ListenToTaxman.com

UK PAYE Tax Calculator / Salary Calculator

The number 1 free UK salary calculator tax calculator since 1998. Calculate salary, national insurance, HMRC tax and net pay

Covid 19 Blog

08/06/2020

Self-Employed Hospital or Key Worker?

To help you with your tax planning, we’ve asked GoSimpleTax to produce this article.

 

While the nation’s attention is currently fixed on the work of our carers and hospital workers, little thought is paid to those that are self-employed and still need to submit their tax returns.

Of course, it’s sometimes tough to determine what counts as a deductible expense and what doesn’t. Mike Parkes, Self-Assessment Expert an Director at GoSimpleTax , has written a timely article to help guide you through the maze.

What clothing expenses can I claim for?

Uniforms are costly. And while you do operate as a self-employed individual, you may also represent certain authorities when you’re caring for patients or vulnerable people. As a result, you may be expected to purchase a uniform or your own PPE.

Fortunately, you’re able to claim for it as an allowable business expense. Provided that what you’re purchasing is either a uniform or necessary protective clothing needed for your work, you’ll qualify for tax relief.

What’s more, if you need to purchase any additional PPE for your role (say, gloves and face masks), this is also considered an allowable expense.

Are there any other expenses I may be eligible for?

It largely depends on your specific role within healthcare. If you operate as a consultant, for example, it may be that you must be a member of a professional organisation in order to practise in your field. That’s why subscription fees are often eligible for tax relief.

HMRC have a list of approved organisations and learned societies to help you determine whether you can claim or not. Whilst this list is aimed at employees, it does give a good, broad view of the subscriptions you can claim as an expense on your tax return.

If you’re a carer, it may be that you’re required to drive between the houses of your vulnerable clients. Petrol expenses add up – so, as long as you’re driving for work purposes, you can claim some travel costs in your Self Assessment tax return. This extends to public transport and parking, which is especially useful if you’re travelling to hospitals.

How can I claim my expenses?

Firstly, be sure you’ve registered for your Self Assessment. If you’ve not done this before, you’ll be sent a letter following your registration with a 10-digit Unique Taxpayer Reference (UTR) number. With this, you can set up your account for the Self Assessment online service. However, the process takes approximately 10 working days. Factor that in ahead of the Self Assessment tax return deadline.

Currently, Self Assessment tax returns can be submitted to HMRC via post, HMRC’s online portal, or using tax return software. By filing online or using tax return software, you’ll effectively be giving yourself an additional three months’ extension as the online submission deadline is 31st January (as opposed to 31st October of the previous year for postal submission).

If you’re new to Self Assessments, you claim for tax relief by adding up your total allowable expenditure and including this figure on your tax return. Be sure to keep a hold of all receipts as they can act as evidence should HMRC require it. Of course, parking and clothing receipts are some of the easiest items to lose. This is why it’s important that you pay careful attention to how you store and log them, otherwise you run the risk of an unnecessarily higher tax bill.

About GoSimpleTax

With GoSimpleTax, you can prevent all those receipts from piling up and adding stress to the Self Assessment tax return process. Instead of sifting through paper, their full service allows you to take photos of any invoices or receipts and log them immediately from your mobile device. But you can also use their free trial straight away to get started managing your finances in real time.

Then, when you’re ready to submit, all the documentation you need is right in front of you – saving you time, money and reliance on an accountant.

 

 

{page url="simpletax-div" }
read the full post here 390
05/05/2020

COVID 19 Business Support for Individual Landlords

{page url="rita4rent-header"}

Sadly, the current COVID-19 pandemic has had two big impacts. One is a huge health impact on the country. The second, is on the economy which has hit employees, small (and large) businesses, and of course, people that hold investments such as landlords with rental income. This has resulted in the government introducing new measures to try to support people who are suffering financially as a result. This blog identifies what is and isn’t available to landlords

Self-Employment Income Support

By far the most common question during the pandemic we have received, is whether a landlord receives self-employed trading income that will qualify for the self-employed income support grant. Unfortunately, for a lot of people who receive property income, there isn’t a happy ending to this! The answer is not usually. Property income falls in to three categories:

Where Trade Exists

For property income to be trading income, the element of service is key. Hotels and B&B’s are two easy examples here. Also, if you have a business model where you intend to profit from selling properties by either a natural increase in their value, or more commonly, to undertake some sort of renovation and develop the property, this is likely to be seen as trading. Some people know this as flipping. The key is that you are intending to generate profits by selling properties rather than by rental income.

