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The rules for MTD for Income Tax

28/05/2021

Making Tax Digital (MTD) will fundamentally change the way businesses, the self-employed and landlords interact with HMRC. The regime will require businesses and individuals to register, file, pay and update their information using an online tax account. The regime started in April 2019 for VAT purposes but only for VAT registered

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Who needs to register for Self-Assessment

02/12/2021

There are a number of reasons why you might need to complete a Self-Assessment return. This includes if you are self-employed, a company director, have an annual income over £100,000 and / or have income from savings, investment or property. Taxpayers that need to complete a Self-Assessment return for the first time should inform HMRC as

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Carry-back charitable donations

02/12/2021

The Gift Aid scheme is available to all UK taxpayers. The charity or Community Amateur Sports Clubs (CASC) concerned can take your donation and, providing all the qualifying conditions are met, reclaim the basic rate tax. This increases the value of your donation by 25p for every pound donated. If you are a higher rate or additional rate

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Can you claim the Marriage Allowance?

02/12/2021

The marriage allowance came into force in 2015 and applies to married couples and those in a civil partnership where a spouse or civil partner doesn’t pay tax or doesn’t pay tax above the basic rate threshold for Income Tax (i.e., one of the couples must currently earn less than the £12,570 personal allowance for 2020-21). The allowance

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VAT – driving schools who supplies services?

02/12/2021

The VAT liability of the supply of driving lessons is an interesting issue that can be of relevance to other supply scenarios such as hairdressers and other workers in the beauty industry. In HMRC’s internal manuals the guidance identifies three possible scenarios that can apply to someone providing driving lessons to the public: The

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TOGC overview

02/12/2021

The transfer of a business as a going concern (TOGC) rules cover the VAT liability on the sale of a business. Normally the sale of the assets of a VAT registered or VAT registerable business will be subject to VAT at the appropriate rate. Where the sale of a business includes assets and meets certain conditions, the sale will be

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Income excluded from a property business

02/12/2021

HMRC publishes a list of income streams that are excluded from a UK property business. The list includes fishing concerns, hotels and guest houses, tied premises, caravan sites, lodgers and tenants in your own home, extra services to tenants and letting surplus trade accommodation. In most cases the income from these activities will be

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New warnings from HMRC re tax fraudsters

25/11/2021

Fraudsters are continuing to target taxpayers with scam emails in advance of the 31 January 2022 deadline for submission of Self-Assessment returns. In fact, over the last year, HMRC received nearly 360,000 reports about bogus tax rebate referrals. A number of these scams purport to tell taxpayers they are due a rebate / refund of tax

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Teesside Freeport open for business

25/11/2021

The first of the English Freeports, Teesside, opened operations on 19 November 2021, and is expected to be followed shortly by Thames and Humber. The Teesside Freeport will be at the forefront of local low carbon sector creating thousands of jobs in green energy. Businesses in Freeport tax sites are able to benefit from tax reliefs

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What is a tax calculation?

25/11/2021

A tax calculation is created by HMRC if you have not paid the right amount of tax. HMRC’s annual reconciliation of PAYE for the tax year 2020-21 is now almost complete. HMRC use salary and pension information to calculate if you have paid the correct amount of tax. The tax calculation is usually generated automatically by HMRC’s computer

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Structures and Buildings Allowance qualifying expenditure

25/11/2021

The Structures and Buildings Allowances (SBA) facilitates tax relief for qualifying capital expenditure on new non-residential structures and buildings. The relief applies to the qualifying costs of building and renovating commercial structures. The relief was introduced in October 2018 at an annual capital allowance rate of 2% on a

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CGT Roll-over Relief

25/11/2021

Business Asset Roll-over Relief is a valuable relief that allows the deferral of Capital Gains Tax (CGT) on gains made when taxpayers sell or dispose of certain assets and use all or part of the proceeds to buy new business assets. The relief means that the tax on the gain of the old asset is postponed. The amount of the gain is

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IHT and domicile

25/11/2021

Domicile is a general legal concept which in basic terms is taken to mean the country where you permanently belong but actually determining domicile status can be complex. HMRC guidance states that domicile cannot be defined precisely, but the concept rests on various basic principles. Although domicile can change, there is generally a

