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Almost 25,000 Self-Assessment customers have set up an online payment plan to manage their tax liabilities in up to 12 monthly instalments, totalling £69.1 million, HMRC revealed recently.

In October, HMRC increased the threshold for self-serve Time to Pay arrangements from £10,000 to £30,000 for Self-Assessment taxpayers. Once they have completed their 2019-20 tax return and know how much tax they owe, taxpayers can use the self-serve facility to set up monthly direct debits and spread the cost of their tax bill.

Taxpayers can apply for the payment plan via GOV.UK. However, they must meet the following requirements:

• they need to have no:
  • outstanding tax returns
  • other tax debts
  • other HMRC payment plans set up
• the debt needs to be between £32 and £30,000
• the payment plan needs to be set up no later than 60 days after the due date of a debt

Please call if you want to take advantage of this facility, we can point you in the right direction.

At first sight, company cars drivers whose private fuel costs are met by their employers may seem to be onto a good thing, but there is a nasty tax hit…

Enter, the Car Fuel Benefit charge.

When the current tax year ends, 5 April 2021, the illustration below demonstrates how a cash payment to an employer to payback any private fuel provided can create overall cash savings. This will not apply to all company car drivers, but it is well worth checking to see if a repayment is possible.

Let’s say the following circumstances apply:

• list price of your company car when new was £30,000
• your employer pays for all your private fuel
• CO2 emissions are 147 g/km, and
• the car has a diesel engine, 2000 cc.

The 2020-21 benefit in kind charge for the use of the car (this is added to your taxable income for the year) is £10,200. This would cost a standard rate taxpayer £170 a month in Income Tax.

But then the provision of private fuel would trigger an additional Car Fuel Benefit charge of £8,330. This would cost a standard rate taxpayer an extra £138 a month.

As the title of this article suggests, it is possible to reimburse your employer for private fuel provided and avoid this Car Fuel Benefit charge completely. Here’s what you would need to do:

• First of all, calculate your private mileage for the 2020-21 tax year. Estimates won’t do, you will need to create evidence, a mileage log for example.
• Multiply this private mileage by HMRC’s Advisory Fuel Rate. The present rate per mile for a 2000 cc diesel car is 10p.

Armed with this information you can now do the sums. In the above example, if the driver’s private mileage was 5,000 miles during 2020-21, the amount that needs to be repaid to the employer is £500. That’s just £42 per month.

Which means, for an effective outlay of £500, the car driver – if a basic rate tax payer – will save £1,666 in tax (£8,330 x 20%). That’s an overall cash saving of £1,166.

If you are receiving private fuel from your employer, or indeed providing private fuel for your employees, it is well worth crunching the numbers to see if there is a cash advantage to repaying any private fuel.

There are deadlines to consider and we can help you with the math and the reporting processes required.

Final planning notes for employers

The car fuel benefit charge not only creates a tax charge for the employee it also creates a National Insurance charge for the employer. And so, allowing employees to repay their private fuel costs will also reduce your NIC costs. A classic win-win outcome.

If you took advantage of the offer to defer VAT payments falling due between 20 March 2020 and 30 June 2020 – to help out with the impact of COVID disruption – your now have three choices. You can:

• pay the deferred VAT in full on or before 31 March 2021
• opt in to the VAT deferral new payment scheme when it launches in 2021
• contact HMRC if you need more help to pay

If you want to opt in to the new payment scheme

You cannot opt in yet. The online opt-in process will be available in early 2021. You must opt-in yourself, we cannot do this for you. Instead of paying the full amount by the end of March 2021, you can make up to 11 smaller monthly instalments, interest free. All instalments must be paid by the end of March 2022.

The scheme will allow you to:

• pay your deferred VAT in instalments without adding interest
• select the number of instalments from 2 to 11 equal monthly payments

To use this scheme, you must:

• still have deferred VAT to pay
• be up to date with your VAT returns
• opt-in before the end of March 2021
• pay the first instalment before the end of March 2021
• be able to pay the deferred VAT by Direct Debit

If you opt-in to the scheme, you can still have a time to pay arrangement for other HMRC debts and outstanding tax.

