Coronavirus: Government Support for the Self-Employed

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Rishi Sunak, the UK Chancellor of the Exchequer has announced the self-employed and those who run a business as a partnership are to receive 80% of earnings, calculated from the mean average of their trading profits for the 3 previous tax returns (2016/17, 2017/18, & 2018/19).  The trading profit is the taxable profit that is calculated as part of your income tax return, from either self-employment or as part of a partnership.

The scheme is called the Self-Employment Income Support Scheme (SEISS).

The average is determined by adding the trading profits for the three years, then dividing by three (if you’ve only been trading for two years, the government will add those two years and divide by two instead).  This average can then be divided by 12 to calculate you monthly income average.  80% of this average will be what the government will offer you as a grant which is taxable (-meaning it will need to be declared in your 2020/21 tax return as income received).

The grant is capped at £2,500 p/m and last only for 3 months (although this may be extended depending on how the coronavirus pandemic plays out in the UK).

For you to be eligible, more than half of your income must come from your self-employment. In other words, you can’t claim if more than half your income come comes from another source, such as full-time employment.

Similarly, if more than 50% of your income comes from other sources usually included on your Self-Assessment tax return, such as investment or rental income, then you are not eligible.

Furthermore, you aren’t eligible for the grant if the 2018-19 trading profit is equal to or greater than £50,000, and the average profits for previous years starting in 2016-17 are equal to or greater than £50,000.

If you have not yet submitted your 2018/19 tax return (that was due 31/01/20), you will NOT be eligible for the grant.  If you were self-employed during this period (06/04/2018-05/04/2019), then you have till the 23rd of April to submit your tax return and qualify for the SEISS.  Contact us at Taxfile to help submit your 2018/19 tax return on 020 8761 8000.

Who isn’t eligible?

You are not eligible for the SEISS grant if any of the following applies:

  • Your trading profits are equal to or more than £50,000 – for both tax year 2018/19 and when averaged across the tax years you traded in during last three full tax years starting in 2016/17.
  • You aren’t self-employed or in a partnership at the moment, or don’t intend to be in the future. It’s not enough to merely be enrolled for Self Assessment and to have undertaken self-employment work or have a role in a partnership at some point in the past year. You must be trading now and intend to do so in the 2020/21 tax year too.
  • You failed to submit a Self Assessment tax return for the 2018/19 tax year before 23 April 2020.
  • You haven’t lost trading profits due to the coronavirus outbreak.
  • Less than 50% of your income comes from your self-employment or partnership.

To apply for the SEISS, the government will contact you (via post) and invite you to apply online, using details they have via your self-assessment registration.  It is estimated that the scheme will be available from June 2020, and that will be the earliest that the grant will be available to the self-employed.

Other coronavirus measures for self-employed workers

There are other coronavirus emergency measures that the government has put in place that might help you, as a self-employed individual or member of a partnership.

Deferred income tax payments

Self Assessment payments due on 31 July 2020 (that is, income tax payments on account) can be deferred until 31 January 2021.

Anybody who fills in a Self Assessment return and who is liable for payments on account can make use of this, not just the self-employed.

Time to Pay

If you’re self-employed and struggling to meet outstanding tax obligations due to financial difficulties, you can contact HMRC to see if you’re eligible for support via the existing HMRC Time to Pay Scheme.  This allows more time to settle financial obligations if you can demonstrate a reasonable ability to pay in future. Contact HMRC on the special coronavirus helpline: 0800 0159 559.

Universal Credit increases

Because of the coronavirus outbreak, the government has increased Universal Credit amounts beyond the already anticipated yearly increase as of April 2020.

The standard allowance will be £409.89 per month.

Grants for businesses that pay little or no rates

If your business operates from a property and is registered for the Small Business Rate Relief (SBRR), or Rural Rate Relief (RRR), then it will receive an automatic grant of £10,000 from your local authority.

