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Self-Assessment filing deadlines

The 2020-21 tax return deadline for submitting your paper Self-Assessment returns is 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 is paid in full by 31 January 2022.

If you are still submitting paper tax returns, we would recommend that you consider the benefits of submitting the returns electronically. This includes gaining an additional three months (until 31 January 2022) in which to submit your return. You will also receive instant confirmation that a return has been filed and do not need to rely on the vagaries of the postal service.

If you received a letter informing you to submit a paper return after 30 July 2021, then you have an extended deadline which runs for three months from the date you received the letter to submit a paper return.

It is also important to remember that taxpayers are required to declare if they received any grants or payments from COVID-19 support schemes up to 5 April 2021 (i.e., during the 2020-21 tax year) as these are taxable. If you received furlough payments, then these should be reflected on your P60 form. Details of any Self-Employment Income Support Scheme or received Coronavirus Job Retention Scheme grants will need to be included on your Self-Assessment form. The £500 one-off payment for working households receiving tax credits does not have to be reported as part of the Self-Assessment submission.

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Getting prepared to use Freeport customs sites

In the Spring Budget earlier this year, the chancellor announced that eight Freeport locations would be created in England. The Freeports will be in the East Midlands Airport, Felixstowe and Harwich, the Humber region, Liverpool City Region, Plymouth, the Solent, the Thames, and Teesside.

Freeports are a special kind of port where normal tax and customs rules do not apply rather there are simplified customs procedures and duty suspensions on goods. This will allow firms to import components and other pre-manufactured goods into a Freeport without paying taxes. The goods would then be processed into a finished product to be built in the UK.

In these new Freeport areas, no duties will be charged on goods or materials until they leave the zone as a finished product for the UK domestic market. There should be no UK tariffs payable when the finished product is re-exported directly from the Freeport.

HMRC has published new guidance to help businesses get ready to use a Freeport site. You cannot currently use the Freeport customs special procedure to import or export excise goods. HMRC’s guidance will be updated with details when this becomes possible.

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What goods are eligible for the margin scheme?

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 selling price of each item. If an item is sold for less than was paid for it, then no VAT is due on the sale.

The eligible goods are:

Second-hand goods – defined as tangible movable property that is suitable for further use as it is or after repair, other than works of art, collectors’ items, or antiques and other than precious metals or precious stones as defined.
Works of art and collectors’ items. The legal definition of works of art includes pictures, paintings, collages, and drawings executed by hand by the artist
Antiques. The legal definition of an antique is an item, other than a work of art or a collectors’ item, which is over one hundred years old.
It is the businesses responsibility to provide satisfactory evidence of an item’s eligibility for the scheme. A list of ineligible goods can be found in Notice 718 The VAT Margin Scheme and global accounting

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Have you claimed your Child Trust Fund cash?

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 the necessary conditions. These funds were invested in long-term saving accounts for newly born children. HMRC has confirmed that there are many thousands of teenagers that have turned 18 and have not yet claimed the cash to which they are entitled.

Around 7 million CTF accounts were set up since the scheme was launched in 2002, roughly 6 million by parents or guardians and a further 1 million set up by HMRC where parents or guardians did not open an account.

Around 55,000 accounts mature each month and HMRC has created a simple online tool to help young people find out where their account is held.

Economic Secretary to the Treasury, John Glen, said:

‘It’s fantastic that so many young people have been able to access the money saved for them in Child Trust Funds, but we want to make sure that nobody misses out on the chance to invest in their future.’

If you’re unsure if you have an account or where it may be, it’s easy to track down your provider online.

The actual CTF accounts are not held by HMRC, but by CTF providers who are financial services firms. Anyone can pay into the account, with an annual limit of £9,000, and there’s no tax to pay on the CTF savings interest or profit.

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Don’t miss out on this tax allowance

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 (currently £12,570).

The allowance works by permitting the lower earning partner to transfer up to £1,260 of their personal tax-free allowance to their spouse or civil partner. The marriage allowance can only be used when the recipient of the transfer (the higher earning partner) doesn’t pay tax at more than the basic 20% rate of Income Tax. This would usually mean that their income is between £12,570 to £50,270 in 2020-21. The limits are different if you live in Scotland.

If you meet the eligibility requirements and have not yet claimed the allowance, then you can backdate your claim to 6 April 2017. This could result in a total tax break of up to £1,220 if you can claim for 2017-18, 2018-19, 2019-20, 2020-21 as well as the current 2021-22 tax year. If you claim now, you can backdate your claim for four years (if eligible) as well as for the current tax year.

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MTD for Income Tax has been delayed by one year to April 2024

The introduction of Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) has been delayed by one year until April 2024. This change was announced in a Written Statement to Parliament. The reason for the delay was given a combination of the issues many UK businesses and their representatives are facing as a result of the pandemic as well as feedback from interested parties.