Furnished holiday lets (FHL’s) are a bit of an odd one. FHL properties must meet certain conditions in the length of occupation, availability of occupation and actual occupation of the property. If the conditions are met, FHL’s benefit from some tax advantages normally given to trades.

This leads to the question as to whether FHL income would make you eligible for the self-employment income support. Although it hasn’t been directly referred to in any of the guidance, it appears to be unlikely. FHL income is still property income and reported on the property income pages. The trading income is likely to be based on what is reported on the self-employment income pages in the tax return.

Where a Trade Partly Exists

In some cases, a trade may partly exist. When we say a trade may partly exist, what we mean is that a trade runs side by side with your property business. Some of the examples given by HMRC in PIM 4300 include:

  • “Providing cleaning services while letting
  • Supply of Clean Linen.
  • Regular Provision of Food.”

The key is that these must be services that are above and beyond what you would normally provide as a landlord. It would also be considered whether your tenant pays separately for the services in addition to their normal rental payment, and if the tenant can opt out of the additional services or not.

In terms of the self-employment income grant, because the amount you receive is based on the trading income you have reported in your previous tax returns in 2016/17, 2017/18 and 2018/19 it depends how your income is represented on your tax returns. Any amendment made to the tax return after 26th March isn’t considered. If you have partly run a trade, this should have been reported on the self-employed pages and would be considered as trading income.

Where a Trade Doesn’t Exist

Unfortunately, a lot of landlords fall into this category and their property income is treated as investment income. Some of the examples that HMRC have given as normal services a landlord would undertake include:

  • “the cleaning of stairs and passages in multi-unit premises,
  • the provision of hot water and heating,
  • supervision involving rent collection and arranging new tenancies, arranging for repairs to the property.”

HMRC have also pointed out that undertaking a significant number of these activities, where they are a full-time landlord maybe with a significant portfolio, does not change the nature of the income.

If you do receive trading income you may be eligible for self-employment income support if you meet the other conditions. Trading profits must be no more than £50,000 and represent more than half of your income. You will need to have traded in the 2018/19 tax year previously and intend to carry on trading. You must have lost profits due to COVID-19 and you will need to make an application. Applications aren’t open yet but HMRC are intending to write to anyone potentially eligible by mid-May.

Mortgage Holiday

One of the main schemes mentioned in the government guidance for landlords, as a result of the current situation, is the mortgage holiday. You may be able to apply for a mortgage holiday for up to three months; this includes buy to let mortgages. To obtain a mortgage holiday, you need to speak to your lender. Just to clarify, a payment holiday is a deferral which means you will still have to pay the mortgage back at some point, so it is strictly a cashflow advantage you will receive. It will also add a little bit of interest to the amount you have to ultimately repay.

Self-Assessment July Payment Deferral

If you meet the relevant criteria and owe a payment on account in July, and can’t pay this because of COVID-19 related hardship, you can defer payment until next January. No application is required so it is just an automatic offer. You should be aware of whether you have a payment due 31st July already, as this is based on your already filed 2018/19 tax return.

In contrast to the mortgage holiday, HMRC won’t charge you interest on this, so long as it is paid by 31st January 2021. Therefore, this should be used in priority to the mortgage holiday where both are available.

Time to Pay Arrangements

Time to pay arrangements are not a new concept; they have been around long before the pandemic. The idea with a time to pay arrangement, is that if you currently have an outstanding tax bill that you can’t pay, you would speak with HMRC and agree a payment plan based on what they feel you can afford. They go through a list of questions to try and assess what you can pay and then you would pay in instalments.