You don’t need to do anything to receive this (note: the requirements differ depending on where in the UK your business is located).

However, if your business doesn’t pay any rates, you may need to contact your local authority to ensure it has your bank details for the payment.

Coronavirus Business Interruption Loan Scheme

Businesses can apply for a loan with approved lenders. The government will underwrite 80% of the loan, making the loan more widely available to those who might not normally be able to apply.

It will also pay the interest for the first six months.

MOTs have been suspended

Those who use a vehicle for their self-employed work will be pleased to hear that MOTs have been suspended for six months, provided the MOT falls after 30 March 2020.

The vehicle must be kept in a road-worthy condition but the exemption is automatic, so there’s no need to apply for it.

If in your self-employment business you use a lorry, bus or trailer then there are different rules – MOTs are suspended for three months as of 21 March 2020.

This again is automatic, although you may need to apply under certain conditions.

Deferral of VAT Payments

If you are a VAT registered business in the UK and have a VAT payment to make between 20/03/20 & 30/06/20, this payment can be now deferred till 31/03/2021 without any penalties or charges imposed.  If you pay via Direct debit, this needs to be cancelled with your bank for the deferment to occur.   More information can be found at deferral of VAT payments due to coronavirus (COVID-19).

Landlords & Property Investors Take Note: New Capital Gains Tax Rules for 2020

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The new capital gains tax (CGT) rules will come into effect on April 2020, which will more than likely impact the sales of most additional properties in the UK.

CGT is paid on profits from the sale of investment properties that are not the sellers main place of residence. The amount of CGT paid is dependent on the annual income of the individual.  Current capital gains tax rates on property for 2019-2020 are 18% for basic rate taxpayers (£12,001-£50,000) and 28% for higher rate taxpayers (£50,001+).

The changes coming into effect in 04/2020 are threefold:

1. The timing of when you pay the CGT to HMRC
2. The amount of tax relief you can claim if you previously lived in the property
3. How the letting relief will work

Timing:
Previously a UK resident CGT has been calculated & submitted alongside their self assessment income tax irrespective of the completion date for the sale of the investment property. From April 2020, sellers will need to pay the full amount owed within 30-days of the completion of the sale and failure to pay within the 30-day limit will result in penalties.

Tax Relief:
The private residence relief (PRR) applies to landlords selling a property where in the past they have used that property as their main place of residence.

Currently, you are exempt from paying tax on the final 18-months that you owned the property, regardless of whether it was being rented. From April 2020 it is expected to be halved to 9-months.  So once you have not lived in a property that was once your main place of residence for longer than 9-months, you will probably be required to pay some CGT on the profits when it is sold.

Lettings Relief:
As a landlord, if you have qualified for PRR, then it may also be possible to claim lettings relief.

Letting relief can currently be claimed if you used to live in the property being sold, and have also let out part or all of it for residential accommodation.

You can claim the lowest of the following:
the same as the amount of PRR you will receive
£40,000
the chargeable gain you make from the period you let out the property

When the new rules come in from April 2020, you will only be able to claim this relief if you live there when it is being sold  (i.e if you share occupancy with your tenant).

Under current rules there are certain costs that can be deducted from your CGT:

  • Stamp duty paid on the purchase of the property
  • Estate agent fees
  • Solicitor fees
  • Improvement costs that added value to the property (such as extensions)
  • Qualifying buying and selling costs (such as surveyor fees)

Aside from this, capital gains tax is only payable on property that is owned by individuals. If the property is owned by a limited company, corporation tax is applied instead of CGT.

Corporation tax is currently 19%, but the current government hinted at a reduction to 17% for 20/21 but we await the confirmation from the Chancellor budget due in the Spring of 2020.

If you have any queries around CGT or need an accountant to calculate & submit your CGT, please don’t hesitate to contact us.  We offer a free 20-minute consultation.

Over 400 tax returns submitted

We Submitted Over 400 Tax Returns in January!