MTD for ITSA 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. From April 2024, the rules will apply to taxpayers who file Income Tax Self-Assessment tax returns with business or property income over £10,000 annually.

General partnerships will not be required to join MTD for ITSA until a year later, in April 2025. The date other types of partnerships will be required to join will be confirmed in the future. The new system of penalties for the late filing and late payment of tax for ITSA will also be aligned with the new MTD dates.

Some businesses and agents are already keeping digital records and providing updates to HMRC as part of a live pilot to test and develop the MTD for ITSA. The pilot is not affected by the delay and will be extended in 2022-23 in preparation for larger-scale testing in 2023-24. Under the pilot, qualifying landlords and sole traders (or their agents) can use software to keep digital records and send Income Tax updates instead of filing a Self-Assessment tax return.

The MTD regime started in April 2019 for VAT purposes only when businesses with a turnover above the VAT threshold were mandated to keep their records digitally and provide their VAT return information to HMRC using MTD compatible software. From April 2022, MTD will be extended to all VAT registered businesses with turnover below the VAT threshold of £85,000.

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£500 million Plan for Jobs Expansion

The Chancellor, Rishi Sunak, has announced a £500 million expansion of the Plan for Jobs as part of his speech delivered to the party faithful at the annual Tory conference in Manchester. The money will be used to help hundreds of thousands of people leaving the furlough scheme and the unemployed over the age of 50 to get back to work.

It was also announced that there would be more help for those earning the lowest wages with increased support for workers on Universal Credit from next April. This will focus on helping the lower-paid to progress their careers.

The Chancellor said:

”At the start of this crisis I made, a promise to do whatever it takes, and I’m ready to double down on that promise now as we come out of this crisis. The job is not done yet and I, want to make sure our economy is fit for the future and that means providing the support and skills people need to get into work and get on in life.”

It was also announced that the Kickstart scheme is being extended to March 2022. The Scheme allows employers to offer young people on Universal Credit and at risk of long-term unemployment state-subsidised work placements for six months. The government is also extending its £3,000 incentive payment for every apprentice a business hires up until 31 January 2022.

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Tax Diary October/November 2021

1 October 2021 – Due date for Corporation Tax due for the year ended 31 December 2020.

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

19 October 2021 – The filing deadline for the CIS300 monthly return for the month ended 5 October 2021.

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

31 October 2021 – Latest date you can file a paper version of your 2021 self-assessment tax return.

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 – The filing deadline for the CIS300 monthly return for the month ended 5 November 2021.

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

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Find customs agent to help with import/export declarations

If you are moving goods to or from the UK, you need to ensure that you have all the correct procedures. This is a complex area, and you may need to consider the support of a customs agent to help with your import and/or export declarations.
Customs declarations can be complicated and time-consuming to complete.
Most businesses use a specialist such as a customs agent, broker, freight forwarder or fast parcel operator to submit import and export customs declarations on their behalf. HMRC publishes a regularly updated list of customs agents and short parcel operators who may help. The list is known as the register of customs agents and fast parcel operators. However, it should be noted that businesses on these lists are not vetted, approved or recommended by HMRC, and proper due diligence should be used in selecting an adviser from the list.
HMRC’s guidance is clear that if your goods do not have the proper paperwork or if the information is incorrect or missing, your interests may be seized, and you may face delays and have to pay extra charges.
If you are moving goods between Great Britain and Northern Ireland, the free Trader Support Service can help guide you through the necessary processes. This service can also help businesses who import goods into Northern Ireland from the rest of the world. The use of this service is optional.

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Student tax scam warning

HMRC is warning new students starting university that they could be targeted by scammers trying to steal their money and personal details. As new students begin the academic year, they can be particularly vulnerable to tax scams. This is especially prevalent if they have a part-time job and are unique to interact with HMRC. This year, there is a significant increase in the number of students attending university, which means that more young people may choose to take on part-time work.
Many tax scams are directly targeting university students. Fraudulent emails and texts will regularly include links that take students to websites where their information can be stolen. Between April and May this year, 18- to 24-year olds reported more than 5,000 phone scams to HMRC.
These scams often offer fake tax refunds, which HMRC does not provide by SMS or email. Students can also be approached to act as ‘money mules’, with offers of various rewards for transferring funds through their own, open financial accounts, inadvertently laundering criminal funds.
Commenting on the warning, HMRC’s Head of Cyber Security Operations at HMRC said:
‘Our advice is to be wary if you are contacted out of the blue by someone asking for money or personal information. We see high numbers of fraudsters contacting people claiming to be from HMRC. If in doubt, our advice is – do not reply directly to anything suspicious, but contact HMRC through GOV.UK straight away and search GOV.UK for HMRC scams’.

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