Generally, it works out well for both parties where the agreement is kept. HMRC won’t have the costs of legal fees or enforcement action in recovering the debt, and if the terms of the agreement are kept, this usually means they stop charging penalties. They usually add a bit of interest but at the current rates (calculated as The Bank of England interest rate plus 2.5%) this is likely to be negligible.

All that has really changed, is that they have set up a new helpline to assist with queries regarding COVID-19 and they are obviously likely to be sympathetic if you are affected by the current situation.

Further Measures for Furnished Holiday Lets

For a lot of Landlords, VAT isn’t something to worry about. Standard rental income from residential properties is exempt for VAT. This is not the case for furnished holiday lets and some commercial property income where, if the VAT thresholds are exceeded, you will need to register for VAT.

If you do have a VAT registered property business, and owe a payment between 20th March 2020 and 30th June 2020, you can defer this until 31st March 2021 at the latest. Similarly to the July payment on account deferral, there is no application required as it is an automatic offer.

In addition, the government’s announcement that it would reimburse local authorities for giving 100% business rates relief for certain types of properties, include self-catered holiday homes for 2020/21. The ultimate decision on business rates relief is down to the discretion of the local authority.

Other Tips

The most important thing to do in the current situation is to try and stay as up to date as you can.  New changes have been announced frequently and we are still waiting for full guidance on some of schemes that have been announced. Good sources of information include:

  • Your own tax advisor if you are represented.
  • Relevant documents from the government website.
  • Minister briefings on the daily update.

In the government briefings, either when the Chancellor of the Exchequer - Rishi Sunak - or the Business Secretary - Alok Sharma - have been speaking, are usually when relevant financial announcements have been made.

The final tip is to be wary of HMRC scam communications, because they are on the increase. They usually offer refunds or financial support, or claim to be able to support you in obtaining refunds from the government.

HMRC made special mention of this in the new guidance published on the self-employed support scheme. The only way to apply for the self-employment income support is through the gov.uk website, so be wary of texts, emails and phone messages pretending to be from HMRC.

{page url="rita4rent-footer"}
read the full post here 383
01/05/2020

Free Webinar Covid 19 Financial Support for Small Bussinesses

Free Webinar "Financial Support for Small Businesses".
More info about the financial supports available to small businesses during the COVID-19 outbreak. This is hosted by The Department for Business, Energy and Industrial Strategy (BEIS) at 11am on 5 May. https://bit.ly/2Yppj4A

read the full post here 381
27/03/2020

Covid 19 help for the Self Employed

Main points of interest from the Self Employed Income Support Scheme:

  • The government will pay self-employed people who have been adversely affected by the Covid 19, a taxable grant worth 80% of their mean average monthly profits over the last 3 years, up to £2,500 per month. That is; tax years 2016/17, 2017/18 and 2018/19. It will be open for at least 3 months, possibly more.
  • These grants for Self Employed will most likely not be available until June, backdated until March. If it's paid in June, it will be a lump sum for 3 months, based on the average of your profits. e.g. If your average yearly profit is deemed to be £40,000, you will get ¼ of that in a lump sum - £10,000, in June.
  • Those Self-Employed who have not yet filed their 2018/19 tax return in January have been given 4 weeks to get it completed, in order to avail of help from the new Self Employment Income Support Scheme
  • You need to be Self Employed for at least the last year, and have completed your 2018/19 Self Assessment tax return to avail of the new scheme. If you set up in the last year, since April 2019, you are not eligible.
  • This scheme is only available to you if 50% or more of your income is from self-employment.
  • You do not need to contact HMRC to access the scheme. They will use existing tax information to contact those who are eligible over next few weeks.
  • This is a grant. You do not have to pay it back. However, it is taxable, and if the payment of it pushes you into a higher tax bracket, you will be paying higher rate taxes and NIC's on this.
  • If you cannot manage to stay afloat until June, you can still apply for help using some of the measures listed at the bottom of this article - Universal Credit etc.

