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Small Trader? Make the Most of These 2 Allowances!

Small Trader? Make the Most of These 2 Allowances!

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Small trader? Make the most of these 2 allowances!

Small traders with very modest incomes are currently eligible for a couple of very useful allowances. Both of these could save them money — and some paperwork:

1. Tax-Free Allowance for small traders

If you receive income of no more than £1000 per annum (before expenses) from property or trading income, you don’t need to tell HMRC, you don’t need to pay tax and usually you don’t need to do a self-assessment tax return. If you have both types of income and each earns you no more than £1000 gross per annum, you are usually eligible for the tax-free allowance in BOTH cases! There are exceptions, of course, but these are the general guidelines. Income from property or land speaks for itself, while ‘trading‘ would include things like self-employment, hiring out personal equipment or services like gardening, window cleaning or babysitting. Partnerships are not eligible.

2. Trading Income Allowance

If you are paying tax but have expenses below £1000 per annum, you could reduce the tax by claiming for ‘Trading Income Allowance’ instead of claiming for the actual expenses themselves. In effect, it’s like claiming for £1000 worth of expenses rather than the lower amount of expenses that you’ve incurred in reality. This aspect is all explained in greater detail, with a simple example, in our previous Trading Income Allowance article here.

It’s important to know, though, that you cannot claim both the Read more

Don't miss THIS on your self-assessment tax return!

Don’t Miss THIS on your Tax Return! (Checklist)

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Don't miss THIS on your self-assessment tax return! (Checklist)

The standard Self-Assessment Tax Return includes all the usual areas that you’d expect to have to confirm to HMRC. These include the obvious things like personal details, information about income for the period in question, any assets, dividends, interest received, pensions and so on.

However, there are a number of additional areas that you need to check and confirm before the return is submitted and filed with HMRC. It’s not an exhaustive list, but things people sometimes miss and that you need to check you have allowed for (if applicable) include:

  • Employment Income — have you confirmed any employment income? Have you supplied Taxfile, if we’re your tax agent or accountant, with copies of P60’s and P11D’s. Did you have any employment expenses?
  • Self-Employment Income or Partnership Income — have you confirmed any self-employed or partnership income and relevant expenses? Have you supplied all CIS vouchers, invoices, cash income etc. if applicable?
  • UK Land & Property Income — have you confirmed any rental income and relevant expenses for each property you perhaps rent out?
  • Foreign Income — did you receive any foreign income? Have you confirmed it?
  • Trust Income — did you receive any trust income or are you treated as having received any trust income?
  • Capital Gains — have you sold any assets or investments which may be subject to capital gains tax e.g. a rental house, stocks and shares etc?
  • Residence — were you, for all or part of the year, not resident, not ‘ordinarily resident’ or not ‘domiciled’ in the UK?
  • Investment Income — have you confirmed any bank/building society interest, dividends, etc?
  • Pension Income — are you in receipt of any? It needs confirming if so.
  • Any other income received that doesn’t fit into any of the above e.g. Job Seekers Allowance, Tax Credits? Child Benefit is an important one, especially if one parent is earning £50k or more. Marriage Allowance is another.
  • Do you have a pension that you pay into? If so, how much did you pay for the period in question?
  • Have you given any money to charity? Higher rate taxpayers can usually get extra tax relief on this.
  • Do you have a student loan?
  • Are you subject to the High Income Benefit Charge?
  • Do you use a service company?
  • Have you been paying your National Insurance?
  • Have you been keeping good records?

Taxfile will always prompt you to check for things like these if you’re our customer, before we submit your tax return on your behalf. As we say above, though, the list is not an exhaustive one, so there may be other information we need, depending upon your individual situation. The list of what HMRC requires each year also Read more

Bounce Back Loan Scheme (BBLS)

Bounce Back Loans for Struggling Businesses: Ending 30 November!