Get ready to opt in to the new payment scheme

Before opting in you must:

• create your own Government Gateway account if you don’t already have one
• submit any outstanding VAT returns from the last 4 years. You will not be able to join the scheme if you have not done so
• correct errors on your VAT returns as soon as possible. Corrections received after 31 December 2020 may not show in your deferred VAT balance
• make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid

You should also:

• pay what you can as soon as possible to allow HMRC to show the correct deferred VAT balance
• consider the number of equal instalments you’ll need, from 2 to 11 months

1 February 2021 – Due date for Corporation Tax payable for the year ended 30 April 2020.

19 February 2021 – PAYE and NIC deductions due for month ended 5 February 2021. (If you pay your tax electronically the due date is 22 February 2021)

19 February 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 February 2021.

19 February 2021 – CIS tax deducted for the month ended 5 February 2021 is payable by today.

1 March 2021 – Due date for Corporation Tax due for the year ended 31 May 2020.

2 March 2021 – Self assessment tax for 2019/20 paid after this date will incur a 5% surcharge.

19 March 2021 – PAYE and NIC deductions due for month ended 5 March 2021. (If you pay your tax electronically the due date is 22 March 2021)

19 March 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2021.

19 March 2021 – CIS tax deducted for the month ended 5 March 2021 is payable by today.

It is possible that your estate will pay no IHT on the valuation of any business assets. The amount of relief available depends on the type of assets held at death. Your estate may be able to claim 50% or possibly 100% relief.

You can get 100% Business Relief on:

• a business or interest in a business,
• shares in an unlisted company.

You can get 50% Business Relief on:

• shares controlling more than 50% of the voting rights in a listed company,
• land, buildings or machinery owned by the deceased and used in a business they were a partner in or controlled,
• land, buildings or machinery used in the business and held in a trust that it has the right to benefit from.

You can only get relief if the deceased owned the business or asset for at least two years before they died.

What doesn’t qualify for Business Relief?

You can’t claim Business Relief if the company:

• mainly deals with securities, stocks or shares, land or buildings, or in making or holding investments,
• is a not-for-profit organisation,
• is being sold, unless the sale is to a company that will carry on the business and the estate will be paid mainly in shares of that company,
• is being wound up, unless this is part of a process to allow the business of the company to carry on.

You can’t claim Business Relief on an asset if it:

• also qualifies for Agricultural Relief,
• wasn’t used mainly for business in the 2 years before it was either passed on as a gift or as part of the will,
• isn’t needed for future use in the business.

If part of a non-qualifying asset is used in the business, that part might qualify for Business Relief.

For example, if you use one room in a building as a shop and the other rooms are used as your home, the shop will qualify for Business Relief, but the rooms will not.

Relief for agricultural property

You may be able to get Business Relief on a transfer of agricultural property (e.g., farmland, buildings or farm equipment) which isn’t eligible for agricultural relief.

Please call if you need more information on this topic or any other aspect of your family estate tax planning.

Government have set out a list of six actions that all businesses who continue to trade with EU customers or suppliers should complete now that the formal transition has ended..

The list is:

1. Goods – if you import or export goods to the EU, you must get an EORI number, make customs declarations or employ an agent to do them for you, check if your goods require extra papers (like plant or animal products) and speak to the EU business you’re trading with to make sure they’re completing the right EU paperwork. There are also special rules that apply to Northern Ireland. Hauliers must obtain a Kent Access Permit and have a negative COVID test before they head to port in Kent.                                     
2. Services – if you deliver services to the EU, you must check whether your professional qualification is recognised by the appropriate EU regulator.                  
3. People – if you need to hire skilled staff from the EU, you must apply to become a licensed sponsor.                                                                                         
4. Travel – if you need to travel to the EU for business, you must check whether you need a visa or work permit.                                                                        
5. Data – if your goods are protected by Intellectual Property (IP), you will need to check the new rules for parallel exporting IP protected goods from the UK to the EU, Norway, Iceland and Liechtenstein. You risk infringing on IP rights if you do not follow the new rules.                                                                      
6. Accounting and reporting – if your business has a presence in the EU you may need to change how you undertake accounting and reporting to ensure compliance with the relevant requirements.

These six key actions should act as a guide for every business affected by the new rules, with more detailed, personalised advice available through the checker tool on gov.uk/transition.

Couples may have experienced the difficulties that can arise when couples separate or divorce. One area where they may need to resolve are the options that courts have to direct ownership of the marital home. The courts can exercise their jurisdiction in the following ways.