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Tax Diary December 2021/January 2022

21/11/2021

1 December 2021 - Due date for Corporation Tax payable for the year ended 28 February 2021. 19 December 2021 - PAYE and NIC deductions due for month ended 5 December 2021. (If you pay your tax electronically the due date is 22 December 2021). 19 December 2021 - Filing deadline for the CIS300 monthly return for the month ended 5 December

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A reminder of trivial benefit rules

18/11/2021

We wanted to remind readers of the trivial benefits in kind (BiK) rules. The BiK exemption applies to small non-cash benefits like a bottle of wine, a bouquet of flowers given occasionally to employees, or any other benefit in kind classed as 'trivial' that falls within the exemption. By taking advantage of the exemption employers can

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Business gifts

18/11/2021

The rules for deciding whether a gift given in the course of business is deductible are complex. The rules for business gifts generally follow those for business entertaining expenditure. This means that HMRC take the view that in general business gifts are not an allowable deduction from profit for tax purposes. However, there are

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Self-Assessment countdown

18/11/2021

There are now less than two months to file your 2020-21 Self-Assessment tax return. Last year over 12.5 million taxpayers were required to complete a Self-Assessment tax return but over 1.8 million taxpayers missed the 31 January deadline. The deadline for submitting your 2020-21 Self-Assessment tax returns online is 31 January 2022. You

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Appealing to the First-tier Tribunal (Tax)

18/11/2021

There are a number of different options open to taxpayers that disagree with a tax decision issued by HMRC. Usually, the first step is to make an appeal to HMRC against the tax decision. The case worker who made the decision will look at your case again and consider your appeal. If they do not change their decision, you can request what

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If clients ask – trading hours for retailers

18/11/2021

There are special rules that govern the trading hours that certain retailers must follow on a Sunday. These rules are defined in the Sunday Trading Act 1994 and apply to shops in England and Wales. The Act restricts the trading hours for retailers with a sales area that exceeds 280 square meters. Small shops in England and Wales are free

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VAT and business gifts

18/11/2021

In general, VAT does not have to be accounted for on business gifts to the same person as long as the total cost of the gifts does not exceed £50 (before VAT) in any 12-month period. The definition of business gifts includes items from brochures, posters and advertising matters, gifts to trade customers, long service awards and retirement

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Vehicles exempt from Vehicle Excise Duty

11/11/2021

Vehicle Excise Duty (VED), also commonly referred to as vehicle tax, is an annual tax levied on owners of most cars, vans, motorcycles, and holders of motorcycle trade licences. There are certain VED exemptions and discounts for people who suffer from various mobility impairments. In addition, alternative fuel vehicles receive a £10

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Vehicles eligible for a plug-in grant

11/11/2021

The low-emission vehicles plug-in grant can help you save up to £2,500 on the purchase price of new low-emission vehicles. The scheme was first launched in 2011 and is available across the UK with dealers using the grant towards the price of eligible new cars. The paperwork for the grant application is handled by the dealer you purchase

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Reporting COVID support scheme grants to HMRC

11/11/2021

Most COVID support scheme grants are treated as taxable income in the same way as other taxable receipts and need to be reported to HMRC. The grants are treated as income where the business is within the scope of either Income Tax or Corporation Tax. This means that if you received a support payment during the COVID pandemic, this may

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What can be transferred between group members?

11/11/2021

Corporation Tax relief may be available when a company or organisation makes a trading loss. Companies that are eligible for group relief can transfer losses and certain other deficits to companies within the same group by means of Group or Consortium Relief. The use of group relief allows losses arising in the accounting period to be

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Tax treatment of incentive scheme awards

11/11/2021

Some companies use incentive award schemes to encourage their employees in various ways. For example, to sell more of their own goods and services. The award can include cash-based, vouchers or other gifts. Where an employer meets the tax payable on a non-cash incentive award given to a direct employee by entering into a PAYE settlement

