Tax payment links January 2022

Self Assessment income tax and national insurance can be paid here.

Have your 10-digit tax reference (UTR) ready.

It is possible to set up a Time to Pay arrangement online, or to request this by phone.

There is general information on payment of tax here.

Where tax is not paid by 31 January, interest is charged. It is worth making a part payment if full payment is not possible, or and estimated payment if the tax return is not submitted by 31 January, or includes any provisional figures.

January concessions

HMRC has announced that where 2021 tax returns are filed before the end of February 2021, no £100 late filing penalty will be charged.

Late-paid tax is still subject to interest – the current rate is 2.75% per annum. However no extra late payment penalties will be charged this year where tax is fully paid by the end of March, or where a ‘time to pay’ arrangement has been set up by then.

As last year, this is a pragmatic step, which not only helps taxpayers whose time and finances have been impacted by the Covid situation, but will also save HMRC having to process a huge volume of February late-penalty appeals.

No concession has been announced for VAT returns. Returns for the quarter ended 31 December 2021 are due with payment by 7 February.

Where any taxpayer’s return is delayed beyond the end of February, or a VAT return is late, for personal reasons – whether related to the pandemic or not – it will still be possible to appeal a late penalty in the usual way, asking HMRC to consider the circumstances and decide whether they will waive the penalty.

Autumn 2021 Budget

With more leaks than a rusty colander, there was little ‘news’ about tax specifics in today’s Budget speech.

Anyone expecting significant tax rises to be rolled out may have been surprised that there was no ‘windfall’ wealth tax, nor indeed any announcement of significant tax rises to balance some of the spending and tax reliefs announced. But the harsher news on benefits and tax had generally been preannounced or leaked. In particular, the withdrawal of the extra £20 in Universal Credit, a 1.25% rise in National Insurance from April 2022, higher tax on dividends above the £2,000 threshold, and an increase to Corporation Tax rates. This left today’s speech with more palatable headlines: tax and business rate reliefs for businesses engaging in research and development, concessions for various cultural and hospitality organisations, and a reduction in the taper applied to Universal Credit for those earning above a certain amount (although this does not help the lowest-income claimants).

Much was made of ‘simplification’, particularly in relation to duties on alcohol. But a consultation is being opened on an  online sales tax – another new tax, and one likely to fall eventually on ordinary consumers.

Also previously announced and recently postponed, from April 2024, Making Tax Digital for income tax will mean that taxpayers who are self employed, or landlords, will need to keep digital records (spreadsheet, or software packages) and provide quarterly updates to HMRC instead of just an annual tax return. Traders who do not use 31 March or 5 April as their accounting date will be pushed towards changing to using the tax year for their accounts.

Key rates and allowances for personal tax can be seen here: 

I shall be adding detail in the coming days as I look at the detail in the Budget documents.


Self employed grant 5

SEISS 5 is now open to claims until 30 September.

Claimants must have a continuing self employment (or intending to continue as soon as possible), must have traded during the years to 5 April 2020 and 2021, and must have submitted their 5 April 2020 tax return by 2 March this year, showing self-employed profits which were £50,000 or less and which represented at least half of their total income. If the 5 April 2020 return does not meet these criteria, HMRC will look at an average of the four returns back to the year ended 5 April 2017.

If you qualified for SEISS 4 but chose not to claim, that does not prevent a claim for SEISS 5.

HMRC have contacted some (but not all) taxpayers who meet the tests listed above.

SEISS 5 relates to 1 May 2021 to 30 September 2021. To be eligible for any payment under SEISS 5, you must believe at the time you claim that your self-employed profits 1 May 2021 to 30 September 2021 (including any partnership profits) will be ‘significantly reduced‘ because of the pandemic. You must also keep evidence to support this. This might be for example details of booked or pencilled engagements that were cancelled because of Covid restrictions, venues where you routinely work that were closed for some of this time, or details of work missed because you had to self isolate. Where any client is very unsure whether profits are likely to be reduced between those dates, I suggest waiting until mid September to decide whether they are eligible. The claim declaration asks whether the claimant reasonably believes that profits from May to September will be significantly reduced. If someone claims at a time they reasonably believe this, they are not obliged to repay any grant if that does not turn out to be the case. But they must be able to demonstrate that their belief was reasonable when they were claiming.

In order to claim, two sets of turnover figures (self-employed income, ignoring any SEISS or local grant and without deducting any expenses) are needed. The total turnover for the year to 31 March or 5 April 2021 needs to be compared to the total for either the previous year, or if that year was lower than typical, the one before that. The turnover is the amount at the top of your self-employed accounts page, and is shown on page SE1 of the tax return in box 15. The difference (how much the most recent year’s turnover is lower than the earlier year) affects the level of SEISS payment available. If the turnover to April 2021 is down by 30% or more compared to the earlier year, you qualify for a higher SEISS amount. If it is down by less than 30%, you qualify for a lower SEISS amount.

The latest year’s turnover needs to be given in the SEISS 5 claim. HMRC will check turnover figures in some cases.

Other income such as pension income, employment income taxed under PAYE,rent received from a tenant or savings income like bank interest, are all ignored both when considering May-September 2021 profits and also when finding total turnover.

