The impact of the Covid-19 pandemic on people’s lives and livelihoods has meant that for many submitting a Self-Assessment Tax Return hasn’t been at the forefront of their mind.

With a third national lockdown and schools being closed, the annual last-minute rush to submit tax returns by January 31 may not have been the No1 priority this year.

HMRC has recognised that and if you’re one of the estimated three million or so taxpayers who hasn’t submitted their tax return yet, all is not lost.

HMRC realised this week that people were struggling and this year’s deadline for the 2019-20 tax return has been extended by a month until February 28.

That means late filing won’t incur an automatic £100 fine as it would normally do, though it’s not a ‘get-out-of-jail-free’ card and interest will still accrue on tax due from February 1.

The move by HMRC means that people have a little breathing space but if you can file by Sunday, January 31 you should do so.

If you can’t, here’s a few last-minute tips to help ensure your tax return is as complete as possible and that you only pay the tax that is due.

Make sure you declare all your income

Honesty really is the best policy when it comes to tax affairs. Think carefully about every little pot of income, even foreign income that was not remitted to the UK. If you’re a UK taxpayer it needs to go down.

What about interest on savings too? Yes, rates are at an all-time low and interest is likely to be negligible but it still needs to be declared.

Income from property rentals too needs to be added. It’s worth sitting down for a few minutes and listing where your money comes from.

Claim all your allowances

There are lots of small ‘tax breaks’ and allowances that all add up when it comes to minimizing the amount of tax you pay.

Did you get married or enter a civil partnership but haven’t told HMRC? Married Couple’s Allowance could cut your tax bill by between £351 and £907.50 a year, according to This applies if one of you was born before April 6, 1935.

If you were born afterwards you may be able to claim Marriage Allowance which lets you transfer £1,250 of your personal allowance to your husband, wife or civil partner and could reduce their tax bill by up to £250.

Were you instructed to work from home in the early weeks of the pandemic? You could claim tax relief for additional household costs such as heating, metered water and electricity bills.

Everyone has a Personal Tax-Free Allowance, of course, but there are other allowances to consider too.

Dividend Allowance means the first £2,000 you receive in dividends from investments is tax-free.

Maybe you earn money from buying and selling on eBay or offer a freelance service. Lots of us have a little sideline these days. You can make £1,000 tax-free. This is known as a “trading allowance.”

You can also claim an allowance for spousal or child maintenance payments. Subject to certain conditions the allowance could be worth 10% of the maintenance you pay up to a maximum of £326.

If you or your spouse or civil partner are registered blind or have severely-impaired sight your personal tax allowance is increased. This is worth £2,450 for 2019-20.

Money still tight? Consider Time to Pay

HMRC wants to help if you’re struggling to pay. If you can’t afford to pay your latest bill you can set up a payment plan.

You can only do that if:

* You owe £30,000 or less;

* You do not have any other payment plans with HMRC;

* Your tax returns are up to date;

* It’s less than 60 days after the payment deadline.

You can choose how much to pay straightaway and how much you want to pay each month. You will, however, have to pay interest.

A last piece of advice?

Yes! Be kind to yourself and plan ahead. Keep the pressure off in January 2022 by doing your homework and keeping records as you go.

Keep your tax affairs in order through the year and then when the 2020-21 tax year ends in April you can start preparing your tax return early.

Why not do yourself a favour and submit next year’s tax return early and forget the January blues?

Posted in Tax

From March 2021 HMRC intends to transfer around one million VAT-registered businesses from the VAT Mainframe (VMF) onto their Enterprise Tax Management Platform (ETMP). This is a process known as “bulk migration.”

There’s a lot of jargon there and you just want to know what it means for your business, right?

It’s pretty straightforward. It’s all about HMRC modernising the way it collects taxes.

Those who have already signed up to Making Tax Digital (MTD) are not affected by the latest changes and don’t need to take any action.

However, those businesses with a taxable turnover of more than £85,000 a year who have not signed up to MTD must do so now or could be hit by a penalty charge.

What’s this “bulk migration” all about?

It’s HMRC getting its systems in order. The transfer or “migration” of these remaining businesses will mean HMRC doesn’t have to continue to operate two separate systems. The old VAT mainframe is expensive to run and maintain so it’ll save money and, hopefully, be more efficient for everyone.

What do I need to do?

Just continue to file your VAT returns as you normally would through your Business Tax Account. Things may look a little different after the switch but change is OK. Keeps us on our toes. The basic principles are the same.

MTD for VAT will be extended to include businesses with taxable turnover below £85,000 from April 2022.

Selecting MTD software and signing up to MTD now will save time and effort in the future. It’s well worth getting it sorted now.

Will my Direct Debit be affected?

Good thinking! For Direct Debits to continue after the migration, HMRC will need a valid and current email address for your business.

This is for your protection and allows HMRC to comply with UK banking regulations which ensure they must inform customers of the date the Direct Debit goes out and how much is being taken.

HMRC will ask businesses for an email address via their Business Tax Account. Doing it online saves time. Without a valid email address HMRC may be unable to collect VAT payments.

What if my accounting software isn’t compatible?

That’s only a problem if you’re still using eXtensible Markup Language (XML) and, to be honest, it’s out-dated and you need an upgrade!

XML allows some software products to file VAT returns directly to HMRC – but that won’t be available after migration. There’s only a small number of businesses who still use XML anyway and from April 21 it will no longer be an option.