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Over 400 tax returns submitted

Taxfile prepared and submitted more than 400 Self-Assessment tax returns for clients during January. That’s about a hundred a week and goes to show just how busy it gets for us during January, the busiest month in our accounting calendar.

Did you submit your tax return on time?

The deadline for submission of your tax return (and payment of any tax due) was 31st January at midnight. Did you manage to submit yours in time? If not, you’re already into the ‘penalty’ period where HMRC basically fine you for being late. The penalty comes in the form of an initial £100 fine but that increases, potentially very significantly, as you get later and later with your tax return submission. If you look at the table below, it’s safe to say that you can end up owing a thousand pounds or more if you bury your head in the sand and are 3 months late, or more.  If you continue to leave your tax payment and tax return submission outstanding for six months or more, the penalty is £1300 as a minimum – perhaps more (it depends upon how much tax you owe).

Late return penalties by HMRC

Is your tax return & tax payment late? Taxfile can help!

If you are late submitting your tax return or paying tax and don’t know how to straighten things out, don’t Read more

Your Tax Return - All Wrapped Up for Christmas!

Your Tax Return – All Wrapped Up for Christmas!

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Your Tax Return - All Wrapped Up for Christmas!

Urgent: rather than waiting until January, start sorting out your Self-Assessment Tax Return out right now.

Why now? Well, because every tax expert and accountant in the land is about to hit their busiest month in the accounting year — January. For tax professionals, January is a frantic time because everyone wants their tax matters sorted out at the same time due to HMRC’s deadlines. So, we have to take on extra staff, extend our opening hours and open at weekends — just to keep up with the demand. All of this costs extra money, so we have to increase charges a little during January to cater for the enormous increase in workload. January also becomes quite a bottleneck. In January alone, we are likely to have to prepare and submit around 500 Self-Assessment tax returns for our customers and that’s a very tall order.

So — act now & save money on your tax return

You can avoid extra charges by coming in to see us for your tax return now — well before January. It makes sense to come in early in November or December if you can. That way, we can have your tax affairs sorted in time for Christmas, avoiding the bottleneck. You can then relax in the knowledge that your tax matters have been sorted, ahead of the rush, at the best possible price.

Saturday opening

We’re open Saturday mornings at Tulse Hill from 9am until 1pm for a limited time. So, make the most of this opportunity and book a weekend appointment now, while it costs nothing extra.

Get a tax refund for Christmas!

We can help prepare and submit your Self-Assessment tax return and let you know the all-important amount of tax you need to pay or, indeed, may even be owed by HMRC. If you’ve overpaid tax, we could even get your refund for you in time for Christmas — what a Read more

The Early Bird Gang

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HMRC expects people to do tax returns for various reasons;

  • Those that have an income outside of a PAYE scheme (i.e. self-employed)
  • High earners on PAYE schemes, earning above £100K
  • Company Directors & Shareholders
  • Landlords who have rental incomes

The tax returns calculated generally run between the dates 06/04/xx through to 05/04/xy, the calculation, submission, and payment deadline  of taxes owed to HMRC (or you), would need to be submitted at the latest 31/01/xz, before penalties & interest are imposed.

Each year, the Government announces a tax free allowance, which is the amount you can earn before your income starts to get taxed.  The tax free allowance for 2018/19 is £11,850.00.  However, this allowance decreases by £1 for every £2 earned above £100k, meaning by the time your reach £125K, the allowance is £0.

The amount of tax paid on income is also specified by the government & is subject to change with announcements made generally in the Budget statements.  For 2018-19 the rates are as follows;

Tax Rate (Band) Taxable Income Tax Rate
Personal allowance Up to £11,850 0%
Basic rate £11,851 to £46,350 20%
Higher rate £46,351 to £150,000 40%
Additional rate Over £150,000 45%

*For 2019-20 the new rates & tax free allowance can be found HERE.

