11 minute read
TAX HEADLINES
by Hazlewoods
ARE YOU DISPOSING OF A RESIDENTIAL PROPERTY?
There has been a significant change to the tax reporting and payment requirements for disposals of UK residential properties from 6 April 2020. See below for our quick-fire Q&A on the new rules.
Q. WHAT IS THE HEADLINE
CHANGE? A. Disposals of any direct and indirect interests in UK residential property or land on or after 6 April 2020, now need to be reported and tax paid within 30 days, rather than under self-assessment.
Q. DOES THIS INCLUDE MY
OWN HOME? A. Reporting is only required by UK residents where there is a capital gains tax (CGT) liability. Disposals of your own home, where it has been your main residence throughout the ownership period, should be covered by principal private residence relief and will therefore not need to be reported. If there have been periods when you have not lived there, let out your home or used part of it as a business, however, reporting may be required.
Q. WHEN DO I NEED TO REPORT
AND PAY THE TAX? A. If you have disposed of a UK residential property on or after 6 April 2020 (i.e. exchange of contracts) then you will need to report and pay the tax due (as a payment on account) within 30 days of completion of the sale.
Q. WHAT INFORMATION WILL I
NEED TO REPORT? A. In order to be able to calculate the capital gain due, information such as costs of acquisition, enhancement expenditure incurred, periods of ownership whilst living in the property etc. will be required. If you are looking to engage a professional adviser to help file the return, giving as much notice as possible will be advisable for them to help you to file on time.
Q. WHAT IF I FILE LATE? A. HMRC has announced an initial ‘soft landing’ period with no late filing penalties issued for late returns received on or up to 31 July 2020. Interest will continue to accrue, however, on any late paid tax. After this date, the 30-day deadline will need to be met in order to avoid a late filing penalty.
SDLT DEADLINE RELAXED FOR MAIN RESIDENCE DISPOSALS
A 3% SDLT surcharge was introduced in April 2016 for the purchase of second homes. This charge also applies where a new main residence is purchased but where your previous home is not sold at the same time. It is, however, possible to claw back this surcharge if the old property is disposed of within three years.
With the coronavirus pandemic freezing the property market for a while, and with an ongoing impact on property disposals, HMRC released updated guidance to extend this three-year time limit in certain circumstances. With the COVID-19 pandemic having cash flow implications for many businesses and individuals, HMRC introduced some formal tax payment deferrals. This included deferring quarterly VAT payments for periods up to 30 June 2020 as well as the second self-assessment payment due on 31 July 2020 for individuals and trusts. Although no formal deferrals have been announced for other taxes such as PAYE, NIC and corporation tax, HMRC are being more receptive to agreeing time to pay arrangements or short-term deferrals for these liabilities. Under the new guidance, new homes purchased on or after 1 January 2017 may still be eligible for a refund after the three-year window has expired if:
→ there are exceptional circumstances beyond their control from disposing of their old home within the threeyear time limit; and → the old home is sold as soon as reasonably possible.
The guidance states that exceptional circumstances may include being For deferred payments of PAYE and NIC, no interest or penalties will be charged. If, however, you have also made a claim under the coronavirus job retention scheme for furloughed employees, you will still be required to pay the related PAYE and NICs received as part of the grant to HMRC. For deferred payments of corporation tax, late payment interest will continue to be charged but no penalties will be raised providing the corporation tax return is filed on time. In order to help with cashflow further, HMRC has also published guidance confirming that, in prevented from selling the property due to government guidance during the coronavirus pandemic.
HMRC has said that they will consider each case separately and it is only possible to put in a request for exceptional circumstances at the point a refund has been requested and once your old home has been sold.
Note that the currently position for sales of property for Scotland and Wales is different. Please contact us if you would
TIME TO PAY ARRANGEMENTS
like further information on this. exceptional cases, they may agree to an early loss carry back claim based on anticipated losses for the current period which could result in a repayment of tax. Under normal circumstances it would generally not be possible to do this until the current accounting period has ended.
