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Tax Diary May/June 2022

1 May 2022 – Due date for corporation tax due for the year ended 30 July 2021.

19 May 2022 – PAYE and NIC deductions are due for the month ended 5 May 2022. (If you pay your tax electronically the due date is 22 May 2022).

19 May 2022 – The filing deadline for the CIS300 monthly return for the month ended 5 May 2022.

19 May 2022 – CIS tax deducted for the month ended 5 May 2022 is payable by today.

31 May 2022 – Ensure all employees have been given their P60s for the 2021/22 tax year.

1 June 2022 – Due date for corporation tax due for the year ended 31 August 2021.

19 June 2022 – PAYE and NIC deductions are due for the month ended 5 June 2022. (If you pay your tax electronically the due date is 22 June 2022)

19 June 2022 – The filing deadline for the CIS300 monthly return for the month ended 5 June 2022.

19 June 2022 – CIS tax deducted for the month ended 5 June 2022 is payable by today.

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Asset disposals are not subject to Capital Gains Tax

Capital Gains Tax (CGT) is a tax on the profit made from selling certain assets such as property, shares or other investments. CGT is usually charged at a flat rate of 20% and applies to most chargeable gains made by individuals.

If taxpayers only pay basic rate tax and make a small capital gain, they may only be subject to CGT at a reduced rate of 10%. Once the total of taxable income and gains exceed the higher rate threshold, the excess will be subject to 20% CGT. An 8% surcharge applies to the sale of chargeable residential property (apart from a principal private residence) and carried interest (the share of profits or gains that is paid to asset managers). There is also an annual CGT exemption for individuals that is currently £12,300.

There are a number of asset disposals, which are not subject to CGT.

These include:

– your car
– your main residence – is known as a principal private residence, but there are some important caveats to be aware of
– personal possessions worth up to £6,000 each, such as jewellery, paintings or antiques
– stocks and shares you hold in tax-free investment savings accounts, such as ISAs and PEPs
– UK Government or ‘gilt-edged’ securities, for example, National Savings Certificates, Premium Bonds and loan stock issued by the Treasury
– betting, lottery or pools winnings
– personal injury compensation
– the foreign currency you bought for your own or your family’s personal use outside the UK
So, if you are lucky enough to win the National Lottery this weekend, it is unlikely you will have to pay CGT!

Note that none of the above exemptions applies when the gains arise through trading or business activities as distinct from occasional sales and disposals.

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Tax-free mileage expenses

If you use your own vehicle for business journeys, then you may be able to claim a tax-free allowance from your employer known as a Mileage Allowance Payment or MAP. The allowance is paid when employees use their own car, van, motorcycle or bike for work purposes. It is important to note that this tax-free allowance is not available for journeys to and from work but is available where employees use their own vehicles to do other business-related mileage.

Employers usually make payments based on a set rate per mile depending on the mode of transport. There are approved mileage rates published by HMRC. For cars, the approved mileage allowance payment for the first 10,000 business miles is 45p per mile and 25p per mile for every additional business mile. An equivalent payment of 20p per mile is available for bicycle travel and 24p per mile for motorcycle travel. These rates have been fixed for many years and HMRC has confirmed that they will continue to apply for the current 2022-23 tax year.

If an employee travels with business colleagues, they can claim an additional 5p per passenger per business mile for each qualifying passenger. Where an employer pays less than the published rates, the employee can make a tax relief claim for the shortfall using Mileage Allowance Relief (MAR). There is no equivalent to MAR for passenger payments, which means that if the employer pays less than 5p per mile to carry a passenger, the driver cannot claim any tax relief on the difference.

Please note that if employees are paid more than the approved mileage rates then the excess is treated as a Benefit in Kind. Conversely, if employees are paid less than the published rates, they can make a tax claim for the shortfall using Mileage Allowance Relief (MAR). There is no equivalent to MAR for passenger payments.

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Tax if you live abroad and sell a UK home

One of the most often used and valuable of the Capital Gains Tax (CGT) exemptions covers the sale of the family home. In general, there is no CGT to pay on a property that has been used as the main family residence. An investment property that has never been used will not qualify. This relief from CGT is commonly known as private residence relief or PRR.

The rules are different if you live abroad. A CGT charge on the sale of UK residential property by non-UK residents was introduced in April 2015. Only the amount of the overall gain relating to the period after 5 April 2015 is chargeable to tax. In certain circumstances, PRR may apply where the property is the owner’s only or main residence.

A UK non-resident that sells UK residential property needs to deliver a non-resident CGT (NRCGT) return and pay any CGT within 60 days of selling a relevant property. The return must be made whether or not there is any NRCGT to be paid if there is a loss on the disposal, and when the taxpayer is due to report the disposal on their Self-Assessment tax return.

There are penalties for failing to file the NRCGT return within the deadline as well as for failing to pay any tax due on time.

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Business tax cuts from April 2022

A number of business tax cuts came into effect from April 2022. This includes an increase in the Employment Allowance from £4,000 to £5,000

The allowance enables eligible employers to reduce their National Insurance liability. An employer can claim less than the maximum if this covers their total Class 1 NIC bill. This increase represents a tax boost for around 495,000 small businesses that can claim an increased reduction in their NIC liabilities or even reduce their bills to zero.

The Employment Allowance is only available to employers with employer NIC liabilities of under £100,000 in the previous tax year. Connected employers or those with multiple PAYE schemes will have their contributions aggregated to assess eligibility for the allowance.