The grant payable is based on three months’ average profits from the last four tax years (or fewer years for new traders). This three-month amount is multiplied by 80% for a ‘higher’ SEISS claim, capped at £7,500. Or the three-month amount is multiplied by 30% for a ‘lower’ SEISS claim, capped at £2,850.

As with the other SEISS grants, any amount received will be subject to income tax and national insurance and will need to be included in the relevant tax return.

There is an option to pay some SEISS grant back, for taxpayers who find hat they have claimed in error, or who simply wish to pay something back for any reason.



Self employed grant 4

The next SEISS taxable grant, the fourth offered, may be claimed later in April.

Eligibility based on tax-return figures can be checked here 

I am suggesting that clients check eligibility as soon as possible. If eligibility is not showing as expected, there is a secure webchat to HMRC which can be used to query the outcome. One client with an incorrect result has already queried this and we expect it to be resolved by the end of April.

For making a claim, I recommend that clients wait until at least 1 May (a delay of only a few days – claims open at the very end of April) to decide whether they should make a claim. By that time, any self-employed income for the months February, March and April 2021 will be known, and it will be possible to compare to previous years where needed.

The claim window will remain open until the end of May. HMRC’s form will include a declaration that during the three months to 30 April this year your business income has been adversely affected by the pandemic. There are examples here to help taxpayers decide whether they qualify. 

This grant will also take into account self-employed (sole trader/partnership) profit figures from the tax return to 5 April 2020. This opens up the claim to some newer self-employed taxpayers. As with previous payments, eligibility on the figures alone does not mean that taxpayers qualify. As before there will be questions and declarations in the online form, which need to be answered at the time of application.

Anyone claiming must still be self employed, so must either still have some self-employed income, or be intending to restart once the rules allow.

There will be a further payment offered in summer, relating to May to July 2021.

With regard to the previous SEISS grants, some clients have asked me whether they can/should repay any. If for any reason the information given when you claimed a grant was incorrect at the time of the claim, it is compulsory to make an appropriate repayment. It is not necessary to revisit claims ‘in hindsight’, provided claims were made based on correct information or reasonable assumptions at that time. Some taxpayers will have ended up with higher profits during the last twelve months when they include their SEISS receipts: that does not automatically mean that anything should be repaid.

Information on repaying SEISS is here

HMRC allows voluntary repayment for any reason, that is simply if a taxpayer chooses to pay back some or all of the money received. Any repayment does not count as tax paid. But because SEISS counts as part of taxable profits, it would lower any tax payable.

Anything received from SEISS 1, 2 and 3 must be included in the tax return to 5 April 2021. This is the case whatever date is used for your self-employed accounts. I am also asking all clients who received SEISS to supply brief details (a few sentences only) in support of their SEISS claims so that this is recorded in the tax return in the additional information. This, together with bank statements, contract or diary details and any other relevant notes, makes up supporting records for SEISS claims. Most of these are anyway part of the usual tax records needed in an ‘ordinary year’ (remember those?)


The Fiscal Drag King Has Spoken

Budget speech 2021. There was always going to be an announcement of further financial help for some taxpayers. And there was clearly going to have to be some extra tax found from somewhere. Detail will follow, but my first observations are these.

The following developments are welcome:

  • There will be two further self-employed grants, SEISS 4 and 5, with taxpayers whose first tax return was the 2020 return now included. I am adding a link to information available so far under TAX LINKS
  • The furlough scheme will continue until the end of September
  • VAT on hospitality will remain at 5%, rising to 12.5% from October until next March
  • Stamp tax concessions will be available until the end of September, which will help homebuyers.
  • The enhanced (+ £20) Universal Tax Credit will continue for another 6 months.
  • There is an attempt to weight the burden of rising tax onto large companies which have been profitable.

Less favourable points are:

  • The long wait to claim SEISS 4, intended to cover February, March and April, continues. Claims will open in ‘late April’, no date yet. This will be giving HMRC time to update the system to accommodate 2020 return figures. But it will have been nearly 6 months from SEISS 3 in November by the time it becomes available.
  • Aside from new traders, many others remain excluded. These include individuals who have been ineligible for SEISS because of profits over £50,000, agency workers, and those whose self-employed income is less than 50% of their total income.
  • A freeze in the tax-free personal allowance and tax rate thresholds, which will stay the same  from 2022 until 2026, does not immediately seem like a rise in tax. However effectively it is. It’s not as overt as the corporation tax rise for companies, but it creates ‘fiscal drag’, with the tax-free allowance not keeping up with the minimum wage, or with inflation. So people pay proportionately more of their income in tax as the years go by.
  • The ‘super deduction’ enhanced tax allowances for businesses which are investing in new equipment are for companies only. They are not available to sole traders or to partnerships.

Overall, this continues the snowplough of various debt and deficit towards the short-term future. That is not a bad thing, within what is still an emergency situation. But there is some stealth in freezing future personal allowances as an alternative to raising personal tax rates. And although there was praise for the NHS, there was no financial ‘thank you’ for NHS workers who continue to bear the brunt of bringing us out of the health crisis.