Accounting and Taxation advice in Hexham, Northumberland

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Thoughts Friday 15th January 2021

Hi folks,
 
First I’d like to share some personal Good News. My son’s partner's grandmother, a feisty but frail lady of 97, was diagnosed with Covid just after New Year. Everyone assumed this was a Death Sentence. BUT……She has now finished her self-isolation, has tested negative and is back to her old self.


On to my take on this week -

More destructive questions from journalists in the press conferences I’ve listened to this week. Perhaps somebody should stand up and point out that we are quickly catching up the Covid cases with vaccination numbers: People vaccinated (2.6 million); People testing positive (3.2 million) – figures from the BBC as at 13 January 2021! That has to be GOOD NEWS

I know that the 3.2 million doesn’t include all the people who had the virus in the first wave who were not tested at all but I still think it gives us HOPE. Like our Health Secretary Matt Hancock states in ‘The Spectator’, I’m a born optimist.


So, if we can avoid raves and minibus trips to beauty spots to walk with lots of people and we try our very best to work within the guidelines maybe we will have the summer we would dream of. We do at least need to dream!


On to the technical bit:

Self-employment Income Support Scheme (SEISS)

A client has asked a couple of very good questions in relation to SEISS, which I would like to share with you as I think it may help others in similar positions:


Q1 I have started receiving my pension and therefore my income has increased in 2020/21, although my self-employed income has fallen, can I still apply for the SEISS grant?

Yes.  The SEISS grant looks only at your self-employed income, not your income as a whole.  As long as your self-employed business has been impacted from Coronavirus and your profits will reduce as a result, then you are eligible for the grant.  However, if you had reduced your self-employment income because, for example, you wished to work less now that you are receiving a pension and not as a direct result of Coronavirus, then you are not eligible.
 
Q2 My self-employed income and profits have decreased but not by as much as the grant I will get, can I still make a claim?

Yes. As long as you have been impacted by the Coronavirus, and as a result your profits are significantly reduced, you can claim the grant.  The value of the grant depends on your average profits in the three tax years to 2018/19.  There will be some winners and losers as a result.  Unfortunately, you cannot claim part of the grant in order to be fair – it’s all or nothing.

Self-assessment – deadline for 2019/20 is 31 January

Tax returns for 2019/20 must still be filed by 31 January, and there is no concession due to Covid.  However late payment penalties can be appealed and should be granted if the return is late because of the pandemic.  At 4 January £6.6m tax returns had been filed, leaving 45% of the £12.1m total number of tax returns still to be filed.  This is surprisingly broadly in line with last year’s figures, despite the pandemic. 
 
2,700 taxpayers submitted their return on Christmas Day! The most popular time being between 2-3pm – just before the Queens speech.  Of course, they could have completed their return prior to the big day, and just waited to press “submit” to make their Christmas even more special……
 
Please also remember that there are a particularly high number of scams purporting to be from HMRC in the run up to the tax return deadline.  In the last 12 months HMRC have responded to more than 846,000 referrals of suspicious HMRC contact from the public, and over 15,500 malicious webpages.  Almost 500,000 (59%) of those referrals offered bogus tax rebates.  HMRC will not contact you by phone and ask for personal information and bank details.  If the contact sounds too good to be true – it probably is!

Self-serve time to pay

With the ongoing pandemic many people may not be in a position to pay all of their tax due on 31 January.  This is compounded because the second payment on account, due 31 July 2020, could be deferred until 31 January.  Some people may therefore have the 2019/20 2nd payment on account, the 2019/20 balancing payment, and the 1st payment on account for 2020/21 to pay on 31 January.  If you make an arrangement to pay you will not incur any penalties, although you will incur interest, which is currently 2.6%.
 
If your total tax liability is under £30,000 and you have no other tax debts or HMRC payment arrangements, you can apply online using the link below and it should give you automatic and immediate approval to an additional 12 months to pay.  You will need your online HMRC log-in.
https://www.tax.service.gov.uk/pay-what-you-owe-in-instalments

As with most HMRC payment plans, if you default you will have to pay the full balance owing immediately.
 
If you are not eligible, or cannot use the online service, you should call HMRC Time to Pay on 0300 200 3822.  Lines are open Monday to Friday 8am-6pm.

Wish us good luck with the remaining tax returns. I’d much rather be making a snowman this week-end!

Keep well and take care
Tricia

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