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If your small or medium-sized business has struggled due to adverse trading conditions caused by the pandemic, it may be eligible for a support loan through the Government’s Bounce Back Loan Scheme (‘BBLS’). However, time is running out — you only have until 4 November 2020* to arrange the loan with a lender. That’s just a few weeks away at time of writing. There are some great features, so don’t miss out if you need financial support …

Bounce Back Loans are interest-free for 12 months (with no repayments being required during that time). Thereafter, the interest will be just 2½% per annum. Small businesses can borrow between £2000 and £50,000 depending upon their turnover (the maximum allowed is 25% of their turnover in the 2019 calendar year, up to the £50k ceiling). Another major feature is that the Government guarantees the loan. BBLS loans have a six year term, but you can repay the loan early without incurring an early redemption fee.

The main requirements around eligibility are that:

  • your business is UK based;
  • it was established before 1st march 2020;
  • it has been adversely affected by the pandemic;
  • it is not in bankruptcy, liquidation or undergoing debt restructuring.

N.B. Banks, insurers (excluding brokers), re-insurers, public-sector bodies and state-funded primary/secondary schools are not eligible.

* IMPORTANT NOTE: many of the high street banks now seem to be stating a deadline of the end of November instead of the 4th. However, Taxfile’s advice is to apply before 4th November (the Government’s official, published deadline) to avoid possible disappointment.

A few other caveats apply, so Read more

Further Delays on the Roll-Out of the Domestic Reverse Charge for the Building & Construction Services.

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The domestic reverse-charge is a major change to the way VAT is collected by HMRC in the building and construction industry reporting under the Construction Industry Scheme (CIS).

It was being introduced to combat VAT fraud in the sector and the initial roll-out on 1st October 2019 was delayed due to a combination of the sector being ill-prepared for the change and Brexit. The date was moved forward 12-months to 1st October 2020 but due to COVID-19 the start date has been further advanced to 1st March 2021.

At Taxfile, we will start contacting our VAT clients working under the CIS, in preparation for the 1st March 2021 start date.

If you would like to know how to prepare your business for this, you will need to: Read more

Making Tax Digital – A New Time Line

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Making Tax Digital (‘MTD’) was announced as the new initiative by HMRC to revolutionise and modernise the tax system in the UK.

MTD centres around keeping digital financial records that can then be accessed by software to calculate and submit taxes through to HMRC. The goal is that there will be direct ‘digital link’ between the financial record and the software used to calculate and submit the records and therefore ensuring an accuracy in the figures being generated.

With initial teething problems, MTD for VAT started back in April 2019, and as a result of various delays around Brexit & COVID-19, it still has not sailed out of its ‘soft-landing’ period.

On 21st July 2020 the Treasury published a 10-year plan to modernize the UK’s tax system which outlines a blueprint for the transition of the UK’s tax system into the digital age.

MTD for VAT

Introduced in April 2019, MTD for VAT had a soft-landing period where the rules for this ‘digital-link’ were relaxed.  Prior to COVID-19, April 2020 was the date stipulated where all digital links were to be in place for submissions.

As a direct consequence of COVID-19, it has been now been stated that as of 1st April 2021, the ‘soft-landing’ period comes to an end and all VAT registered businesses submitting VAT returns will need to ensure they have these digital links in place for their submissions.

Furthermore, from April 2022, MTD for VAT will apply to all VAT registered businesses and not just those that have a turnover greater than the VAT threshold.

MTD for Income Tax

The 10-year plan targets 6th April 2023 for self-employed businesses and unincorporated landlords to begin reporting Read more

Watch out for scam emails, texts & calls

Watch Out – Fraudsters Are About!

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Watch out for scam emails, texts & calls

Have you noticed a significant increase in the number of scam calls, phishing emails and dodgy texts to your mobile in recent weeks? We certainly have. Some of Taxfile’s customers have been asking if any are genuine, so we thought we’d send out this warning …

If you receive a call, email or text from HMRC asking for your personal or financial details, it’s simple: DO NOT to give ANY information away via text, email or to someone calling you by telephone. They could be anyone! Your information will be used against you if it gets into the wrong hands — and that could potentially cost you a LOT of money. So if they call, text or email you out of the blue:

  • don’t confirm your date of birth,
  • don’t confirm your National Insurance Number,
  • don’t tell them your your mother’s Maiden name,
  • don’t confirm your Unique Taxpayer Reference (‘UTR’) or any other piece of personal or financial information,
  • … even if they say it’s urgent (most fraudsters will say it is, so as to panic you into divulging your information).