• By recognising an existing equitable interest of the spouse or civil partner who does not have legal title to the dwelling house.

• By ordering the spouse or civil partner owning the home (or an interest in it) to transfer it to the other spouse or civil partner.

• By ordering the spouse or civil partner owning the home (or an interest in it) to hold it on trust for the other spouse or civil partner for a limited period.

• By ordering the spouse or civil partner owning the home to sell it and to pay the other spouse or civil partner a capital sum out of the proceeds of sale.

• By both determining that one of the spouses or civil partners had an equitable interest in the home and ordering the other spouse or other civil partner to transfer some or all of their interest in the home or to pay a capital sum out of their share of the sale proceeds.

Where the marital home is the couple’s main asset the outcome of these deliberations is clearly significant.

January is the month that taxpayers registered for self-assessment need to pay their taxes. Usually, this amounts to any underpayment for the previous tax year and a first payment on account for the current tax year.

Unfortunately, HMRC will base their payment on account for 2020-21 on the self-assessment liability for the previous tax year, 2019-20. As may traders have experienced a downturn in profits during the period of COVID disruption since February 2019, they need to reduce their payments on account for 2020-21 to reflect the lower profit compared to that for 2019-20.

In this way you can recalculate any payments on account for 2020-21 based on the reduced activity.

Even with these reductions in the January 2021, payment on account, many taxpayers will be faced with paying tax bills and have no funds to do so.

In a recent press release, HMRC explained the current support they are prepared to offer taxpayers to spread any tax payments over twelve monthly instalments.

They said:

Almost 25,000 Self-Assessment customers have set up an online payment plan to manage their tax liabilities in up to 12 monthly instalments, totalling £69.1 million, HM Revenue and Customs (HMRC) has revealed today (13 January 2021).

In October, HMRC increased the threshold for self-serve Time to Pay arrangements from £10,000 to £30,000 for Self-Assessment customers. Once they have completed their 2019-20 tax return and know how much tax they owe, customers can use the self-serve facility to set up monthly direct debits and spread the cost of their tax bill.

Visit GOV.UK to find out more about Payments on Account.

The self-serve Time to Pay threshold was increased to help businesses and individuals who have been affected by the coronavirus pandemic. Supporting Self-Assessment customers to manage their tax bills can help ease their financial commitments into more manageable monthly payments. To date, the average value of payment plans set up online is £2,821.

Customers can apply for the payment plan via GOV.UK. However, they must meet the following requirements:

• they need to have no:
  • outstanding tax returns
  • other tax debts
  • other HMRC payment plans set up
• the debt needs to be between £32 and £30,000
• the payment plan needs to be set up no later than 60 days after the due date of a debt

 

NOTE: Be aware of copycat HMRC websites and phishing scams. Taxpayers should always type in the full online address www.gov.uk/hmrc to get the correct link for their Self-Assessment tax return online securely and free of charge.

They also need to be alert if someone calls, emails or texts claiming to be from HMRC, saying that they can claim financial help, are due a tax refund or owe tax. It might be a scam. Check GOV.UK for information on how to recognise genuine HMRC contact.

There is a major advantage to recording business transactions digitally; once the basic data has been entered it can be interrogated and represented in endless types of reports.

During the present COVID disruption this ability to drill down or summarise data should be used to support business owners in making appropriate decisions. Accounting software, used effectively, will provide you with information in real time to identify problem areas and direct your efforts to enact counter measures.

Most businesses use accounts software to monitor their bank balances, chase unpaid bills and keep an eye on bills they need to pay.

Whilst these are all valuable features, and they do enable you to manage daily “housekeeping” chores, they do not inform you of impending cashflow, profitability or solvency issues. To address these additional needs, you will need to review the standard reports that all accounts software packages provide. If necessary, you may also need to create new reports – linked to your accounts data – that provide you with the additional evidence you need.

There are very few business owners that would not benefit from recording and interrogating their business data digitally.

Some may only need fairly basic functionality; others would benefit from a more in-depth approach. We recommend:

• There is no excuse for avoiding the recording of your business transactions digitally. If you are completely computer phobic we can offer bookkeeping support.
• Those that already use accounting software should review the number and type of reports they produce to see if additional reports are required.

