll, even for just a single director or employee, a final Full Payment Submission (FPS) needs to be submitted on or before your employees’ last pay day of the tax year on 5 April 2024. 

Basis Period Reform

The way taxable profits are reported and how tax returns are prepared is changing from 6 April 2024. This change will affect self-employed sole traders (and partnerships) with an accounting period between 6 April and 30 March. This change is called basis period reform. 

Accounting periods between 31 March and 5 April will not be affected by the change. 

Basis period reform means all self-employed sole traders (and partnerships) will report tax to HMRC on a tax year basis, from 6 April to 5 April, regardless of their accounting period. 

This change comes into place from the next tax year on 6 April 2024.

HMRC is allowing businesses that use any accounting period and with unused overlap relief to use it during the transitional year. The overlap relief will be ‘lost’ if it is not used before 5 April 2024. 

If the basis period reform affects you, there is still time to consider changing your accounting date to 31 March or 5 April, to align your accounting period with the end of the tax year. HMRC has lifted the restrictions on changing your accounting date, starting from the tax return for 2023 to 2024. 

Autumn Statement November 2023 and Spring Budget 2024

The Chancellor announced in the Autumn Statement in November 2023 a number of changes that will impact construction businesses and those working in construction. Read a summary of the highlights and challenges in our Autumn Statement blog here. This will help you identify any changes that may impact you or your workforce.

Changes may also be announced in the upcoming Spring 2024 Budget. Keeping up to date with tax announcements ensures you stay compliant and a step ahead of anything that may affect you, your business and/or your workforce.

Indigo holds every subcontractor’s statement of earnings and uploads it to their individual, safe and secure, Indigo portal. Subcontractors are able to access this information directly from us, 24/7, ready to complete their Self Assessment tax returns. 

This saves contractors admin time, fuss and money.

Indigo can also help with:

• Protecting you from subcontractor employment status issues
• Shielding from future tax liabilities
• Avoiding tax penalties from late filing and missed deadlines
• Reducing admin to save you time to focus on your other business challenges and opportunities
• Access to our MyIndigo platform for full transparency of subcontractors profiles
• We review your contracts and procedures, and protect you from risk
• We ensure all subcontractors are covered by the correct insurance policies
• Removing the administrative burden of CIS compliance
• Friendly, professional and expert team with a dedicated Business Development Manager
• We are an FCSA accredited company, which means that your business and workforce are in safe hands

Please get in touch for a free Business Compliance Health Check if this is something you think Indigo can help you with. 

If you are a subcontractor needing statements for your Self Assessment tax return, please check your Indigo portal or get in touch with one of our support team.