We are often asked why a self-employed person is paying so much tax when their drawings from their self-employed business are minimal. The reason for this is that sole traders and partners (individuals) pay tax on the profits they earn not on the amount of cash they withdraw from their business. For example, consider Sue, a self-employed electrician, who made a profit...
Landlords and tax – the basics
The following definitions set out how property income is calculated and taxed: Rental income – includes rents, amounts received to cover use of furniture, cleaning of communal areas, hot water, heating and repairs to property. Allowable expenses – any expense that you have laid out “wholly and exclusively” for the purposes of renting out a property can be deducted when working out...
More time to file tax returns and pay tax due
HMRC is responding to the pressures we all feel as the new COVID-19 variant, Omicron, makes normal life difficult once more. The offer by HMRC is generous. Basically, they have announced that taxpayers who have still not filed their self-assessment tax returns for 2020-21, will be granted an extra month to file online without triggering a penalty, and an easing of...
Are you registered to use MTD for VAT?
Businesses are reminded to take steps to prepare for Making Tax Digital for Value Added Tax (VAT) before it becomes mandatory for all VAT-registered businesses from 1 April this year. Making Tax Digital is designed to help businesses eliminate common errors and save time managing their tax affairs. Making Tax Digital for VAT is part of the overall digitalisation of UK Tax....
Muras Matters: Self-Assessment Filing Penalty Extension and Late Payment Penalties
Background Tax payers will be aware that the deadline for submitting their Self-Assessment tax return is 31 January 2022 in order to avoid a £100 late filing penalty. However, last week, HM Revenue & Customs (HMRC) announced that tax payers will not receive an automatic late filing penalty providing their tax return is filed by 28 February 2022. In addition HMRC also...
Don\’t forget to declare COVID-19 grants
HMRC have issued the following guidance to taxpayers who may have received COVID-19 grants during the 2020-21 tax year. “If you claimed Self-Employment Income Support Scheme (SEISS) or received Coronavirus Job Retention Scheme grants, you’ll need to include details of all the taxable coronavirus support scheme payments you received during the 2020 to 2021 tax year. “If you are employed and received...
Will your earnings exceed any of these amounts in 2021-22?
£100,000 - Loss of income tax personal allowance Your income tax personal allowance - £12,570 for 2021-22 – will be reduced by £1 for every £2 your adjusted net income exceeds £100,000. If your projected earnings for the current tax year are expected to be in excess of £100,000, perhaps for the first time, you still have three months to consider...
Lockdown survival tactics
We have listed below a number of ideas that might ease your progress through any continuing COVID-19 related disruption during 2022. The following comments are not advice. Every business is different so please call if you have concerns due to a reduction in trade this year. Mothball investment plans. Could you defer decisions on buying that new car or other equipment for...
Facing 2022
We are now two years into the COVID-19 pandemic and the virus is showing a remarkable ability to adapt. In its latest form, the Omicron variant, it is proving to be more transmissible and successful at seeking out new hosts. If we have learnt anything from the experience of the past two years of anxiety and disruption it’s that adaptability is...
Tax Diary January/February 2022
1 January 2022 - Due date for Corporation Tax due for the year ended 31 March 2021. 19 January 2022 - PAYE and NIC deductions due for month ended 5 January 2022. (If you pay your tax electronically the due date is 22 January 2022). 19 January 2022 - Filing deadline for the CIS300 monthly return for the month ended 5 January...