Category Archives: Tax Help

Tax Help

Self-Employment Income Support Scheme Update

The online service for claiming under the latest phase of the Self-Employment Income Support Scheme (SEISS) will open in the next few days. Here are the latest updates on the scheme and details of when HMRC will be contacting you.

Customers receiving their personal claim dates
HMRC have begun contacting eligible customers to give them a personal claim date, from which they can make their SEISS claim. HMRC will have contacted you either by email, letter or through the online service, depending on what contact details they hold.
You can make their claim from this personal claim date in late April, until the claims service closes at 11:59pm on 1 June 2021.

If you have not been contacted by HMRC
If you believe you are eligible for the scheme but are yet to hear from HMRC, their advice is to wait until the end of the month before contacting HMRC. They are inviting customers to claim on different days to ensure the system is fast and easy to use, so they can support millions of people quickly and easily.

Contacting ineligible customers
HMRC have also contacted self-employed people who have previously claimed SEISS support but are no longer eligible. There are several reasons for ineligibility, for example:
• not filing your 2019-20 Self Assessment return on or before 2 March 2021
• if the information on your 2019-20 Self Assessment return means you no longer meet the eligibility criteria,
• if you’ve permanently ceased trading.

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.

VAT Domestic Reverse Charge

A straightforward guide to VAT Domestic Reverse Charge!

From the 1st October 2019 there will be a radical change to the way VAT is collected for some businesses. If you are a business or individual registered for VAT and work in the building and construction industry, this change is likely to affect you. Whether you are an existing client or not, we are happy to discuss if this will affect your business.

The new VAT changes do not affect consumers, only businesses and individuals registered for VAT.

The fundamental change with the VAT Domestic Revers Charge is, the customer receiving the service will be responsible for pay the VAT to HMRC rather than paying the supplier of the service or product.

HMRC states you will need to apply the reverse charge if the following services are supplied :

  • constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services
  • constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours
  • pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence
  • installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure
  • internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration
  • painting or decorating the inside or the external surfaces of any building or structure
  • services which form an integral part of, or are part of the preparation or completion of the services described above – including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works

With the following services excluded from the reverse charge :

  • drilling for, or extracting, oil or natural gas
  • extracting minerals (using underground or surface working) and tunnelling, boring, or construction of underground works, for this purpose
  • manufacturing building or engineering components or equipment, materials, plant or machinery, or delivering any of these to site
  • manufacturing components for heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems, or delivering any of these to site
  • the professional work of architects or surveyors, or of building, engineering, interior or exterior decoration and landscape consultants
  • making, installing and repairing art works such as sculptures, murals and other items that are purely artistic
  • signwriting and erecting, installing and repairing signboards and advertisements
  • installing seating, blinds and shutters
  • installing security systems, including burglar alarms, closed circuit television and public address systems

This information was published by HMRC, and is of course subject to change.

You can find the latest updates and more information on the HMRC website

If you have any questions at all concerning VAT Domestic Reverse Charge, or any other taxation issue, please do contact us today

Self Assessment Tax Returns FAQ

Self Assessment Tax Returns, questions we get asked a lot and some interesting facts.

Who needs to complete a Self Assessment Tax Return?

Self Assessment Tax affects individuals, partnerships and trustees who receive tax returns, together with companies that are not resident in the UK and are not trading in the UK through a permanent establishment. It also affects individuals who do not receive a tax return, but need to claim a tax relief or allowance and companies making claims outside their company tax returns.

Accountants charge too much for Self Assessment Tax Returns, I am just a sole trader.

If your accountant is charging you too much for your Self Assessment Tax Return, you need to speak to us today!  Our service is second to none, and we always aim to save you much more than the cost of our services ever would!  We know how difficult starting a new business is, and it is in our benefit as well as yours to do everything we can to help you flourish.

When did Self Assessment Tax start?

The first year for Self Assessment Tax was the 1996 – 1997 tax year (April to April), with all partnerships being included in Self Assessment in the 1997 – 1998 tax year.   Previous to self assessment, HMRC would assess each taxpayer!

When do I need to complete my Self Assessment Tax Return?

Paper returns must be filed by 31st October following the end of the tax year. The deadline for filing self assessment returns on-line is 31st January. Returns issued after 31st July following the end of the tax year must be filed three months from date of issue or 31st January if later and the return is filed on-line.

So for example, your trading between 6th April 2019 and 5th April 2020 would need to be submitted;  on or before the 31st October 2020 if you use a paper tax return form (SA100), or if you submit your self assessment tax return online, on or before 31st January 2021.

Can’t I just have my self assessment tax return filed straight away?

Yes, you can file your tax return for the previous year from 6th April.  There are no advantages filing later in the year, and actually it allows your accountant more time to make sure you have included everything you are entitled to claim as expenses!   Filing your tax return straight away does not mean you have to pay your tax bill any sooner than someone who files on the 31st January!

If you are in receipt of certain HMRC tax credits, filing earlier should mean you are not being over paid, or under paid.

I have just started working for myself, when should I let HMRC know?

If you do not receive a notice to file, but have received untaxed income or made a capital gain in the tax year have to inform HMRC by 5th October following the end of the tax year. However, for National Insurance purposes a when you start new self-employment, you must notify HMRC as soon as you start, within the first three months of self-employment.

I missed my filing deadline, it was due last week, last month, last year, or even for previous years, what do I do?

Firstly, do not panic, but you should act straight away!  HMRC can be very accommodating of genuine mistakes, but you need professional advice now!  Click here to contact us.

When will I know how much self assessment tax I need to pay HMRC?

As soon as we complete your return, ready for submission, we request your approval before sending to HMRC, at this point you will have a breakdown of any payment due.

When do I need to make Payment on Account to HMRC?

If you have Self Assessment Tax bill is more than £1,000 and less than 80% of your income is from a PAYE scheme, you will be required to pay your tax bill by 31st January as normal, but also half as much again against your future prospective earnings.  If you think you may fall into the Payment on Account scheme, you should contact us to clarify.

As an example; if your tax due for April 2018 to April 2019 is £2,000 , before 31st January 2020 you would need to settle this tax bill, and also your Payment on Account of £1,000 for the year April 2019 to April 2020.    In other words, you would pay a tax bill of £3,000, made up of the previous years bill, and half of the following year – on account.

If you have any questions at all concerning Self Assessment Tax, or any other taxation issue, please do contact us today, you will be glad you did!