Tax tips for Family Businesses

From April 2020 HMRC is changing the rules related to the submissions of information and payment of Capital Gains Tax (CGT) due on the disposals of a UK residential property.

Currently, reporting a taxable disposal of property or asset is done on the self assessment tax return, i.e. 31 January following the tax year in which the disposal takes place. This effectively gives the taxpayer up to 9 months in which to report the transaction and pay over the tax.

Under rules changes above, the tax due must be reported and paid to HMRC within 30 days of completion of the disposal. Non-UK residents who currently report property disposals within 30 days can no longer defer payment.

To enable customers to report and pay any CGT liability arising from gains on the sale of a property HMRC are developing a new digital service accessible from GOV.UK, which will be available from April 2020 to make it easier for customers to report and pay their CGT property disposal liability.

The good news thought is that for many customers this will mean that if they have no other Self Assessment criteria, they will no longer need to register for Self Assessment to notify and pay for a ‘one-off’ property disposal to report the gain.

However, if you are already within Self Assessment to report other liabilities you will need to ensure that the gain is also included on their Self Assessment tax return, HMRC will be amending the Self Assessment return to allow you to do this.

Note that late filing and late payment penalties will apply, and consequent interest will also continue to be charged.

If you would like more information about this please call on 0114 275 6292 or email info@shipleystax.com.

You made it and filed your self-assessment return for 2018/19 by the 31 January 2020. However, having felt pleased with yourself, you realise to your horror that you have made a mistake and need to correct your return.

Can you do this and if so, how and by when?

Yes, you can

If you have made a mistake on your return, for example entered a number incorrectly or forgotten to include something, all is not lost. As long as you are within the time limit, the error can be corrected by filing an amended return.

How?

If you are in time to file an amended return, the process that you need to follow will depend on whether you filed your return online or on paper.

Online returns

If you filed your return online, you simply amend your return online. To do this:

1. Sign in to your personal tax account using your User ID and password.
2. Once in your account, select ‘Self-Assessment Account’. If this does not appear as an option, simply skip this step.
3. Select ‘More Self-Assessment details’.
4. Choose ‘At a glance’ from the left-hand menu.
5. Choose ‘Tax Return options’.
6. Choose the tax year for the year you want to amend.
7. Go into the tax return, make the changes you want to make, and file the return again.

Remember to check that it has been submitted and that you have received a submission receipt.

Check the revised tax calculation too in case you need to pay more tax as a result of the changes, but remember to take account of what you have already paid.

Paper return

If you opted to file your return on paper by 31 October 2019, to make a change you will need to download a new tax return. This can be done from the Gov.uk website. Fill in the pages that you wish to change and write ‘Amendment’ on each page. Make sure you include your name and unique taxpayer reference (UTR) on each page too. Send the corrected pages to the address to which you sent your original return.

Commercial software

If you used commercial software to file the return, contact your software provider to find out how to file an amended return. If your software does not allow for this, contact HMRC.

When

You have until 31 January 2021 to make changes to your 2018/19 tax return. 

If you have missed the deadline, you will need to write to HMRC instead. This may be the case if you find a mistake in your 2017/18 return after 31 January 2020. In the letter, you will need to say which tax year you are amending, why you think you have paid too much or too little tax and by how much. You have four years from the end of the tax year to claim a refund if you have overpaid.

Changes to the tax bill

If amending the return changes the amount that you owe, you should pay any excess straight away. Interest will be charged on tax paid late. If your 2018/19 liability changes, your payments on account for 2019/20 may change too.

If as a result of the changes made to the return you have paid too much tax, you can request a repayment from your personal tax account.

Despite widespread industry backlash, the off-payroll working rules as they currently apply where services are provided through an intermediary to a public sector body, are to be extended to the private sector from 6 April 2020.

From that date, private sector organisations which are medium-sized or large and which engage workers who provide their services through an intermediary, such as a personal service company, will need to carry out a status determination. If, ignoring the intermediary, the worker would be an employee of the organisation, the off-payroll working rules apply and the organisation (or fee-payer if different) must deduct tax and National Insurance from payments made to the worker’s personal service company. The organisation must also pay employer’s National Insurance. Where these rules apply, the worker’s intermediary will no longer need to work out the deemed payment under the IR35 rules – instead the worker will effectively be ‘on-payroll’.

The rules however do not apply where the end client is a small private sector organisation. As now, the worker must determine whether IR35 applies and work out the deemed payment and pay tax and National Insurance if it does.

Speak to us to understand how the changes to the off-payroll working rules will affect you and what you need to do to prepare. Call us on 0114 275 6292 or email info@shipleystax.com.