Self employed 4th grant available

If you have received any of the previous Self Employed Income Support Scheme grants (SEISS) you should receive an email from HMRC soon regarding your application for the 4th grant.

To apply, you’ll need to reasonably believe there is a significant reduction in your trading profits due to coronavirus between February 2021 and April 2021, and that you intend to continue to trade.

If you claim, you must also keep appropriate records as evidence of the impact on your business.

You do not need to have claimed SEISS before to apply for this round of grants, just visit GOV.UK for more information regarding the mehods for applying.

Minimum wage increase from April 2021

If you have employees you need to be aware of the increases across all ages of the minimum wage.

Rate from April 2020Rate from April 2021Increase
National Living Wage£8.72£8.912.2%
21-22 Year Old Rate£8.20£8.362.0%
18-20 Year Old Rate£6.45£6.561.7%
16-17 Year Old Rate£4.55£4.621.5%
Apprentice Rate£4.15£4.303.6%
Accommodation Offset£8.20£8.362.0%

New Self-employment grants announced.

The UK Government has today announced that the Self-Employment Income Support Scheme (SEISS) will continue until September with a fourth and fifth grant.

The fourth and fifth grants will take into account 2019 to 2020 tax returns and will also be open to you if you became self-employed in the 2019 to 2020 tax year. This means that you may be able to claim, even if you were not eligible for previous grants.

To qualify, you must have filed your 2019-20 Self Assessment tax return by 2 March 2021, at the latest.

Can’t pay your tax?

HMRC has announced they will not be charging the regular initial 5% late payment penalty if you make payment by 1st April 2021, however its not all good news; The regular payment deadline of the 31st of January hasn’t actually changed, and you will be charged interest after this date.

If you are having problems paying your self-assessment tax, and need more time to pay, you qualify for a “Time to Pay” arrangement with HMRC, you can even set this up online here. You can also call HMRC directly on 0300 200 3822 for more information.

So what is a Time to Pay arrangement? In a nutshell it allows you to spread your payments to HMRC in regular monthly instalments, up until January 2022.

If you still have not filed your Self-assessment tax return for 2019-2020, you need to do this before the 28th February to avoid penalties.

Claim your third SEISS grant now before its too late!

The deadline for claiming the third SEISS grant is fast approaching. If you are eligible, you must make your claim on or before 29‌‌‌ ‌January 2021.

As with the first and second SEISS grants, the third grant will be subject to Income Tax and self-employed National Insurance and must also be reported on your 2020-21 Self Assessment tax returns (to be submitted by 31‌‌‌ ‌January 2022).

Confirming a significant reduction in trading profits

Before you make a claim for the third grant, you must decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in.

HMRC cannot make this decision on your behalf because your individual and wider business circumstances will need to be considered when deciding whether the reduction is significant.

You do not have to consider any other coronavirus scheme support payments you have already received when deciding whether you reasonably believe that you will suffer a significant reduction in trading profits due to reduced activity, capacity, demand or inability to trade due to coronavirus during 1‌‌‌ ‌November 2020 to 29‌‌‌ ‌January 2021 (period covered by the third grant).

Self Assessment 2021 Late Filing Penalties.

HMRC has announced that Self Assessment tax payers will not receive a penalty for filing 2019-20 tax returns late, as long as you file online by 28‌‌ ‌February 2021.  If you have not yet filed, you are encouraged to do so by 31‌‌ ‌January 2021, if possible.

You still need to pay your Self Assessment tax bill by 31‌‌ ‌January 2021! Interest will be charged from 1‌‌ ‌February 2021on any outstanding liabilities. You can pay online, or through your bank, or by post before you file.

If you cannot afford to pay by 31‌‌ ‌January 2021, you may be able to set up an affordable plan and pay in monthly instalments. But you will need to file your 2019-20 tax return before setting up a time to pay arrangement. More information is available on GOV.UK.

Landlord expenses you should include

Landlord expenses – a quick guide to some of the more common expenses you should include in your tax return, some of which are particular to landlords. You could be wasting significant money when renting our your property if you are missing these allowable expenses.

General information

As a landlord, you probably already know the government is removing the ability to include your buy to let mortgage as a business expense. If you are in a position where this will affect you, I recommend you contact us and discuss the solutions we have available for you.

If your property is used solely for rental, with no private use, you should be able to apply most deductions below. If you property is also partly, either by time or floor-space, used by yourself, you need to apply deductions proportionately.

Tax Relief On Domestic Items

From April 2016, if a domestic item within your furnished rental property requires replacement, you should be able to claim tax relief for the item(s). It is important to realise this only applies to replacement of an existing item, not the initial purchase.

HMRC define “domestic items” as beds, freestanding wardrobes, floor coverings such as carpet, curtains and linens. Electrical items such as TV’s, freestanding cookers, fridges, freezers, dish-washers, washing machines, tumble dryers. You should also be able to receive tax relief on plates, cups, saucers, and cutlery. This list is an example, we could not find an extensive list produced by HMRC.

As a final word on replacements, they should be as close to like for like as possible, and not a significant improvement. Replacing a 32″ TV with a 66″ TV is not a reasonable replacement, and you should only claim tax relief on the cost of the 32″ replacement, even if you purchase the larger model.

Tax relief on domestic items does not apply to fully furnished holiday lets and “rent a room” schemes.

Ongoing & Operating Costs

Utilities : your water rates , council tax, gas, heating oil, and electricity can be deducted.

General repairs to the building and maintenance, such as guttering, windows, doors etc; as with domestic items, any replacement items must be of similar specification, not an upgrade.

Maintenance wages, such as cleaners, gardeners, security.

Administration and marketing, including letting fees, advertising, phone costs directly associated with acquiring new tenants.

Insurance costs including buildings, contents and public liability.

Legal fees where the tenancy lasts a maximum of a year, and renewals for less than a fifty year term.

Accountants fees.

Vehicle running costs incurred while servicing your rental business.

Are accountants fees a deductible expense?

This is a question which regularly pops up from new clients who are doing their own book-keeping, are your accountants fees an allowable expense? You will be glad to know that by and large, yes, your accountants fee is an allowable expense, but read on to find out when it might not be!

Why not?

There is a phrase used often by HMRC to describe expenses, and that is “wholly”, were the accountancy fees for you business only? What other reason could anyone possibly need an accountancy for?

Lets say you are employed as a plumber, and have an income from some rental property you were left by a deceased relative. Its been a very busy year at work, you have received a pay rise to £70,000 , and now need to consider the Child Benefit Clawback.

In this scenario, it should be possible to claim the accountancy fees for preparation of the accounts, however work carried out regarding the Child Benefit Clawback has nothing to do with the property rental business, and is therefore should not be an allowable expense.

Self Assessment Tax Return Online and Limited Company Accounting Services

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