fpdteam

HMRC has confirmed that more than 10.2 million people submitted their 2020-21 Self-Assessment tax returns by the 31 January deadline. This leaves over 2.3 million taxpayers or 19% that have missed the deadline and are yet to file. Are you among those that missed the 31 January 2021 filing deadline for your 2020-21 Self-Assessment returns?

HMRC has already announced that due to the coronavirus pandemic, fines for taxpayers that file their Self-Assessment returns late will be waived until 28 February 2022. However, interest will be applied to any outstanding balance due from 1 February 2022 so you should try and pay your tax bill as soon as possible. If you are unable to pay your tax bill, then there are a number of options for you to defer the payment that was due on 31 January 2022.

This includes an option to set up an online time to pay payment plan to spread the cost tax due on 31 January 2022 for up to 12 months. This option is available for debts up to £30,000 and the payment plan needs to be set up no later than 60 days after the due date of a debt. This should be done sooner rather than later as a 5% late payment penalty will be charged if tax remains outstanding, and a payment plan has not been set up, before 1 April 2022.

If you owe Self-Assessment tax payments of over £30,000 or need longer than 12 months to pay in full, you can still apply to set up a time to pay arrangement with HMRC, but this cannot be done using the online service.

HMRC’s Director General for Customer Services, said:

'We’re waiving penalties this year, to give those who missed the deadline an extra month. And customers can set up a monthly payment plan online if they’re worried about paying their tax bill. Search ‘Self-Assessment’ on GOV.UK to find out more.'

Where a property business makes a loss, the loss can usually be carried forward and set against future rental business profits. HMRC’s guidance is clear that any losses made in one rental business cannot be carried across to any other rental business the customer carries on at the same time in a different legal capacity.

Under limited circumstances property losses can be set against general income of the same year or the following year. However, where a property business claims loss relief against general income, they must take the full amount of the loss available up to the amount of their general income.

Income Tax rental business losses can only be set against general income to the extent that they are attributable to:

• certain capital allowances,
• certain agricultural expenses

A claim has to be made on or before the first anniversary of 31 January following the end of the year of assessment. For example, where relief is to be claimed for the 2021-22 tax year, the normal filing date would be 31 January 2023 and the claim for property loss relief must be made by 31 January 2024.

There are exceptions to the loss relief rules for properties that are let on uncommercial terms (for example, at a nominal rent to a relative).

Newly self-employed taxpayers should notify HMRC as soon as practicable when they begin working for themselves. However, HMRC must be officially notified by 5 October following the end of the tax year so that a Self-Assessment return can be issued on time and to avoid any unnecessary penalties.

HMRC’s guidance says that you are probably self-employed if you:

• run your business for yourself and take responsibility for its success or failure;
• have several customers at the same time;
• can decide how, where and when you do your work;
• can hire other people at your own expense to help you or to do the work for you;
• provide the main items of equipment to do your work;
• are responsible for finishing any unsatisfactory work in your own time;
• charge an agreed fixed price for your work;
• sell goods or services to make a profit (including through websites or apps).

The newly self-employed should also register to pay National Insurance contributions (NICs) and to monitor whether a VAT registration is required.

There is a £1,000 tax allowances for miscellaneous trading income that has been available to taxpayers since April 2017. This is known as the trading allowance.

The exemption from tax applies to taxpayers who have trading income of up to £1,000 from:

• self-employment;
• casual services, for example, babysitting or gardening;
• hiring personal equipment, for example, power tools.

Where this £1,000 allowance covers all the individual’s relevant income (before expenses) the income is tax-free and does not have to be declared to HMRC.