Freelancers / Contractors / Owner-Directors

  • Freelancers, paid under PAYE scheme, contact the employer/ employers you worked for in February 2020. It may be possible for them to furlough you so you can avail of the Corona Virus Job Retention Scheme.
  • If you are a contractor paid through an Umbrella Company operating a PAYE scheme, the umbrella company may furlough you so you can avail of the Corona Virus Job Retention Scheme.
  • Contractor's or Owner- Director's who pay themselves a basic salary + dividends are not covered by the Self Employment Income Support Scheme announced today. They may be able to access the Corona Virus Job Retention Scheme if they are operating PAYE schemes. Note that they will only be eligible to use the amount declared for PAYE, and not the amount claimed in dividends.

If you are not covered by either the Corona Virus Job Retention Scheme or the Self Employed Income Support Scheme

  • Check out the various options offered by banks through the Business Interruption Loan Schemes.
  • Deferral of the next VAT payment - you must cancel your direct debit to HMRC.
  • Defer your July Tax payment until January 2021.
  • Apply for Universal Credit. Changes in Universal Credit mean it is now available to all self employed. It has also been increased in the new measures announced in the last week and is tax free. If you have less than £16,000 in savings, you will be eligible.
  • Various changes in Housing Benefit have been brought in for those who are renting, - greater amounts available in payments, depending on where you live.
  • Contact your bank about mortgage relief.

New HMRC helpline number for self employed/SME's 0800 024 122

Please note that this advise is what is recommended at this point (26/3/2020). As advice keeps changing and updating, so may the recommendations suggested here.

Full published details of the Self Employed Income Support Scheme here.  https://bit.ly/3ahlVf3

read the full post here 376
27/03/2020

Looking to access COVID 19 help- Are you Self-employed but missed the January Self-assessment deadline?

Self-Employed Income Support Scheme Summary

  • You must have completed your 18/19 tax return
  • 80% of profits up to £2,500 per month
  • Profits on 3 years average, there will be nothing available if over £50,000
  • Payment will be made in June

The self-employed have now been passed their life-line amidst the Covid-19 pandemic from Chancellor Rushi Sunak as he announced a new self-employed income support scheme, this will cover up to 80% of self-employed workers’ average taxable monthly profits.

Self-employed should not contact HMRC now, eligible taxpayers will be contacted by them directly.  They will use existing information to check potential eligibility and invite applications once the scheme is operational.

If you have not yet filed your 18/19 tax return – you have four weeks to do so. First you will need your UTR…

A Unique Taxpayer Reference (UTR) number is required by all sole traders, partnerships and limited companies in the UK. It’s unique to that individual or organisation and remains unchanged forever.

You will also need a UTR if you have other forms of income or expenses that require you to file a Self Assessment tax return.

If you don’t have a UTR, you won’t be able to submit a Self Assessment tax return.

What is a UTR?

A UTR helps HMRC identify and process tax returns against the correct taxpayer’s records.

If you have income outside of PAYE or own a business and don’t act compliantly when it comes to your Self Assessment tax return, you could face criminal prosecution.

Who uses them?

Any individual with self-employed income or income from rental property probably forms the biggest group that will need a UTR.

These individuals will need to perform a Self Assessment tax return. For other taxpayers, it may also be relevant when registering for the Construction Industry Scheme or working with an accountant.

How can I get one?

As you won’t receive a UTR number unless you’re registered as either self-employed or a new business, you’ll need to do so on HMRC’s website. Alternatively, you can call them on 0300 200 3310. There is no cost to doing either.

Register as soon as you can with all the below information to hand:

  • Full name
  • Date of birth
  • Email address
  • Home address
  • Phone number
  • National Insurance number
  • The date you started self-employment

Double-check that you have fully completed the process if you’re still waiting on your UTR following registration.

What if I’m already registered?

