A little bit of free advice… How to avoid a double tax charge on your SEISS!
We’re now in the middle of the period for submitting the client’s self-assessment tax returns for 2020/2021 and these should include the SEISS payments made to taxpayers affected by the Covid 19.
HMRC are automatically amending returns if the amount declared for SEISS does not agree to their records, assuming that you have got it wrong.
In many cases, taxpayers have included the amounts in their accounts as turnover instead of separating out the grant in the relevant box. This has led to adjustments to tax returns.
Our advice is to make sure things run as smooth as possible – include the amount received for SEISS in the right box, not in turnover or other income and tick the box that says you have included all SEISS income.
The Chancellor, noting that the recovery from COVID-19 is costing us dearly financially and socially as a nation said ‘it comes at too high of a cost’. He noted our debt levels which now stand near 100% GDP as well as how it could have been even worse without recent tax increases to fix things up for once. The chancellor went on record saying these measures may not be popular but he needs them in order to be ‘put back on a sustainable footing’.
The government has already announced a 1.25 percentage point increase in NICs to pay for increased spending on health and social care. It also increased the scope of NICs to include retirees who continue to work, and there will be an additional 1.25% charged on dividend income.
Changes to basis periods
The government is currently discussing proposals for income tax basis period reform, which entails a change for unincorporated businesses. There are also discussions on whether the UK tax year itself should change: a year-end of 31 December or 31 March, rather than 5 April, has been suggested.
Tax administration is not often overhauled, and the reforms could be viewed in light of the implementation of Making Tax Digital for Income Tax (MTD for ITSA).
MTD for ITSA takes effect in three stages, starting from 6 April 2024 for self-employed businesses and landlords, and 6 April 2025 for partnerships with only individuals as partners. Other partnerships will enter at a later date.
Recently published regulations stipulate that fixed quarters will be used to report to HMRC.
Reform of the business rates system
The publication of the government’s Business Rates Review is due this autumn, having been previously delayed due to the COVID-19 pandemic. Experts have pondered over what the review will find. Could we see a significant change to business rates in England or smaller technical alterations to the tax?