Since 6th April 2019, you would have been able to calculate & submit your 2018/19 tax return to HMRC, so since then the Tax Agents at Taxfile have been busy filing away for the early birds.   We have been open on Saturdays too, to keep up with the influx of tax returns & CIS returns.

However, the last Saturday that we will be open will be 29th June.  If you would like to join our ‘gang’ of Early Bird & can only come in on Saturdays, you only have a few weekends left.

Please note, on Saturdays, all our agents see clients by appointment only, and can not generally deal with walk-in clients.  So please book in advance by either calling 020 8761 8000 or booking online HERE.

So get our professional help at Taxfile & we’ll make filling in and filing your tax return a breeze.

See our Newsletter HERE

Making Tax Digital (MTD) delayed due to Brexit

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HMRC delays the rollout of Making Tax Digital (MTD) for businesses & individuals beyond 2021:

Even though MTD for VAT has been rolled out, the wider extension of the MTD scheme for individuals & businesses has been delayed till at least 2021.

The Chancellor’s 2019 Spring Statement mentioned;

“The focus will be on supporting businesses to transition and the government will therefore not be mandating MTD for any new taxes or businesses in 2020.”

MTD for income & corporation tax was scheduled to come into effect from 2020, but as the UK prepares itself for Brexit, HMRC has redirected its focus on the implications of UK’s exit from the EU.

HMRC has said that its digital delivery team and business analysis team are being redeployed to focus on ensuring that a customs solution will be in place should it be required when the UK leaves the EU.

With the current perplexity surrounding Brexit, HMRC has stressed that ‘this does not indicate any expected outcome but is due to the level of work required to deliver any outcome’.

Christmas & New Year Opening Times at Taxfile

Christmas & New Year Opening Times at Taxfile

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Christmas & New Year Opening Times at Taxfile

Please take a look at the calendar above and note our opening times over Christmas and New Year. As you can see, we’re closed on several days over the festive period. This is particularly important for those who need to come to see us for help with time-sensitive accounting and tax-related services in the run-up to January 31st.

Need Help Filing Your Tax Return?
Make an Appointment NOW!

In particular, we urge anyone who needs to file a 2017/18 Self-Assessment tax return to come and see us well before Christmas. By doing so, you’ll avoid the last minute stampede — way too many people leave it until January, which is the busiest time in the tax and accounting calendar. While the HMRC deadline for tax returns is the end of January, you run the risk of being caught up in the bottleneck if you leave things later than December. Taxfile files tax returns for thousands of customers during November, December and January, so we’re incredibly busy at this time of year — particularly January, which is frenetic! So, those leaving it until the last minute not only run the risk of being charged more to cover the long hours and overtime that we need to work during January, but they also risk receiving a fine from HMRC if they miss the deadline completely because they left things so late.

So the message is: please book an appointment with us now, ideally for a date before Christmas.

For Self-Assessment tax returns, records for the period 6th April 2017 to 5th April 2018 are required. For business accounts, we will also need to do accounts based upon the business’s individual year end.

Open for Saturday Appointments

We are happy to see people on Saturdays at this busy time of year (with the exception of the festive closures of course – see the calendar above). Saturday morning appointments should be more convenient for those who work on weekdays. As you can see on the calendar, we’re open from 10am to 1pm for most Saturdays in December and January but only for those with a pre-agreed appointment.

To book an appointment, please call 0208 761 8000 or book an appointment online here. Many thanks.

Taxfile's Autumn Newsletter 2018

Autumn Newsletter 2018

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Taxfile's Autumn Newsletter 2018

Those of you who are not on our mailing list may be unaware of our latest newsletter. So, we thought we’d post a little about it here, along with a link where you can download an Acrobat PDF version to read at your leisure.

Keep on Top of your Taxes

The Autumn 2018 Newsletter is packed full of articles and advice to help you get on top of your taxes, make sure you are aware of the services we offer and, above all else, ensure that you file your tax return in good time.