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VAT business test

11/11/2021

There are a number of conditions that must be satisfied in order for an activity to be within the scope of UK VAT. One of the conditions that needs to be carefully considered when deciding whether an activity is within the scope of VAT is the concept that the supply must be made in the course or furtherance of business. This idea of

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Self-employed basis period reforms

04/11/2021

The government announced back in September that the introduction of Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) has been delayed by one year until April 2024. There had been widespread concerns on the speed of the MTD for ITSA rollout and the delay was widely welcomed. In tandem with this announcement, the government

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More time to pay Capital Gains Tax

04/11/2021

The Capital Gains Tax (CGT) reporting and payment date for UK residents that sell a residential property changed with effect from 6 April 2020. This change meant that any CGT due on the sale of a residential property needed to be reported and a payment on account of any CGT due made within 30 days of the completion of the transaction. In

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Vehicle benefit charges from April 2022

04/11/2021

The vehicle benefit charges were updated following the Chancellor's Budget speech. Where employees are provided with fuel for their own private use by their employers, the car fuel benefit charge is applicable. The fuel benefit charge is determined by reference to the CO2 rating of the car, applied to a fixed amount. The car fuel benefit

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VAT reverse charge and the flat rate scheme

04/11/2021

There are special VAT rules for building contractors and sub-contractors that came into effect on 1 March 2021. The new rules make the supply of most construction services between construction or building businesses subject to the domestic reverse charge. The reverse charge only applies to supplies of specified construction services to

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Discovery assessment changes

04/11/2021

HMRC has taken action to ensure that discovery assessments relating to certain aspects of the High Income Child Benefit Charge (HICBC), Gift Aid Donations and different pension charges act as intended. According to HMRC, this new measure does not change this policy but makes a technical point to clarify the law to provide legal certainty

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Switching between film and TV reliefs

04/11/2021

Film tax relief (FTR) can increase the amount of expenditure that is allowable as a deduction for tax purposes or, if a company makes a loss, can be surrendered for a payable tax credit. To qualify for relief, films must be intended to be shown commercially in cinemas and at least 10% of the core costs must relate to activities in the UK.

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Tax Diary November/December 2021

28/10/2021

1 November 2021 - Due date for Corporation Tax due for the year ended 31 January 2021. 19 November 2021 - PAYE and NIC deductions due for month ended 5 November 2021. (If you pay your tax electronically the due date is 22 November 2021.) 19 November 2021 - Filing deadline for the CIS300 monthly return for the month ended 5 November

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Autumn Budget 2021 - Recovery Loan Scheme

28/10/2021

The Recovery Loan Scheme was launched on 6 April 2021. The scheme currently allows businesses of any size to access loans and other kinds of finance between £1,000 and £10 million. The scheme was originally meant to close on 31 December 2021 but the Chancellor has confirmed that the scheme will be extended until 30 June 2022. The scheme

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Autumn Budget 2021 – Minimum Wage increases

28/10/2021

The Chancellor of the Exchequer, Rishi Sunak confirmed that the government has accepted in full the proposals of the Low Pay Commission for increasing minimum wage rates from 1 April 2022. This puts the government back on track to reach their minimum wage target of two-thirds of median earnings by 2024. The new National Living Wage (NLW)

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Autumn Budget 2021 - £1 million Annual Investment Allowance

28/10/2021

In the Spring Budget earlier this year, the government announced that the temporary Annual Investment Allowance (AIA) cap of £1 million would be extended until 31 December 2021. The Chancellor, delivering the Autumn Budget revealed that the temporary cap will now be extended further until 31 March 2023. The government says that this move

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Autumn Budget 2021 – Dividend tax rates

28/10/2021

As announced on 7 September 2021, the 1.25% increase in NIC contributions from April 2022 will be mirrored by a similar increase in the tax charge on dividends. From April 2022, the dividend tax increases will apply as follows: Basic rate taxpayers will see an increase from the present 7.5% to 8.75%. Higher rate taxpayers will see an

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Autumn Budget 2021 - Creative industry tax reliefs

28/10/2021

The sunset clause for the Museum and Galleries Exhibition Tax Relief (MGETR) was supposed to come into force on 31 March 2022. As part of the Autumn Budget measures, the Chancellor announced that the relief will be extended for another two years to 31 March 2024. This will help encourage the sector just as exhibitions are starting to tour

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Autumn Budget 2021 - Alcohol and Tobacco Duty

28/10/2021

As part of the Budget measures the Chancellor announced, to a big cheer, that the planned duty rates on beers, spirits, wines and ciders expected to come into effect from midnight on Budget Day will be cancelled. The Chancellor also announced major changes to the current duty system are expected to be introduced from 1 February 2023.

