SELF EMPLOYED INCOME SUPPORT SCHEME (SEISS)
Question: What year are SEISS grants taxed in?
Answer: Grants 1, 2 and 3 are shown and taxed in the 2020/21 self-assessment. Grants 4 and 5 will be shown in the 2021/22 self-assessment.
To ensure that the grants are returned correctly, and can be checked by HMRC, the amounts claimed are entered separately on the Tax Returns and not added to turnover.
FACE TO FACE MEETINGS
Now that we are slowly emerging from lockdown, we are starting to arrange face to face meetings with new clients and existing clients to discuss the years trading.
If you would like your 2020/21 Tax Return completed and submitted to HMRC sooner rather than later, get in touch. Do not leave it until January!
MAKING TAX DIGITAL
Making Tax Digital (MTD) for Income Tax is set to be introduced for Sole Traders, Partnerships and Landlords from April 2023. Businesses will have to keep digital records instead of paper receipts. This means you will be required to keep track of your tax affairs digitally using MTD compatible software.
Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for MTD for Income Tax from their next accounting period starting on or after 6 April 2023.
The Self-Assessment Tax Return will be replaced by five new reporting obligations, four during the year and a final declaration after the year end to include any other income, amendments or claims for reliefs.
Morton Tax is aware that clients will need support with this change and we are actively planning well in advance. Your requirements depend on you, how you feel about technology and the nature of your business.
MTD is the biggest administrative change to be made to the UK tax system for businesses since the introduction of self-assessment in 1996. You can read more about it here.
HMRC SUSPENDS LATE FILING PENALTIES UNTIL 28 FEBRUARY
In an eleventh-hour U-turn, HMRC have bowed to pressure from professional bodies and waived late filing penalties on tax returns as long as the taxpayer can file their return online by 28 February. The relaxation of late filing penalties does not affect the payment deadline, which means interest will be charged from 1 February on any outstanding liabilities if taxpayers do not pay their bills by 31 January.
NO EXTENSION TO THE SELF-ASSESSMENT DEADLINE OF 31 JANUARY 2021
HMRC have rejected calls to relax the tax return deadline of 31 January 2021. They will not waive late filing penalties for late returns. Pandemic related disruptions and agent delays may be accepted as a reasonable excuse and they will also extend the period to appeal any penalty. However, appealing a penalty will incur time, money and stress.
INSOLVENCY UPDATE – October 2020
The Government has announced it will bring forward new laws requiring mandatory independent scrutiny of pre-pack administration sales where connected parties - such as the insolvent company’s existing directors or shareholders - are involved in the purchase. The move is intended to improve confidence and transparency, giving the general public and creditors reassurance that their interests are being protected alongside those of the distressed business. In my view this is an excellent step forward and long overdue.
Whilst on the subject of insolvency, a recent completed case included a 7-year director disqualification for Alexander Nix of SCL Elections Ltd, which traded as Cambridge Analytica, for causing or permitting the company or associated companies to market themselves as offering potentially unethical services to prospective clients; thereby demonstrating a lack of commercial probity. This is the case where millions of Facebook users’ personal data was harvested without consent to be used for political advertising. This is the government press release: https://www.gov.uk/government/news/7-year-disqualification-for-cambridge-analytica-boss
NEW SELF ASSESSMENT SELF-SERVE TIME TO PAY SCHEME ~ September 2020
If you deferred paying your July 2020 Payment on Account, you will need to pay the deferred amount, in addition to any balancing payment and first 2020/21 Payment on Account, by 31 January 2021. This may be a larger payment than you usually pay in January.
If you are unable to pay your Self-Assessment (SA) bill in full by 31 January 2021, you can set up a Time to Pay payment plan of up to 12 months online without speaking to HMRC. This will get automatic approval if the amount is not in excess of £30,000. If the debt is over £30,000, or you need longer than 12 months to repay the debt in full, you can still use the Time to Pay arrangement but you, or your representative, will need to liaise with HMRC.