Even one bit of data given away can be dangerous these days. ‘Social Engineering’ scams can use one bit of information as a starting point to eventually build a more complete picture of your sensitive data. Once they have enough pieces of the jigsaw, they can potentially take over your identity, empty your bank account or go on a spending spree with a credit or debit card issued in your name. People have lost thousands! So, the message is to be careful not to give anything away via email, SMS/text or to someone who has telephoned you out of the blue.

If HMRC do send you a genuine email, text your mobile or call you, they will never ask for personal information, financial information or payment details. It may help you to check here to see a list of genuine communications that HMRC has recently sent.

If you’re going to give HMRC information and want to be sure it’s genuine, you need to Read more

2nd SEISS grant now open for applications (started 17 August 2020)

2nd SEISS Grant Applications – NOW OPEN!

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2nd SEISS grant now open for applications (started 17 August 2020)

The Government previously announced that, much like the furlough scheme, the Self-Employment Income Support Scheme (‘SEISS’) is to be extended for a second period and in fact it’s now open for applications.

If your business has been adversely affected as a result of COVID-19 on or after 14th July 2020 you can make a claim from 17th August 2020 for the second and final grant.

You can make a claim for the second grant, if you’re eligible, even if you did not make a claim for the first grant. 

Your eligibility for the 2nd SEISS grant must meet the same criteria as those outlined for the 1st grant:

  • you must have traded in the tax year 2018/19 and submitted your Self Assessment tax return on or before 23 April 2020;
  • you must have traded as self-employed in the tax year 2019/20;
  • you must have all intentions to trade as self-employed in the tax year 2020/21;
  • your average trading profits must be less than £50,0000;
  • your trade must have been adversely affected by coronavirus.

Like the first SEISS grant, the second SEISS grant is a taxable one. However, this time, it is based on 70% of your average monthly trading profits. It will be paid out in a single instalment, based on a 3-month period of average profits, and is capped at a maximum of £6,570.

Taxfile will be in touch with clients to remind them. Now that the 2nd grant is available, do feel free to call us if you’d like our assistance in helping you to make your claim.

Please remember the deadline for claiming the first SEISS grant was 13 July 2020. You can start claiming the second SEISS grant now, as it opened to applications on 17 August 2020.

Please call Taxfile on 020 8761 8000 if you need help to make a claim for either of these SEISS grants and we’ll be happy to help. Alternatively, fill in and submit the form below and we’ll be in touch to help you.

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    [Article updated 17 August 2020].

    First SEISS Grant Application Deadline Day Looms

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    First SEISS Grant Application Deadline Day Looms

    Back in April, as a result of the Coronavirus pandemic, the Government announced the Self Employment Income Support Scheme (‘SEISS’), a taxable grant to support self-employed individuals and businesses affected by COVID-19.

    The deadline for claiming this initial grant has been set as Monday 13 July 2020.

    After this date you will no longer be able to claim for this first SEISS grant.

    The 1st SEISS grant covered a 3 month period, for loss of income due to COVID-19, from April to June 2020. If you are eligible for this grant, you only have until Monday 13th July 2020 to make the claim. After this date the applications will close and you will have no means of applying.

    Need Help?

    If you have been putting it off, have not checked your eligibility status, or are unsure how to do so, then please call Taxfile on 020 8761 8000, and we can help you. Alternatively, fill in and submit the form below and we’ll be in touch.

    (Interested in the 2nd SEISS grant? Click here).

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      Letting a room through Airbnb? HMRC tracks your income & data!

      Letting a Room through Airbnb? HMRC Tracks your Income!

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      Letting a room through Airbnb? HMRC tracks your income & data!

      Back in late 2015, we forewarned that HMRC was planning to force on-line companies like Airbnb to share customer income data with them. That plan has come to fruition and HMRC is now receiving detailed information from Airbnb and other online providers. The data will tell HMRC about lettings income that may have been previously falling under their radar.

      Airbnb is an on-line marketplace where people can rent out rooms, cottages, apartments and suchlike to those looking for short-term accommodation, city breaks, holidays or lower cost alternatives to hotels and overnight business stays.