It’s Tax Return Time! Act Now!

When it comes to Self-Assessment tax returns, the main message is to act now. That way you will avoid the January stampede and any unnecessary, additional expenses.

Key Contacts at Taxfile

Along with other tax news and advice, we also include a very useful table of your key contacts at Taxfile. Simply choose the service you require and the key people responsible for helping you can be found alongside, including their email addresses for direct contact.

Download Taxfile's Autumn Newsletter 2018Download the eNewsletter

To find out much more, download the Taxfile Autumn 2018 Newsletter here.

Professional Help to Get Your Tax Affairs in Order

Taxfile are super-keen to help you through the maze of HMRC rules and tax regulations. We’ll get your paperwork, accounts, bookkeeping and tax returns all in order. Simple!

Open for Saturday Appointments

Taxfile’s Tulse Hill (SE21) office is now open on Saturday mornings, from 10am until 1pm, for pre-booked appointments. So, if you’d like to discuss any aspect of your tax and a weekend appointment is more convenient than a weekday, call 0208 761 8000 to book one or book an appointment online here.

Taxfile's May 2018 e-newsletter

May Newsletter – New Battersea Branch, Easy CIS Tax Refunds, Avoid £10 Daily Fines & More

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Taxfile's May 2018 e-newsletter

Our informative May e-Newsletter is now ready to view online. It includes exciting news of our new branch opening in Battersea along with important tax and accountancy-related news that might affect you. Here is a quick summary of the newsletter’s contents:

  • The first article announces the opening of our new Battersea Branch in London SW8. New and existing customers are welcome to pop in and say hello and to get expert help with your tax affairs and accountancy requirements. Learn more about the opening of the Battersea branch, and the core services on offer, here or click the big button below to read the newsletter.
  • If you work on one of the many Battersea construction sites in or around SW8, we can help you reclaim overpaid tax and much more … see the newsletter for more details – click the big button below.
  • If you’re a sub-contractor working in the construction industry scheme (‘CIS’), you’re almost certainly due a tax refund (learn why here). Taxfile are experts at getting tax rebates from HMRC, so come and see us and we’ll get you the maximum refund possible. Read the newsletter (click the big button below) to learn how we make your tax refund application fast and hassle-free.
  • We can help limited company contractors too! We’re tax and accountancy experts so we can help you register as a limited company or register for CIS if you’re not already set up, we’ll help you with the monthly tasks demanded of you by HMRC including accounts preparation, confirmation statements, corporation tax handling, CIS set-off rebate, National Insurance (NI), VAT, bookkeeping, payroll and much more. We’ll save you time and will make operating the Construction Industry Scheme a breeze. Click the pink newsletter button below for more details.
  • If you introduce a family member, friend or colleague to Taxfile, you will get a discount off your next tax return if they sign up as a new paying customer with us. Click the button for details.
  • Taxfile recently printed some brightly coloured postcards to promote our new Battersea office and our tax-related services. Simply get in contact if you’d like some of these postcards to hand out to colleagues. If you write your full name on the back and use it to refer a colleague, it might even save you money! Click the button for more details.
  • Our team are multi-lingual and always happy to help. If English is not your first language, let us know and we’ll try to match you to the most appropriate staff member.
  • If you, your friends, family or colleagues have not dealt with your old tax returns, HMRC will be adding £10 per day to the penalty from 1st May. That’s on top of the £100 fine that will have applied immediately after missing the original 31 January deadline. Let Taxfile get your tax records, tax returns and overdue tax all in order so you don’t have to pay any more in fines than you have already. Learn more here or contact your nearest branch for a consultation.
  • All Taxfile clients get free ‘Tax Enquiry Fee Protection Insurance‘ when they file their tax return through Taxfile by the statutory deadline. So – if you’re investigated by HMRC – our fees to sort it out are covered. Click the button for more details.
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