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Reminder to look out for tax credit renewal packs

06/05/2021

HMRC has begun sending the annual tax credit renewal packs to some 2.5 million tax credit claimants and is encouraging recipients to renew their tax credits claim online. The packs are being sent out over the next 6 weeks and should be with recipients by 4 June 2021. A renewal is required if the pack has a red line across the first page

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Mobile phone exempt costs

06/05/2021

When an employee incurs costs for the provision of mobile phones to employees it is important to understand the correct tax treatment of these expenses. This includes costs for phones provided to employees and reimbursement of employee’s own phone costs. As a rule, the provision of one mobile phone to a director or employee for private

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COVID support grants that are taxable

06/05/2021

We would like to remind readers that existing legislation is in place to ensure that COVID support grants are treated as taxable income in the same way as other taxable receipts. The grants are treated as income where the business is within the scope of either Income Tax or Corporation Tax. This treatment extends to the Self-Employment

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CIS – types of work and businesses affected

06/05/2021

The Construction Industry Scheme (CIS) is a set of special rules for tax and National Insurance for those working in the construction industry. The CIS covers all construction work carried out in the UK, including jobs such as: site preparation alterations dismantling construction repairs decorating demolition Exceptions to

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Impact of residence and domicile

06/05/2021

HMRC’s online guidance note for residence, domicile and the remittance basis: RDR1 is intended for UK residents and non-residents and covers the residence, domicile and remittance basis rules from 6 April 2013 and onwards. For most taxpayers, it will be clear whether they are resident in the UK. However, for taxpayers with complex

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Cryptoassets for individuals - taxes that apply

06/05/2021

In most cases, individuals hold cryptoassets (such as Bitcoin) as a personal investment, usually for capital appreciation in its value or to make purchases. They will be liable to pay Capital Gains Tax when they dispose of their cryptoassets. This includes: selling tokens exchanging tokens for a different type of cryptoasset using

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Debt respite scheme launched

05/05/2021

A new scheme, aptly named Breathing Space, was launched 4 May 2021. Breathing Space will give those facing financial difficulties space to receive debt advice, or mental health crisis treatment, without pressure from creditors or mounting debts. Under the scheme, people will be given legal protections from their creditors for 60 days,

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Tax Diary May/June 2021

29/04/2021

1 May 2021 - Due date for Corporation Tax due for the year ended 30 July 2020. 19 May 2021 - PAYE and NIC deductions due for month ended 5 May 2021. (If you pay your tax electronically the due date is 22 May 2021). 19 May 2021 - Filing deadline for the CIS300 monthly return for the month ended 5 May 2021. 19 May 2021 - CIS tax

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New self-build initiative

29/04/2021

In a surprise weekend announcement, the Housing Secretary Robert Jenrick has revealed new plans for £150 million of funding to make it easier and more affordable for people to build their own homes. The new “Help to Build” low deposit mortgage scheme will help self and custom home building become a realistic option to get

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Tax on savings interest

29/04/2021

If you have taxable income of less than £17,570 in 2021-22 you will have no tax to pay on interest received. This figure is calculated by adding the £5,000 starting rate limit for savings (where 0% of the interest is taxable) to the current £12,570 personal allowance. However, it is important to note that if your total non-savings income

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Tax-free capital gains

29/04/2021

As with Income Tax personal allowances, taxpayers have an annual exempt amount for Capital Gains Tax (CGT) which is forfeited if not used. The annual exemption for individuals in 2021-22 is £12,300. Whilst most taxpayers are aware of their annual tax-free allowance and the exemption for the qualifying sale of the family home there are

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VAT – transfer as a going concern

29/04/2021

The transfer of a business as a going concern (TOGC) rules concern the VAT liability of the sale of a business. Normally the sale of the assets of a VAT registered or VAT registerable business will be subject to VAT at the appropriate rate. Where the sale of a business includes assets and meets certain conditions the sale will be

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Restarting a dormant or non-trading company

