July Questions and Answers
Newsletter issue – July 2023
Q. I quit my job in July 2022 and became self-employed from September 2022. I started to pay class 2 NIC for my self-employed trade with effect from 1 September. Will the 2022/23 count as a qualifying year towards my state pension?
A: Probably not as you will not have paid NIC for every week of the year. But you need to check your NIC record on your personal tax account (www.gov.uk/personal-tax-account) once you have submitted your tax return for 2022/23. Do this as soon as possible. You will then be able to pay class 2 NIC for any missing weeks, once you know how big the gap is.
Q. I have applied to register my café business for VAT from 1 July, but the VAT number hasn't arrived. What should I show on invoices from that date?
A:
- You should charge your customers the basic price plus 20% VAT from 1 July, but you can't show the VAT amount separately on the invoice. As you are a retail business, and your individual invoices are likely to be £250 or less (including VAT) you are not required to issue full VAT invoices. You should issue simplified VAT invoices, which must include the following:
- Your business name and address
- VAT registration number (say 'VAT number applied for' until you get it)
- date of the sale
- description of the goods or services supplied;
- total amount payable including VAT;
- for each rate of VAT chargeable, the gross amount payable including VAT; and
- the VAT rate applicable.
Q. My building business is winding down as I prepare to retire. I want to close my company, which has gross payment status for the Construction Industry Scheme (CIS) and carry on any further work as an individual sole trader. Will the CIS gross payment status carry over into my sole trader business?
A: When a sole trader builder incorporates their business their CIS gross payment status (if they have that) carries over into the new company. As your company is entirely owned by you, and you are the only director, HMRC will view you as a sole trader and your company, as a continuing business for CIS purposes. So, the CIS gross payment status should carry on into your self-employed trade.