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Autumn Budget Summary 27 October 2021

27/10/2021

As with the Spring Budget 2021, much of the detail for the Autumn Budget had been leaked to the press prior to the official report to parliament, 27th October 2021. But we now have all the details and, as usual, there is much to consider. The following Budget summary is split into two sections: Taxation changes Other

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Self-Assessment filing deadlines

21/10/2021

The 2020-21 tax return deadline for submitting your paper Self-Assessment returns was 31 October 2021. The tax deadline for submitting online returns is 31 January 2022. Late submission of a Self-Assessment return will become liable to a £100 late filing penalty. The penalty usually applies even if there is no liability or if any tax due

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Claiming tariff quotas to reduce import duties

21/10/2021

Tariff quotas are a special mechanism for importing limited supplies of specific goods at a lower rate of customs duty than would normally apply. The quotas usually apply to imports from specific countries. Most tariff quotas operate on a first come first serve basis and when the quota runs out, the duty rate returns to normal. There is

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Transport restrictions eased

21/10/2021

The government has announced plans to introduce a temporary extension to road haulage cabotage rules to alleviate pressures with the supply chain due to lorry driver shortages and other global supply issues. The term cabotage in this context refers to specific restrictions on foreign lorry drivers on the amount of work they can do within

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VAT Margin Scheme bad debt relief

21/10/2021

The VAT bad debt relief rules allow businesses to claim bad debt relief and reclaim the VAT they have paid to HMRC. This can happen when an invoice has been issued to a customer and no payment has been received after an extended period (usually 6 months after the due date) has elapsed. Under the normal VAT accounting rules, a business

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Haulage company charged with loan fraud

21/10/2021

An interesting case has seen a haulage company based in the West Midlands have their operator licence revoked. This followed a public inquiry into the company by the traffic commissioner for the West Midlands. The traffic commissioner found that almost all the company’s financial resources had been provided by a £50,000 Bounce Back loan

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Payments received after company is dissolved

21/10/2021

Any assets or rights (but not liabilities) remaining in a company at the date of dissolution will pass to the Crown as ownerless property. This happens under what is known as 'bona vacantia' which literally means vacant goods. The bodies that deal with bona vacantia claims vary across the United Kingdom, but they all ultimately represent

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Have you claimed your Child Trust Fund cash?

14/10/2021

Young persons who turned 18 on or after 1 September 2020 may have cash waiting in a dormant Child Trust Fund (CTF) account. This could be as much as or more than £1,000. The actual amount on deposit depends on certain factors. Children born after 31 August 2002 and before 3 January 2011 were entitled to a CTF account provided they met

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Letting agencies and the Money Laundering Regulations

14/10/2021

HMRC is responsible for the money laundering supervision of certain businesses including letting agencies. Businesses that HMRC is responsible for supervising should be aware of the requirement to register with HMRC and the penalties for failing to register. It is a criminal offence to trade as a letting agency business (as defined within

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Don’t miss out on this tax allowance

14/10/2021

If you are entitled to the marriage allowance and have not yet applied, then you could receive a payment of up to £1,220 from HMRC. The marriage allowance is available to qualifying married couples and those in a civil partnership where a spouse or civil partner is a non-taxpayer i.e., has an income below their personal allowance

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What goods are eligible for the margin scheme?

14/10/2021

There are a few VAT margin schemes. The margin schemes work by allowing qualifying businesses to account for VAT on their profit margin i.e., on the difference between the cost of acquiring an item and its sale price rather than on the full selling price. Without the margin scheme the business would have to account for VAT on the full

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