29/04/2021

HMRC must be informed when a non-trading or dormant company starts trading again and becomes active for Corporation Tax. Companies can use HMRC Online Services to supply the relevant information. When a company has previously traded and then stops, it would normally be considered as dormant. A company can stay dormant indefinitely,

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Changing the terms of a salary sacrifice arrangement

29/04/2021

A salary sacrifice arrangement is effectively an agreement to reduce an employee’s entitlement to cash pay, usually in return for a non-cash benefit. This can include items such as company cars, childcare vouchers and additional employer pension contributions. The tax and NIC advantages of certain benefits provided as part of a salary

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The Mortgage Guarantee Scheme

22/04/2021

One of the measures announced at the Budget was the introduction of a new Mortgage Guarantee Scheme to help home buyers purchase property. The scheme was officially made available from Monday, 19 April 2021. The new scheme is designed for prospective home buyers who only have a small deposit and are therefore unable to obtain mortgage

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Recovery Loan Scheme

22/04/2021

The new Recovery Loan Scheme was launched on 6 April 2021. The new scheme allows businesses of any size to access loans and other kinds of finance between £25,000 and £10 million. The scheme will remain open until 31 December 2021 (subject to review). The scheme is intended to provide further support to businesses to help them recover

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Keeping self-employed tax records

22/04/2021

If you are self-employed as a sole trader or as a partner in a business partnership, then you must keep suitable business records as well as separate personal records of your income. For tax purposes, the business records must be held for at least 5 years from the 31 January submission deadline for the relevant tax year. For example,

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Treasury directive re fourth SEISS grant

22/04/2021

HM Treasury has published a further Treasury Direction made under the Coronavirus Act 2020, ss. 71 and 76, which modifies and extends the effect of the Self-Employment Income Support Scheme (SEISS). The new Direction mainly deals with the expansion of the SEISS from 1 February 2021 to 30 April 2021, officially referred to as the SEISS

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Correcting errors on VAT returns

22/04/2021

Where an error on a past VAT return is uncovered, businesses have a duty to correct the error as soon as possible. As a general rule, any necessary adjustment can be made on a current VAT return. However, in order to be able to do so, there are three important conditions that must be met: The error must be below the reporting

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Small trading tax exemption for charities

22/04/2021

The tax treatment of charities can be complex. Many charities trade either as part of their charitable interests or to raise funds. As a first step, any charity hoping to benefit from any beneficial tax treatment needs to be recognised as a charity for UK tax purposes by HMRC as well as meeting other criteria. A charity will not pay tax

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Vaccine for your business

20/04/2021

There is a poignant similarity between the effects of COVID on us personally and our businesses. Thankfully, the possible dire consequences of catching the Coronavirus bug are being countered by a variety of vaccines. Fingers crossed that these will ease the pressure on the NHS and minimise the distress that this dreadful virus has

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A reminder that not all costs are costs…

20/04/2021

Costs are defined as something that has to be paid or spent to acquire something. Costs include the acquisition of: An object, say material required to convert into saleable goods. A service, for example, sub-contact labour or A right, the rates you pay to occupy business premises. In your accounts, these costs would appear as

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HMRC’s new penalty regime

15/04/2021

HMRC’s new points-based penalty regime for late submission and payment will start from 1 April 2022. The changes will apply in the first instance to the submission of VAT returns for VAT return periods beginning on or after 1 April 2022. The penalty regime will then be extended to Making Tax Digital (MTD) Income Tax Self-Assessment

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One-off £500 payment for working households receiving tax-credits

15/04/2021

As part of the March 2021 Budget, the Chancellor announced that the temporary £20 weekly uplift in Universal Credits would continue for a further six months, until the end of September 2021. It was also confirmed that Working Tax Credit claimants would receive equivalent support. It appears that it was operationally difficult for this

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Property repossessions from 1 April 2021

15/04/2021

There have been a significant number of measures introduced to help those experiencing financial difficulties because of coronavirus. Throughout the course of the pandemic, the Financial Conduct Authority (FCA) has sought to ensure that lenders provide tailored support to mortgage borrowers who continue to face payment difficulties due to