      We understand that various on-line providers, including Airbnb, are now exchanging information with HMRC. HMRC then uses their analytical tool “Connect” to track and monitor income from such sources. This powerful application was developed by BAE Systems and is the most advanced data gathering tool HMRC has at its disposal.

      So, if you let property or a room on Airbnb, you can expect detailed information to be passed to the Revenue about your letting activities and the income it generates. While you may currently be able to earn up to £7,500* per year tax-free for furnished accommodation under the Government’s ‘Rent a Room Scheme‘, care needs to be taken to submit a tax return and pay tax on any income received once you have gone over that limit. Higher rate taxpayers also need to take care if their rental income pushes them into a higher tax bracket.

      In order to qualify under the Rent a Room Scheme:

      • The room must be furnished;
      • The relief cannot be used if you let your home whilst living abroad;
      • The accommodation provided cannot be office space or business space.

      Changes arriving in 2019:

      HMRC recently held a consultation with relevant professionals and the public about whether the scheme should continue in its present form. Following this, they have announced that the scheme will be more restricted; landlords who do not live in their “main residence” at the same time as their tenants will probably no longer be able to claim “rent a room relief” from 6 April 2019.

      Tax Help & Advice for Lettings Income

      If you need our help handling your lettings tax needs, Taxfile is here to assist you. We’re tax experts and can guide you through the maze of rules and regulations concerning lettings, renting out accommodation, tax thresholds, knowing when it’s appropriate to work under the Rent a Room Scheme, whether you can claim expenses and so on. Book an appointment at your nearest Taxfile office: for Tulse Hill in London SE21 book an appointment on-line here; book here for Dulwich in SE21. Alternatively, simply call 0208 761 8000 or send us an email here and we’ll be happy to help to get you on the right track.

      Learn more about our services to landlords and those earning an income from property lettings here.

      * Correct for tax years 2016-17 and 2017-18. For tax year 2015-16 the threshold was only £4,250. Also note that the current year’s threshold reduces to £3,750 if someone else, for example a joint owner, receives lettings income in the same property.

      Tax credits renewal deadline is just days away!

      Tax Credits Renewal Deadline Just Days Away – Don’t Miss Out!

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      Tax credits renewal deadline is just days away!

      If you’re claiming tax credits and haven’t yet renewed, then you’d be wise to pay very close attention to the following …

      Don’t Miss Out

      Tax Credits are payments made to eligible people with children and/or very low incomes. Examples include Tax Credits and Child Tax Credits and the payments are made by the UK Government. However, the scheme rules are complex and part of that includes a strict renewal process, with a built-in deadline.

      Renewal Deadline

      Alarmingly, even if you are already claiming tax credits, there’s a high likelihood that your payments will cease completely unless you take proactive steps to renew your claim to them by 31st July* 2018 — that’s just a few days away at time of writing, so there is no time to lose.

      * If your renewal pack states a different deadline, then that applies instead of 31st July in your case.

      How to Renew Tax Credits

      If you are claiming tax credits, you will be sent a renewal pack.

      If your renewal pack has a red line across the first page, then you will need to send a reply.

      Note that you can only renew your claim once you have received your renewal pack. Having received the pack, you should then ideally renew your tax credits online although see below for other options.

      Automatic Renewal

      If your form shows the code ‘TC 603 R’, you do not need to send a reply and your tax credits will be renewed automatically. However, you must make sure that you check the form carefully in case any of your details are incorrect. Should you fail to report any errors or to confirm any changes in your circumstances, your tax credits could stop or you could receive a fine. You can report errors and changes in circumstances using the Tax Credits Online Service.

      Online Renewals

      Renewing online is HMRC’s preferred method of renewal, via the Gov.UK website.

      Telephone Renewals

      To renew your claim to tax credits via telephone, simply contact the Tax Credit Helpline on 0345 300 3900 or textphone: 0345 300 3909.

      Postal Renewals

      You can also renew your tax credits claim by post. Send your claim to: Comben House, Farriers Way, Netherton L75 1AX. Make sure that your renewal claim arrives by 31 July and we also recommend sending by recorded delivery so you have some proof of the arrival date.

      What Next?

      You should hear back from HMRC within Read more