NICK HAINES Partner 01242 237661 nick.haines@hazlewoods.co.uk
CORONAVIRUS JOB RETENTION SCHEME: KEEPING THE WORKFORCE EMPLOYED
At Hazlewoods we are seeing, hearing and understanding the huge impact the coronavirus pandemic is having on our client’s businesses across the country. Last month the Treasury announced that in excess of 25% of employees in the UK were covered by the Government’s furlough, or coronavirus job retention scheme (CJRS), totalling approximately 8.9 million workers.
This unprecedented scheme has provided a much-needed lifeline for businesses large and small, across all different sectors, enabling staff to continue to receive up to 80% of their salary (subject to the £2,500 cap) whilst being furloughed from their roles.
Our own CJRS team has worked tirelessly to answer client queries from across our base of over 6,500 business clients, helped to set up clients with access to the Government Gateway portals to facilitate their own claims, and physically made in excess of £6.8 million in CJRS claims for our clients to date.
The start of July has heralded the beginning of a new flexible furlough scheme to try and stimulate the economy and encourage the workforce back into action. We are already seeing the benefit of eased restrictions with a number of clients no longer claiming any furlough at all, and an even bigger number having significantly reduced the number of their staff needing to use the scheme.
Whilst not all businesses will be able to sustain their employment numbers at their pre-pandemic levels, we are confident that a great many of our clients will have been able to use the CJRS to maximum benefit and thus enable their businesses to withstand these difficult times.
In his summer statement, the Chancellor did have some positive news. Although he confirmed that the furlough scheme would continue to wind down as planned, ending in October, with the aim of ensuring that after this time those furloughed employees are retained by their employers, he announced a new ‘coronavirus job retention bonus’ scheme. This new scheme will be introduced at a cost of up to £9 billion and just shy of one-third of the total package announced during his speech.
Under the scheme, employers will receive a one-off £1,000 bonus for each furloughed employee that is continuously employed by the business until at least 31 January 2021. To qualify, the employee must earn at least £520 per month on average from when the furlough scheme ends up until the end of January 2021. The employees must also have been included on a furlough claim submitted by 5 July 2020.
If you would like further information on the CJRS schemes or other employment taxes, please get in touch with Katie Williams at katie.williams@hazlewoods.co.uk or 01242 237661.
KATIE WILLIAMS Director 01242 237661 katie.williams@hazlewoods.co.uk
CLOUD UPDATE
What a difference six months makes.
Or, in the world of accounting records and bookkeeping, we could probably call it five years?
In 2015, the words ‘cloud accounting’ wouldn’t have meant much to many, even accountants! However, we are now in a world where managing your accounting records via a widely accessible onlinebased programme is the norm.
For most, the jump from paper-based records, to Excel, to Cloud, has meant time savings, real-time reporting, and more informed decision-making. There is no going back now, especially with the Making Tax Digital world we now live in only set to grow, if HMRC can be relied upon.
We work with many hundreds of clients using Xero to process their business bank transactions, sales quotes and invoices, bills and staff expenses, all through one platform. We then add value via timely monthly or quarterly reporting, VAT submissions to HMRC and producing year end accounts from the online records prepared.
Recent updates in Xero include the roll-out of HubDoc, a receipt and invoice management tool which is included with most Xero subscriptions. As well as allowing uploads of invoices via a unique e-mail address or receipt capture via an app, HubDoc can also link to online supplier accounts to automatically extract bills when they are generated; a further time saving. Paper records really can be a thing of the past.
SO, WHERE NEXT? The COVID-19 pandemic has made most businesses re-assess where they are now, and what the next 12 to 24 months will bring. Budgeting and forecasting have always allowed businesses to produce more insightful reporting, and with the current climate so uncertain, a thought-through and considered budget will be critical when assessing staffing levels and cash pinch points. Please speak to us if you would like assistance on how to prepare a budget, and how they can be shown within Xero.
