New tax year, are you making these tax claims?
Working from home? Claim deductions
This is an opportunity for the self employed and the business owner alike.
An employee who works from home can claim a tax deduction of £6 per week (£26 per month) for the costs of using their home as a workplace without having to keep records of specific expenditure.
Alternatively the employer can pay the homeworker the allowance tax and NIC-free.
As a business owner, you can claim the same as an employee - the flat rate of £26 per month noted above or if you are working for the majority at home, you can be reimbursed a percentage of home running costs.
Contact us to learn more.
Higher rate taxpayers: make the most of gift aid
Gift aid for donations to charity is more flexible than some think.
Tax relief can be claimed in the year the donation is made or carried back to the preceding year to reduce that year’s tax liability and may trigger a cash repayment.
Check YOUR PAYE codes
At the beginning of the tax year, it is worth checking your PAYE code, which contains adjustments for unpaid tax, deductions or other income, based on preceding years’ figures.
Your current PAYE code for 2021/22 code may be incorrect if additional deductions are due, or any investment income has reduced or is likely to do so.
This is a worthwhile exercise to avoid overpaying tax throughout the tax year and maintaining good cash flow.
Self assessment payments on account
The first 2020/21 self-assessment payment on account made on 31 January will have been based on 2019/20’s income and tax liability.
If you think your tax bill will be lower due to the pandemic and reduced income as a result, you can claim a reduction in your next payment on account due on 31 July 2021, and this may also produce a repayment of the payment on account made in January, depending on your circumstances.
Again, this will help you with cash flow as you emerge from the pandemic and get back up and running.
Review company shares for negligible value claims
If a share’s value has become negligible that can produce a loss for CGT purposes.
Better still, if the company concerned is or was carrying on a trade eligible for the Enterprise Investment Scheme (EIS) and you subscribed for their shares you may be able to claim income tax relief for their loss.
You do not have to have claimed EIS and if it can be established that the company’s value became negligible within the preceding two years. the tax relief may also be claimable for an earlier year.
If you need to sell shares to meet your tax liabilities, you should consider crystallising your losses as noted above.
When you come to do your 2020/21 tax return, make sure that all capital losses from shares are identified and reported in your tax return. Even if the losses are not going to be set off against gains for 2020/21, those losses need to be returned to be claimable against future gains.
Complete residential property acquisitions before the SDLT holiday ends
The SDLT temporary reduction in England, Wales and Northern Ireland applies to property purchases before 30 September 2021. But this valuable tax relief will be lost if completion takes place after 30 September.
There is a limited relief for purchases where substantial performance of the contract happens before 31 July which is the end of the ‘initial temporary relief period’ and completion takes place before 30 September.
Purchasers need to be mindful that conveyances are taking longer to process and complete than usual and the 3% surcharge on additional residential property is not included in the temporary relief and so is still payable but may be reclaimed where the new property replaces a main residence that is disposed of within three years of acquisition of the new property.
In Wales the land transaction tax (LTT) holiday has only been extended until 30 June.
Scotland did not extend its land and buildings transaction tax (LBTT) holiday which ended on 30 April.
Get social - missed the christmas party? Have a summer garden party instead
The tax reliefs available for employee events are usually referred to as the ‘Christmas party exemption’ but it does apply to all regular events where employees are entertained.
Employers were not able to have Christmas parties in December, but when lockdown rules allow, a replacement event can still be held.
Many employers made the best of things with virtual events which HMRC agreed would fall within the exemption for 2020/21 but such events were a poor substitute for the real thing and entertainment venues would undoubtedly welcome the return of their customers for an event as soon as possible.
Another concern is that we are now in a new tax year so an employer holding last year’s party now, as well as the traditional December event will need to be mindful of the £150 per person limit which applies across all events in any tax year, not per event.
Strictly speaking adding an additional one-off event to the calendar after going virtual in 2020 could be problematic in that that would not fit the definition of an ‘annual event’ so worth seeking tailored advice.