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Repaying overclaimed SEISS grants

15/04/2021

Self-employed individuals (including partnerships) who have overclaimed the Self Employed Income Support Scheme (SEISS) must pay back the overpayment to HMRC. The rules for repaying HMRC state that you must tell HMRC if you were not eligible to have claimed the grant. For example: for the first or second grant, your business was not

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Lockdown changes 12 April 2021

15/04/2021

Even the unseasonably cold weather does not seem to have stopped people in England getting their first taste of normality for many months as many restrictions were lifted on 12th April 2021. The full list of changes that came into effect in England from 12 April 2021 are listed on GOV.UK as follows: non-essential retail can

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Website development costs

15/04/2021

One of the main areas to consider in deciding how to treat a deductible expense is whether the cost is revenue or capital in nature. There is no single, simple test that can be applied to decide which items are capital expenditure and which are revenue. This can only be determined by reference to the relevant facts that applied at the

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Archiving international trade documents

08/04/2021

There are important rules that all businesses must follow to keep business and accounting records accessible if requested by HMRC. The exact documentation that must be held and the time limits for doing so can vary significantly. For example, most company records must be held for at least 6 years from the end of the last company financial

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National Minimum and Living Wage increases 1 April 2021

08/04/2021

The new National Minimum Wage (NMW) and National Living Wage (NLW) rates came into effect on 1 April 2021. The new rate for the NLW is £8.91 which is a 19p increase over last year. The NLW is the minimum hourly rate that must be paid to those aged 23 or over. The NLW used to apply only to those aged 25 and over but from 1 April 2021 has

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Companies can claim super-deduction from 1 April

08/04/2021

The new super-deduction tax break, that will allow companies to deduct 130% of the cost of any qualifying investment from their taxable profits, is available on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances. This means that for every £1 a company invests they can reduce their

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Exempt beneficial loans

08/04/2021

An employee can obtain a benefit when provided with an employment-related cheap or interest-free loan. The benefit is the difference between the interest the employee pays, if any, and the commercial rate the employee would have to pay on a loan obtained elsewhere. These types of loans are referred to as beneficial loans. There are a

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Claims to reduce payments on account

08/04/2021

Self-Assessment taxpayers are usually required to pay their Income Tax liabilities in three instalments each year. The first two payments are due on 31 January during the tax year and 31 July following the tax year. These payments on account are based on 50% each of the previous year’s net Income Tax liability. In addition, the third (or

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Annual party benefits

08/04/2021

The cost of a staff party or other annual entertainment is generally allowed as a deduction for tax purposes. If you meet the various criteria outlined below then there is no requirement to report anything to HMRC or pay tax and National Insurance. There will also be no taxable benefit charged to employees. An annual function offered

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5% late penalties apply from 1 April 2021

01/04/2021

Self-Assessment taxpayers that failed to pay their outstanding tax liabilities or set up a payment plan by midnight on 1 April 2021 will be charged a 5% late payment penalty charge. Under the normal rules a 5% late payment penalty would have been charged if tax remained outstanding or a payment plan has not been set up before 3 March

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New support for High Streets and sea-side towns

01/04/2021

As lockdown measures begin to be eased, a new package of support measures to help high streets and coastal areas across England has been announced by the Communities Secretary Robert Jenrick. The support will be delivered via a new £56 million Welcome Back Fund. The new funding will help councils boost tourism, improve green spaces and

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£1.5bn boost for rates relief

01/04/2021

A new Business Rates relief fund will provide a £1.5 billion tranche of support to businesses outside the retail, hospitality, and leisure sectors affected by COVID-19. Retail, hospitality and leisure businesses have not been paying rates during the pandemic as part of a 15 month-long relief which runs to the end of June this year. Many

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OTS recommended changes to IHT

