No time to waste!
Tax return season is upon us again. By now you should have received much of the documentation needed to complete your tax return for the year ended 5 April 2021. When you have it all together, there's no need to visit the Post Office - scan, fax or even photograph your information and email it: firstname.lastname@example.org ...
HMRC Proposes Abolition of Basis Periods for Unincorporated Businesses in 2022
Draft legislation will be included in Finance Bill 2022 to abolish basis periods for businesses that pay income tax on profits calculated on a current year basis. From 2022/23 those taxpayers will have to report to HMRC the income and expenses that arise precisely in the tax year – i.e. on an ‘tax year basis’. Losses will be those arising in the tax year. MTD forces change With ...
2021 Budget Summary
With the UK having been adversely affected by the COVID-19 pandemic, Chancellor Rishi Sunak presented the 2021 Budget against a backdrop of ongoing economic hardship. Our Budget Summary provides an overview of the key announcements arising from the Chancellor’s speech. However, it also looks beyond the headlines and offers details on the less-publicised changes that are most li ...
Covid-19 - Change of conditions applying to latest SEISS Payment
The SEISS claims portal reopens on Monday 30 November, but taxpayers must declare their trade has been impacted by reduced demand before they claim the third grant. This is a change from previous payments when taxpayers simply had to claim their business had been adversely affected.
When claiming the first two self-employed income support (SEISS) grants taxpayers had to confirm that their trade had been adversely affected by the coronavirus pandemic, which was a difficult concept to pin down. For the SEISS.3 this condition has been replaced with a more precise “impact on demand” test.
Where they qualify for the SEISS.3 grant, taxpayers will receive one lump sum payment to cover the three-month period: 1 November 2020 to 31 January 2021. It will be paid at 80% of the taxpayer’s average trading profits for 2016/17 to 2018/19, as calculated for the SEISS.1 grant.
The maximum SEISS.3 grant payable is £7,500, or £2,500 per month, which is also the same cap as applied for the SEISS.1 grant.
To qualify for SEISS 3, an individual must be:
The trader must also confirm they are:
The previous “adversely affected” test was met if the business turnover had decreased, or alternatively if business costs had increased, due to the pandemic. There was no minimum threshold for the adverse effect, so even a small increase in costs or drop in sales meant the business would qualify.
The new reduced demand test requires the trader to suffer a significant reduction in trading profits for the relevant accounting period. Unhelpfully, “significant” is not defined, so it must take its normal English definition as having a great effect, or something that affected a situation to a noticeable degree.
The HMRC examples make it clear that an increase in costs alone, resulting in a drop in profits, will not allow the trader to qualify for the grant.
The reduction in sales can be due to a number of factors, but it must also lead to a reduction in profits. If the volume of sales has decreased but the value of each sale has increased so profits are constant, the business does not qualify.
Please note that if the reduced sales activity is solely due to the business owner having to self-isolate because they, or someone they care for, has travelled into the UK, that business doesn’t qualify for the SEISS.3 grant. Self-isolation due to Covid-19 symptoms, testing or on instruction due to medical vulnerability is accepted as a cause of reduced sales.
The remaining conditions as applied for the first two SEISS grants still apply to SEISS 3, which unfortunately means taxpayers who were excluded from those grants are still excluded from the SEISS.3. This includes those who:
Covid-19 - Deferral of Self-Assessment Tax Payments due 31 January 2021
In the Chancellor's Winter Statement last week it was announced that individual taxpayers can choose to defer tax due by 31 January 2021 without incurring interest or penalties. Taxes involved are as below: Second Payment on Account for 2019/20 (already deferred from. 31 July 2020) Balancing payment for 2019/20 First Payment on Account for 2020/21 Capital gains tax for 2019/2 ...
Significant changes to how property disposals will be taxed in the UK
From 6 April 2020 there are significant changes to how property disposals will be taxed in the UK. Be aware that if your house sale has been delayed until after 6 April by lockdown you will unfortunately now be caught by changes to the capital gains tax regime for residential property sales. These changes affect those who have not lived in the house as their main home for the d ...
COVID 19 - Extension of Period to Claim Stamp Duty Refunds on Purchase of 2nd Home
HMRC has been persuaded to offer some relief for those caught in a Stamp Duty trap by delays in selling their home caused by lockdown restrictions. The trap was inadvertently created by the property market being frozen. In April 2016, the Government introduced an extra 3pc stamp duty surcharge on properties purchased in addition to a main residence. Buyers could apply for a r ...
Extension for Reporting CGT on the Sale of Residential Property
Since 6 April 2020, UK homeowners have joined non-UK resident owners of residential property in needing to report sales and pay any CGT due to HMRC within 30 days of completion. To help UK resident taxpayers get used to the new rules and online filing process, HMRC has confirmed it will not charge late filing penalties for reports of CGT on disposals of UK residential property ...
Covid-19 - Tax Relief for Additional Cost of Working from Home
Employees who are directed by their employers to work from home are entitled to some relief for additional household expenses incurred such as heat, light, water and business phone calls. The Revenue have confirmed that those affected by COVID are considered in this category. As it is difficult sometimes to quantify these additional costs and whether they exclusively relate t ...
Covid-19 - Deferral of 2nd Payment on Account for 2019/20
HMRC is supporting individuals by offering an optional deferral of the second payment on account for 2019/20, from 31 July 2020 to 31 January 2021. This is an automatic offer and no application is required. No interest or penalties will be charged, so long as both the 2nd payment on account and any balancing payment for the year is made by 31 January 2021. It is not necessary ...