A news release from HM Treasury also highlighted a number of other measures on offer to spur business growth, including:

– A new 50% business rates relief worth almost £1.7 billion, for eligible high street businesses, subject to a £110,000 cash cap per business.
– A freeze to the business rates multiplier worth £4.6 billion over the next five years.
– A temporary twelve-month-long 5p cut to fuel duty.
– The super-deduction tax break that allows companies to deduct 130% of the cost of any qualifying investment on most new plant and machinery investments that would ordinarily qualify for 18% main rate writing down allowances continues until 31 March 2023.
– Help to Grow programmes are supporting SMEs to adopt productivity-enhancing software and to get mini-MBAs.

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Resolving commercial rent debts

A new law that seeks to resolve certain remaining commercial rent debts accrued during the pandemic received Royal Assent on 24 March 2022. The new law introduces a legally binding arbitration process to resolve certain outstanding commercial rent debts related to the pandemic. It is hoped that this new law will help resolve disputes about certain pandemic-related rent debt and help the market return to normal as quickly as possible.

The law applies to commercial rent debts of businesses in England and Wales including pubs, gyms and restaurants which were mandated to close, in full or in part, from March 2020 until the date restrictions ended for their sector. Debts accrued at other times will not be in scope.

Before using the arbitration process, commercial landlords and tenants are strongly encouraged to negotiate agreements using the Commercial rents Code of Practice that was published in November 2021. The Code of Practice applies across the UK.

The general moratorium on commercial evictions and restrictions on Commercial Rent Arrears Recovery (CRAR) in England and Wales also ended on 24 March 2022, but eligible firms remain protected for the next 6 months during which arbitration can be applied for or until the conclusion of an arbitration.

The moratorium provided firms with breathing space to negotiate how to address the cost of commercial rent debts caused by the pandemic before the new law came into place.

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Get help with childcare costs for Easter

As the Easter holiday approaches, HMRC is reminding parents that they may be eligible for Tax-Free Childcare (TFC) to help pay for regulated childcare, including holiday clubs and other out-of-school activities.

The TFC scheme can help parents of children aged up to 11 years old (17 for those with certain disabilities). The TFC scheme helps support working families with their childcare costs. There are many registered childcare providers including childminders, after school clubs and approved play schemes signed up across the UK. Parents can pay into their account regularly and use their TFC allowance towards the cost of holiday clubs, before and after-school clubs, childminders and nurseries, and other approved childcare schemes.

The TFC scheme provides a government top-up based on parental contributions. For every £8 contributed by parents an additional £2 top-up payment will be funded by the Government up to a maximum total of £10,000 per child per year. This will give parents annual savings of up to £2,000 per child (and up to £4,000 for disabled children until the age of 17) in childcare costs.

The TFC scheme is open to all qualifying parents including the self-employed and those on a minimum wage. It will also benefit parents on paid sick leave as well as those on paid and unpaid statutory maternity, paternity and adoption leave. To be eligible to use the scheme, parents will have to be in work at least 16 hours per week and earn at least the National Minimum Wage or Living Wage. If either parent earns more than £100,000, both parents are unable to use the scheme.

HM Treasury’s Exchequer Secretary to the Treasury, said:

‘There are lots of brilliant holiday clubs and childcare providers to help working parents during the Easter holidays, and Tax-Free Childcare is a great offer that can help cut the childcare bills.’

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On your bike – cycle to work exemption

The Cycle to Work scheme was introduced over 20 years ago to help promote the use of healthy ways to commute to work using an environmentally friendly mode of transport.

The scheme allows employers to provide bicycles and cyclists’ safety equipment to employees as a tax-free benefit. The scheme must be offered to all employees and the bike must be used mainly for qualifying journeys i.e., between home and work. However, pleasure use of the bike is also allowed. Where the scheme conditions are satisfied employees can benefit from a significant tax and National Insurance Contributions (NICs) reduction. In addition, there is no employer liability to NICs.

The cycle to work benefits only relate to the loan period, however, it is commonplace for an employer or a third-party bicycle provider to offer the employee the bicycle / equipment they have been using for sale after the loan period has ended. The bike may be offered to the employee for sale at a fair market value, but this must be done as a separate agreement.

Employers of all sizes including those in the public, private and voluntary sectors are eligible to take part in the scheme to provide (technically loan) bicycles and cyclists’ safety equipment to employees as a tax-free benefit. The scheme can also be used for electronic bikes known as e-bikes.

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Scammers target Self-Assessment taxpayers

Fraudsters continue to target taxpayers with scam emails, texts and calls following the deadline for submitting Self-Assessment returns for 2020-21. In fact, over the last year, HMRC received more than 570,000 reports about suspicious HMRC contacts.

Many of these scams purport to tell taxpayers they are due a fake tax rebate or tax refund from HMRC and ask for bank or credit card details to send the fake tax refund. The fraudsters use various means to try and scam people, including making contact by phone calls, texts or emails. In addition, fraudsters have been known to threaten victims with arrest or imprisonment if a bogus tax bill is not paid immediately.

HMRC has a dedicated Customer Protection team to identify and close down scams. The group seeks to identify suspect emails before they reach the taxpayer. Since 2017, these technical controls have prevented 500 million emails from reaching taxpayers, but the problems continue as the fraudsters adapt and try new methods to evade capture.

Taxpayers should also try and recognise the signs of fraud to avoid becoming victims themselves. For example, genuine organisations like HMRC and banks will never contact customers asking for their PIN, password or bank details.

If you think you have received a suspicious email from HMRC, you are asked to forward the details to phishing@hmrc.gov.uk. Suspect texts should be sent to 60599, and there is a form on GOV. The UK can be used to report suspicious phone calls. If you have suffered financial loss, you should contact Action Fraud on 0300 123 2040 or use their online fraud reporting tool.

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