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Check if you can claim working from home expenses

If you are an employee who is working from home, you may be able to claim tax relief for some of the bills you pay that are related to your work.

Note that if an employee is working at home voluntarily, they cannot claim tax relief. However, these tax reliefs are available to anyone who has been asked to work from home due to the COVID-19 outbreak. HMRC received more than 3 million claims for the tax relief for the 2020-21 tax year and has also confirmed that the tax relief will continue to be available in the current 2021-22 tax year.

HMRC’s Director General for Customer Services recently commented that:

‘Half a million people have already reduced their Income Tax this year by up to £125, by claiming tax relief on their working from home expenses.’

Employers may reimburse employees for the additional household expenses incurred by working at home. The relief covers expenses such as business telephone calls or heating and lighting costs for the room in which you are working. Expenses that are for private and business use (such as broadband) cannot be claimed. Employees may also claim tax relief on equipment purchased to facilitate working at home such as a laptop, chair or mobile phone.

Employers can pay up to £6 per week (or £26 a month for employees paid monthly) to cover an employee’s additional costs if they must work from home. Employees do not need to keep any specific records if they receive this fixed amount.

If the expenses or allowances are not paid by the employer, then the employee can claim tax relief directly from HMRC. Employees will get tax relief based on their highest tax rate. For example, if they pay the 20% basic rate of tax and claim tax relief on £6 a week, they will get £1.20 per week in tax relief (20% of £6). Higher rate taxpayers would receive £2.40 a week (40% of £6). Employees can claim more than the quoted amount but will need to provide evidence to HMRC.

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Company information on signs and stationery

There are a number of requirements that must be taken care of when running a limited company. One of the lesser-known requirements concerns the use of signs, stationery and promotional material.

A company is required to display a sign showing the company name at its registered office and at any other premises at which the business operates. The sign must be easy to read and visible at all times not just when the premises are open. If the business is being run from a residential property, the company is exempt and there is no requirement to display a sign.

There are also specific rules for business stationery. This includes the requirement to include the company’s name on all company documents, publicity and letters.

On business letters, order forms and websites, you must show:

– the company’s registered number
– its registered office address
– where the company is registered (England and Wales, Scotland or Northern Ireland)
– the fact that it is a limited company (usually by spelling out the company’s full name including ‘Limited’ or ‘Ltd’)

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NICs after reaching State Pension Age

If you have reached the State Pension age and continue to work, in most cases, you no longer need to pay employees National Insurance Contributions (NICs).

At State Pension age, the requirement to pay Class 1 and Class 2 NICs ceases. However, you will remain liable to pay any NICs due to you before reaching the State Pension age. If you continue working, you will need to provide your employer with proof of your age.

Your employer remains liable to pay secondary Class 1 employer NICs. If you would rather not provide proof of age to your employer, you can request a letter (known as an age exception certificate) from HMRC confirming you have reached State Pension age and are no longer required to pay NICs.

If you are self-employed, you will need to pay Class 4 NICs for the remainder of the year in which you reach State Pension age but will be exempt from the following year.

HMRC provides the following example if you reach the State Pension age on 6 September 2021. You will stop making Class 4 contributions on 5 April 2022 and pay your final Class 4 bill by 31 January 2023, together with your Income Tax.

If you have overpaid NICs, you can claim the excess back from HMRC.

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CIS – types of work and businesses affected

The Construction Industry Scheme (CIS) is a set of special rules for tax and National Insurance for those working in the construction industry.

The CIS covers all construction work carried out in the UK, including jobs such as:

– site preparation
– alterations
– dismantling
– construction
– repairs
– decorating
– demolition
Exceptions to the definition of construction work includes professional work done by architects and surveyors, carpet fitting, scaffolding hire (with no labour) and work on construction sites that’s clearly not construction. The CIS does not apply to construction work carried on outside the UK.

The scheme covers all types of businesses and other concerns that work in the construction industry, including:

– companies
– partnerships
– self-employed individuals
Businesses in the construction industry are known as ‘contractors’ and ‘subcontractors’.

New VAT rules for building contractors and sub-contractors came into effect from 1 March 2021. The new rules will make the supply of most construction services between VAT registered construction or building businesses subject to the domestic reverse charge. The reverse charge only applies to supplies of specified construction services to other businesses in the construction sector. This means that sub-contractors no longer add VAT to their supplies to most building customers, instead, contractors are obliged to pay the deemed output VAT on behalf of their registered sub-contractor suppliers.

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Cryptoassets for individuals – taxes that apply

In most cases, individuals hold cryptoassets (such as Bitcoin) as a personal investment, usually for capital appreciation in its value or to make purchases. They will be liable to pay Capital Gains Tax when they dispose of their cryptoassets.

This includes:

– selling tokens
– exchanging tokens for a different type of cryptoasset
– using tokens to pay for goods or services
– giving away tokens to another person (unless it is a gift to your spouse or civil partner)
If the taxpayer’s activity is trading, then Income Tax will take priority over CGT and will apply to profits (or losses).

Individuals will be liable to pay Income Tax and National Insurance Contributions on cryptoassets which they receive from:
– their employer as a form of non-cash payment
– mining, transaction confirmation or airdrops
There may also be cases where an individual is running a business which is carrying on a financial trade in cryptoassets and will therefore have taxable trading profits.

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Changing the terms of a salary sacrifice arrangement

A salary sacrifice arrangement is effectively an agreement to reduce an employee’s entitlement to cash pay, usually in return for a non-cash benefit. This can include items such as company cars, childcare vouchers and additional employer pension contributions.

The tax and NIC advantages of certain benefits provided as part of a salary sacrifice arrangement were removed from 6 April 2017. The change effectively removed the Income Tax and employer NIC advantages of certain benefits provided as part of salary sacrifice arrangements such as mobile phones and workplace parking. There was a transitional plan in place for certain benefits until 6 April 2021.

If an employee wants to opt in or out of a salary sacrifice arrangement, the employer must alter their contract with each change. The employee’s contract must be clear on what their cash and non-cash entitlements are at any given time.

It may also be necessary to change the terms of a salary sacrifice arrangement where a lifestyle change significantly alters an employee’s financial circumstances.

This may include:

– changes to circumstances directly arising as a result of coronavirus (COVID-19)
– marriage
– divorce
– partner becoming redundant or pregnant
Salary sacrifice arrangements can allow opting in or out in the event of lifestyle changes like these.

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