I have an agent who handles the VAT for me. Won’t they sort it all out?

Yes – but do have a conversation and check everything is organised.

Following the switch over, agents won’t be able to use the agent online service for VAT clients not yet signed up for MTD. Instead they must file clients’ VAT returns through what’s called an Agent Service Account. Best check with your agent to make sure everything is ready to go.

So that’s what you need to know when it comes to VAT migration. It’s not as complicated as it sounds when you strip out the jargon.

It’s all about the continuing drive to make HMRC one of the most digitally advanced tax collectors in the world and that should be a benefit to us all.

If you need further guidance, we’re always happy to help, so feel free to contact us on
Posted in Tax

Lockdown 3.0 came hard and fast just a day after most businesses returned to work after the Christmas and New Year break.

Businesses hoping for better times with the turn of the year were left disappointed and ‘non-essential’ shops hoping for a boost from the January sales were forced to close. Overnight the traditional ‘Happy New Year’ refrain seemed to stick in the throat somewhat.

The Government was quick to announce a new £4.6 billion package of financial help aimed at keeping businesses afloat until the Spring but for many that still won’t go far enough.

What the Government is offering is a good start but many firms are on the brink, even with furlough extended to the end of April.

There is only so long a business can sustain itself without any actual trade and the stop-start nature of the Covid-19 restrictions ramps up the pressure on businesses already under extreme stress.

Chancellor Rishi Sunak will look again at help for businesses in the Budget on March 3 but until then businesses should look closely at what is available.

Here we look at the financial support that it’s still not too late to claim.

What is the National Lockdown Grant announced on January 5 and who’s it for?

  • One-off top ups for retail, hospitality and leisure businesses who are legally required to close;
  • Those with premises with a rateable value of £15,000 or less can claim £4,000;
  • Those with rateable value between £15,000 and £51,000 can claim £6,000;
  • Larger businesses with rateable value greater than £51,000 can claim £9,000.

Coronavirus Job Retention Scheme (known as ‘furlough’)

It’s been around a while now but there are strict deadlines for claiming. Currently the Government will pay 80% of employees’ usual wages for hours they do not work up to a maximum of £2,500 per month.

The deadline for claiming for furloughed employees in December is January 14, for January it’s February 15.

The scheme is open until April 30.

Deferring VAT

VAT-registered businesses which had a VAT payment due between March 20 2020 and June 30 2020 can defer payments until March 31 2021.

Statutory Sick Pay Rebate

You can reclaim Statutory Sick Pay paid to employees off sick, self-isolating or shielding because of Coronavirus. It covers up to two weeks for eligible employees.

The company has to be UK-based and have had fewer than 250 employees since February 28 2020.

Christmas Support Payments for Pubs

If your pub was in Tier 2 or Tier 3 between December 2 and 29 2020 you may be eligible for a payment of up to £1,000.

The pub must be in England and have less than 50% in revenue from food sales.

Apply to your local authority before January 31 2021.

Business Rates Holiday for Retail, Hospitality and Leisure

Business rates have been waived for 2020-21 for retail, hospitality or leisure businesses. You should receive this automatically through your local authority if your business is eligible.

Coronavirus Business Interruption Loan Scheme

UK businesses can access loans of up to £5 million, as long as they have a turnover of less than £45 million a year.

They need to be considered viable by a lender if it was not for the pandemic and have been negatively impacted by Coronavirus.

The scheme is open until March 31 2021.

Coronavirus Bounce Back Loan

Small-medium sized enterprises and the self-employed may be able to borrow between £2,000 and £50,000, interest-free and repayment-free for the first 12 months.

Businesses must be UK-based, established before March 1 2020 and negatively impacted by Coronavirus.

The scheme is open until January 31 2021 and loans can be topped up to the maximum.

Time to Pay Service to Ease Tax Burden

HMRC offers a Time to Pay service for businesses struggling to meet their tax bill on time. Contact HMRC to see if your business is eligible.

Local Restrictions Support Grant for Businesses Forced to Close

Grants may be available from your local council if all or part of your business was closed by law at any time between August 1 and November 5 2020 or after December 2 2020.

Your business must have been in Tier 2, 3 or 4 and you can claim for each 14-day period your business was closed for. How much depends on the rateable value of your property.

Local Restrictions Support Grant for Businesses that Stayed Open

If your business was in a Tier 2 or 3 area between August 1 and November 5 2020 and stayed open you may have a claim.

You will have to show your business was negatively affected and payment is based on the rateable value of premises.

Additional Restrictions Grant

Local authorities were given extra money for businesses impacted by local restrictions.

Local authorities will decide who is eligible and for how much. Businesses which could benefit are those supplying a sector forced to close or if your business is in the events industry. It’s worth checking with your local authority about what’s available.

Self-Employment Income Support Scheme

The scheme is open for the self-employed to make a third claim – a taxable grant worth 80% of annual monthly trading profits, capped at £7,500 in total. Only those eligible for the first two rounds are eligible again.

The claim for a third grant runs from November 1 2020 to January 29 2021, and must be made on or before January 29 2021.

There’s a lot to take in but there’s more information on how to claim on the Government website where you can enter in specific details about your business and see what’s available.

Just be aware of the deadlines because when it’s gone, it’s gone!