During COVID disruption – to individual businesses and to the wider economy – information as well as cash is king.

With very little effort, new reports can be created to help you manage specific problems and once created, they will be available to you instantly, at the click of your mouse button. Don’t get left behind or stressed by lack of information. Go digital…

We have prepared the following lists from information published on the GOV.UK website. It sets out which businesses are required to close, and which can remain open during the current COVID lock-down.

Those required to close face compounded financial difficulties as their ability to create revenue is at best restricted and in many cases stopped completely.

We can help. Please call so we can help you consider your options.

Businesses and venues which must close in England

• non-essential retail, such as clothing and homeware stores, vehicle showrooms (other than for rental), betting shops, tailors, tobacco and vape shops, electronic goods and mobile phone shops, auction houses (except for auctions of livestock or agricultural equipment) and market stalls selling non-essential goods. These venues can continue to be able to operate click-and-collect (where goods are pre-ordered and collected without entering the premises) and delivery services.

• hospitality venues such as cafes, restaurants, pubs, bars and social clubs; with the exception of providing food and non-alcoholic drinks for takeaway (until 11pm), click-and-collect and drive-through. All food and drink (including alcohol) can continue to be provided by delivery.

• accommodation such as hotels, hostels, guest houses and campsites, except for specific circumstances, such as where these act as someone’s main residence, where the person cannot return home, for providing accommodation or support to the homeless, or where it is essential to stay there for work purposes

• leisure and sports facilities such as leisure centres and gyms, swimming pools, sports courts, fitness and dance studios, riding centres, climbing walls, and golf courses.

• entertainment venues such as theatres, concert halls, cinemas, museums and galleries, casinos, amusement arcades, bingo halls, bowling alleys, skating rinks, go-karting venues, indoor play and soft play centres and areas (including inflatable parks and trampolining centres), circuses, fairgrounds, funfairs, water parks and theme parks

• animal attractions (such as zoos, safari parks, aquariums, and wildlife centres)

• indoor attractions at venues such as botanical gardens, heritage homes and landmarks must also close, though outdoor grounds of these premises can stay open for outdoor exercise.

• personal care facilities such as hair, beauty, tanning and nail salons. Tattoo parlours, spas, massage parlours, body and skin piercing services must also close. These services should not be provided in other people’s homes

• community centres and halls must close except for a limited number of exempt activities, as set out below. Libraries can also remain open to provide access to IT and digital services – for example for people who do not have it at home – and for click-and-collect services

 

Some of these businesses and places will also be permitted to be open for a small number of exempt activities. A full list of exemptions can be found in the guidance on closing certain businesses and venues in England, but includes:

• education and training – for schools to use sports, leisure and community facilities where that is part of their normal provision

• childcare purposes and supervised activities for those children eligible to attend

• hosting blood donation sessions and food banks

• to provide medical treatment

• for elite sports persons to train and compete (in indoor and outdoor sports facilities), and professional dancers and choreographers to work (in fitness and dance studios)

• for training and rehearsal without an audience (in theatres and concert halls)

• for the purposes of film and TV filming

Businesses and venues which can remain open in England

• essential retail such as food shops, supermarkets, pharmacies, garden centres, building merchants and suppliers of building products and off-licences

• market stalls selling essential retail may also stay open

• businesses providing repair services may also stay open, where they primarily offer repair services

• petrol stations, automatic (but not manual) car washes, vehicle repair garages and MOT services, bicycle shops, and taxi and vehicle hire businesses

• banks, building societies, post offices, short-term loan providers and money transfer businesses

• funeral directors

• laundrettes and dry cleaners

• medical and dental services

• vets and retailers of products and food for the upkeep and welfare of animals

• animal rescue centres, boarding facilities and animal groomers (may continue to be used for animal welfare, rather than aesthetic purposes)

• agricultural supplies shops

• mobility and disability support shops

• storage and distribution facilities

• car parks, public toilets and motorway service areas

• outdoor playgrounds

• outdoor parts of botanical gardens and heritage sites for exercise

• places of worship

• crematoriums and burial grounds

 

Regional variations

As regulations created to manage the COVID epidemic are organised and sanctioned regionally, you will need to refer to the regional authorities in Wales, Scotland and Northern Ireland as their instructions may be different to those listed above.