You should already have a UTR code somewhere. If you’ve misplaced it, start by checking any correspondence that you may have received from HMRC. All previous tax returns will reference it, along with any notices you may have had to file a return, payment reminders or statements of account.

In addition, your HMRC online account will also display the code, provided you can access it. If none of these options prove fruitful, contact the Self Assessment helpline.

More details on help for the self-employed here.

About GoSimpleTax

Getting your UTR is the easy part. What trips up most UK taxpayers is submitting the Self Assessment tax return itself. With GoSimpleTax software, filing has never been easier as it does all the calculations for you and thanks to features that allow you to take a picture of expenditure and upload it to your records, as well as log all forms of income.

With the documentation you need in one place and learning resources to help minimise your tax liability further, all that’s left for you to do is press submit.

{page id="326"}
read the full post here 378
24/03/2020

Home Working Allowance

Are you working from home? An increasing number of employees are. Additional time spent at home impacts the fuel, water, telephone and electricity bills. HMRC have an allowance available to counter these costs. If you have not been claiming this allowance but should have been, do not fear, you can claim for it as far back as 2014/15. This allowance is free from tax or NIC's.

{page url="adsense"}

Working from home needs to be specified as part of the job, or else a home-working agreement with your employer needs to be in place to qualify. If you are working under a home-working agreement, your employer can contribute towards your expenses - £4.00 per week (from 2015-16) or more if you can show that you had to spend more than that. However, if your employer doesn't contribute you can not claim the allowance.

{page url="adsense"}

From 6 April 2012 the guideline rate you can claim when working from home increased from £3 to £4 per week. For employees who are paid monthly, the guideline rate is £18 per month. This is the rate which can be claimed without the need for records to demonstrate the additional expenditure. This guideline rate is not a maximum amount and greater amounts can be paid where there is evidence to justify them. Claiming does not incur an extra tax or NICs charge.

Read more about working at home on Gov.uk

{page url="simpletax-div"}
read the full post here 48
24/03/2020

Information on Company Annual Returns Extensions due to Covid 19.

Has Covid 19 had an impact on your company?

Wondering how to ask Companies House for an extension for your annual company return?

If COVID-19 has affected your company either financially, or through disruption in staff availability, resources, etc. you may need more time to file your annual accounts with Companies House.

Company accounts fall due for filing nine months after the companies financial year end. If your company return is due in the next few months, you may find it difficult to make this deadline.

If you can complete these returns on time, you should. In case you cannot, you can apply to Companies House for an immediate three month extension.

This extension is not automatic applied to all companies. You must apply for it.

  • It must be applied for before the Company's normal filing deadline
  • You will need your Company Number to apply.
  • If the extension you apply for is on the grounds of disruption due to Covid 19, you will receive an immediate 3 month extension.
  • Companies that have already extended their filing deadline, or shortened their accounting reference period, may not be eligible for an extension.
  • Penalties: If you do not apply for an extension and your accounts are filed late, an automatic penalty will be imposed.

Apply here for an immediate extension for your annual company return.

More info available from Gov.uk

 

read the full post here 375
20/03/2020

Covid 19 Emergency Measures announced for Business, Employees and Self Employed

Job Retention Scheme (updated March 26th)

  • Government setting up the Corona Virus Job Retention Scheme. Any employer, including charities,  can access Government grants to cover wages for those workers kept employed, but not working due to the corona virus. The grants will cover 80% of the salary of retained workers, up to a total of £2,500 a month.
  • The scheme, open to any employer in the country, will cover the cost of wages backdated to March 1st and will be open before the end of April for at least 3 months.
  • Contractors and freelancers paying PAYE may be able to access this scheme by contacting their employers from February and asking this employer to furlough them.