The reporting tools already available, without further monthly expense, can also help businesses choosing to diversify, strengthen and weather any future storms.
For example, we know of businesses in the hospitality industry, who, in the ‘before’ times, were purely premises based. They are now branching out into home delivery, and a few may switch purely to this route in the next 12 months. But, how do they assess the profitability of each revenue stream? Xero allows each sector of a business to be tracked, so reports can be run independently, to really show the business strengths and weaknesses. These reports may be used to make difficult, but ultimately, positive, business decisions.
As well as reporting opportunities within the software itself, there are ‘bolt-on’ apps available to assist with staff expense recording and cash-flow.
Fluidly, a management cash-flow software, incorporates actual data from Xero and artificial intelligence to produce more accurate cashflow forecasts. It also provides the opportunity for scenario planning, and the impact of purchasing a new piece of machinery, opening a new premises, etc. Talk to your Hazlewoods adviser if you would like further insight into this. With employees soon to be back out on the road, it is a good opportunity to review your staff expense recording systems. Snap and scan receipts as they are incurred using your mobile phone and accurately track and submit mileage on the go with the map in Xero Expenses; the claim value is then calculated based on the rate per mile offered by the employer.
Expensify, a stand-alone software that integrates with Xero, can also be explored as an option. Features include connections to apps such as Uber, for automatic receipt imports, mileage tracking and the opportunity to build custom reports.
Many apps provide free trials, so you can explore the features available before subscribing, to assess whether these will be useful for you.
Now more than ever, future-proofing your business needs to be at the forefront. Using software to provide you with insightful reports and keep your record keeping as up to date and accurate as possible will help making those all-important commercial decisions easier, strengthening your business for the future.
RHIANNON HOOPER Director 01242 237661 rhiannon.hooper@hazlewoods.co.uk
HAYLEY SCOTT Manager 01242 237661 hayley.scott@hazlewoods.co.uk
MIND, BODY AND SOUL
WHAT HAVE OUR PEOPLE BEEN UP TO?
People are at the heart of everything we do at Hazlewoods. Although lockdown has been a time where our employees have physically been apart, we have come together in a new enhanced programme called ‘Mind, Body and Soul’. We asked everyone for ideas and suggestions on activities or resources they need then created a schedule packed full of information, events and competitions to keep everyone connected and entertained.
Health and wellbeing is nothing new at Hazlewoods, as we established a programme in 2017 with monthly activities ranging from chair yoga to bootcamps, massage to cooking demos. The new challenge was to make this even more fun and virtual!
EASTER EGG HUNT A usual highlight of the Hazlewoods calendar is Easter, often with a quick Easter egg hunt round the offices; not to be deterred by being at home, the egg hunt went virtual with an egg hidden online and plenty of chocolate for the winners.
LOOKING AFTER THE MIND Early on, we had a fantastic range of resources with apps to help with wellbeing, advice on sleep, hypnotherapy, areas to learn new languages and virtual wellbeing festivals. CRAFT AND ART GALORE! Our May craft competition to win a day’s holiday saw paintings, felting, crocheting, and macramé to name just a few of the entries. Hazlewoods creativity does not stop there, with over 20 entries to a photography competition in June run by workplace art consultants, Little Van Gogh.
WEEKLY QUIZ Quizmaster, Martin Howard, has entertained teams every week with his quiz, which has included themed rounds such as James Bond – just an excuse for Martin to dress up really!
KEEPING FIT For the fitness fanatics, or even those just getting into it, Wednesday mornings now start with a virtual fitness class and on Fridays there is morning yoga for the early risers.
FOR THE SOUL The quote of the day has been particularly well supported, with people submitting their quotes to keep their colleagues and friends motivated or even just amused whilst they are apart.
Our ideas for activities are constantly evolving, and we welcome ideas for new activities we could try.