01/04/2021

The Financial Secretary to the Treasury has written to the Office of Tax Simplification (OTS) to confirm that HM Treasury strongly supports some key recommendations on changes to Inheritance Tax. The government announced on 23 March 2021 that it will: change reporting regulations so that from 1 January 2022 over 90 per cent of

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Film and TV restart scheme

01/04/2021

The government’s £500 million scheme to kickstart film and television production entitled the Film and TV Production Restart Scheme, helps UK film and TV productions struggling to secure insurance for COVID-19 related costs. The Scheme allows TV and film productions that have been halted or delayed by a lack of insurance to get started

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Updating Self-Assessment tax returns

01/04/2021

There are special rules to follow if you have submitted a Self-Assessment return and subsequently realise you need to change it. This can happen if for example you made a mistake like entering a number incorrectly or missing information from the return. If you filed your return online, you could amend your return online as

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Disposing of garden or grounds

25/03/2021

In general, there is no Capital Gains Tax (CGT) on a property which has been used as a main family residence. This relief from CGT is commonly known as private residence relief. However, there are some grey areas which might result in CGT being due on the sale of a private residence. One of these areas to consider is when disposing of

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Have you claimed too much from furlough scheme?

25/03/2021

HMRC’s guidance makes it clear that any business that makes an error in making a Coronavirus Job Retention Scheme (CJRS) claim must pay back any amount overclaimed. Any claims based on inaccurate information can be recovered by HMRC. If you’ve overclaimed a grant and have not repaid it, you must notify HMRC by the latest of 90 days

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Consider signing up to PROOF scheme

25/03/2021

One of the services offered by Companies House helps combat fraud and protect your company from unauthorised changes to records. The free service is known as the protected online filing (PROOF) scheme and means that any forms covered by PROOF can only be filed online. Companies House will reject any paper versions of the forms and send

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Calculating Minimum Wage if paid annual salary

25/03/2021

New National Minimum Wage and National Living Wage rates will come into effect on 1 April 2021. These changes will see the National Living Wage increase by 19p to an hourly rate of £8.91 and the National Minimum Wage will increase to £8.36 (a rise of 16p). There are also increases in the other minimum wage thresholds. There are special

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Incorporation relief

25/03/2021

When a taxpayer owns a business as a sole trader or in partnership, a capital gain will be deemed to arise if the business is converted into a company by reference to the market value of the business assets including goodwill. This could give rise to a chargeable gain based broadly on the difference between the market value of the assets

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Flat Rate Scheme limited cost trader check

25/03/2021

The VAT Flat Rate Scheme has been designed to simplify the way a business accounts for VAT and in so doing reduce the administration costs of complying with the VAT legislation. The scheme is open to businesses that expect their annual taxable turnover in the next 12 months to be no more than £150,000. A limited cost trader check was

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Tax Diary March/April 2021

25/03/2021

1 April 2021 - Due date for Corporation Tax due for the year ended 30 June 2020. 19 April 2021 - PAYE and NIC deductions due for month ended 5 April 2021. (If you pay your tax electronically the due date is 22 April 2021) 19 April 2021 - Filing deadline for the CIS300 monthly return for the month ended 5 April 2021. 19 April 2021 -

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What would a business vaccine aim to prevent?

23/03/2021

Now we are getting used to the idea that the various vaccines will provide some defence against COVID outbreaks, what would a vaccine for our businesses attempt to prevent? We have listed below a few strategies that you might like to consider that would help you survive any more periods of lockdown that governments may be forced to

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Rent-a-room relief

18/03/2021

The rent-a-room scheme is a set of special rules designed to help homeowners who rent-a-room in their home. The current tax-free threshold of £7,500 per year has been in place since 6 April 2016. If you are using this scheme you should ensure that rents received from lodgers during the current tax year do no exceed £7,500. The tax

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Tax-free property and trading income

18/03/2021

Two separate £1,000 tax allowances for property and trading income were introduced in April 2017. If you have both or either type of income highlighted below then you can claim a £1,000 allowance for each. The £1,000 exemptions from tax apply to: If you make up to £1,000 from self-employment, casual services (such as babysitting or

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