Of specific interest to Self Employed:

  • The Universal Credit minimum income floor has been suspended, so it is now accessible to all including the self employed, equal to the statutory sick pay (SSP) for employees.
  • Universal Credit will be increased £1,000 a year for the next 12 months
  • Tax credits will also increase by £1,000 a year for the next 12 months
  • The Self Assessment payment date has been moved to next Jan 2021.
  • This next quarter's VAT payment will be deferred. No business will pay VAT from now to mid June. You'll have until the end of the financial year to repay those bills.If you wish to avail of this you will still need to cancel your direct debit to HMRC if you have one.
  • Coronavirus Business Interruption Loan Scheme that was announced in the Budget will be made available from this coming Mon and will now be tax free for 12 months, instead of the previously advised 6 months.

Rent

  • Nearly £1bn of support by increasing the housing benefit and Universal Credit, so that the Local Housing Allowance will cover at least 30% of market rents in your area.
{page id="326"}
read the full post here 372
11/03/2020

Budget 2020 Highlights

Corona Virus Response

  • Statutory Sick Pay to be given to those who have to take time off work for the Corona virus, including those who have to self isolate even if they are not sick. Pay to be given from Day 1 rather than Day 4 from now on.
  • Government to refund the cost of Statutory Sick Pay for up to 14 days, for businesses with less than 250 workers.
  • Contributory Employment Support Allowance benefit claimants will be able to claim sick pay on day one, not after a week
  • Business rates in England will be abolished for the year for small businesses, with a rateable value below £51,000 in the retail, leisure and hospitality industries.
  • Small Businesses suffering as a result of the Corona virus can apply to local councils for a £3,000 payment - available to those which qualify for small business rate relief.
  • SME's will have access to the new temporary Corona Virus Business Interruption Plan Scheme where banks will make Government backed loans available.
  • A dedicated HMRC helpline to be set up for those who need a deferral period on their tax liabilities due to the corona virus crisis.

Personal Taxation

  • National Insurance threshold increase from £8,632  to £9,500. This will save the average employed person £104 per year and about £78 for the self-employed.
  • No changes to personal tax rates or thresholds.
  • The 5% "Tampon Tax" is to be abolished on all women's sanitary products.
  • Pensions taper limit increases to £200,000

Fuel and Alcohol Duty

  • No increases on fuel duty.
  • No increases to duty on beer, wine and spirits.

Business Taxation

  • Business rate discounts for pubs to rise from £1,000 to £5,000 this year
  • No change to Corporation Tax
  • The Employment Allowance will increase from £3,000 to £4,000 per annum from April 2020.
  • Vat to be scrapped on digital media publications, such as newspapers and magazines.
  • Entrepreneur's relief reduced to £1m lifetime limit.
  • R&D tax credit to be increased from 12% to 15%

Environment

  • £5bn to be spent on getting gigabit-capable broadband into the hardest-to-reach places
  • Increase of taxes on Gas, no increase of tax on Electricity.
  • Plastic packaging tax to be introduced from April 2022
  • Manufacturers and importers whose products have less than 30% recyclable material will be charged £200 per tonne
  • £1bn to promote and develop green transport
  • 120m to help winter flood defences and £200m funding for local communities to help with flood defences.
  • Subsidies for fuel red diesel will be scrapped in some areas, but will remain for farmers and rail operators
  • £640m "nature for climate fund" to protect natural habitats, and creating 30,000 hectares of newly planted trees

Other Announcements

  • Decentralisation- 22,000 civil servants will be moved outside London.
  • New civil service hub in the North of England, employing 750 staff
  • Treasury to open new offices in Wales and Scotland
  • £600m to get rough sleepers into homes.
  • £12bn announced for Affordable Homes.
  • Stamp duty surcharge of 2% for non-UK residents from 2021.
  • NHS surcharge on immigrants increases to £624, discount for children.
  • £2.5bn pothole fund
  • £1bn fund to remove all unsafe combustible cladding from all public and private housing higher than 18 metres

 

Annnnd phew! That's the main points...I think. Feel free to contact us with points I may have missed- support@listentotaxman.com. We will get a more detailed budget review together as soon as possible.

{page id="326"}
read the full post here 370

This article was published in our Blog section on 01/03/2020.

More from our Blog section

201