News & Information
Keeping you up to date.
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July personal tax payment deferral
Taxpayers with July personal tax payments don’t need to pay the 2nd payment on account!
It would normally be due by 31 July 2020 but now needs to be paid by 31 January 2021.
The deferral was announced back in March but went largely unnoticed with all of the other grants available.
HMRC have now started sending out statements to taxpayers, which state the new payment date of January. To avoid any confusion we go through the scheme in more detail.
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Who is eligible for the July personal tax payment deferment?
Any taxpayer with a personal tax payment due on 31st July 2020 is eligible.
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How does the deferral of income tax help me?
This initiative will assist UK taxpayers with short term cashflow problems caused by Coronavirus.
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How do taxpayers claim the deferral?
There is no requirement to apply. The process is automatic.
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When will the July personal tax payment deferral become payable?
The payment is deferred until 31st January 2021.
There will be no interest or late payment charges during the period of deferment.
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Can taxpayers still choose to pay the July personal tax payment as normal?
Yes. The deferment is optional. Should you wish to pay the July tax payment you just need to make the payment in the normal way.
For further information on the July tax payment deferral see the HMRC website.
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Conclusion of the July personal tax payment deferral
Any short term help to support businesses and individual taxpayers with their cashflow at this time is to be welcomed.
Self-employment Income Support Scheme
Use this scheme if you're self-employed or a member of a partnership in the UK and have lost income due to coronavirus (COVID-19).
Changes to company car benefits from 6th April 2020
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The UK has adopted the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) to establish the carbon dioxide (CO2) emissions figures for all new cars registered from 6th April 2020. These are likely to be higher for most petrol/diesel vehicles because they reflect ‘real world’ driving conditions. This will therefore increase the benefit charge.
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Cars registered after 6th April 2020
As a result, the Government will introduce a new set of benefit rates for new cars registered from 6th April 2020.
The benefit rates will be based on the normal rules, but reduced by 2% for 2020/21, 1% in 2021/22 and 0% 2022/23. This will ensure that the transition to using the WLTP is a gradual one.
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Cars registered before 6th April 2020
The car benefit rates for vehicles registered before 6th April 2020 will remain the same with the introduction of range in electric mode for ultra-low emission cars. The greater the miles the car can do in pure electric mode, the lower the percentage and therefore, the lower the tax charge.
For zero emissions vehicles, the benefit in kind percentage (16% for 2019/20) will be reduced to 2% for 2020/21, 1% for 2021/22 and 2% for 2022/23.
Why you should file your tax return early.
With the COVID-19 pandemic locking down most of the world, your annual income tax return for the 2019/20 tax year will probably be one of the last things from your mind.
In normal circumstances, there are many reasons to prepare/file your tax return early and, indeed a couple of these reasons, are even more important during this unprecedented coronavirus outbreak.
Below we share four reasons why you should file your tax return in April.
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1. Receive your tax refund earlier
Why wait to receive your tax refund? Once you file your tax return, your refund should be processed soon after. This will be a nice boost to your income.
Under or over payments of tax can often arise on employees or directors, where HMRC has made errors with their tax credits. Building subcontractors who have had tax deducted at source through the Construction Industry Scheme (CIS) are often in a tax refund position.
What better way to boost your cash resources than by claiming a refund from HM Revenue and Customs (HMRC)?
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2. Calculate your tax bill for cashflow planning
Many businesses are currently trying to forecast their cash needs in the short/medium term and one of the biggest expenses the self-employed will have before the end of the tax year will be their income tax bill.
Knowing exactly how much your tax bill will be in January 2021 will help you to plan effectively for how you will be able to pay it, be that through bank funding or by preparing to engage with HMRC and asking for a phased payment arrangement when the liability falls due.
Remember just because you file your return early does not mean that you must pay the liability immediately. That only becomes due for payment in January 2021.
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3. Have more time to focus on your business
While HMRC is looking at granting tax payment deferrals during the COVID-19 crisis, it is advising all businesses to continue to file their tax returns as normal.
This includes your annual self-assessment tax return.
If business is quieter for you now your income tax return is a job that you could get done and out of the way now. When business is back to normal then you will have more time to focus on getting your business back on track rather than on your tax returns.
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4. Get your Tax Credits sooner
If you receive tax credits or benefits, your claim needs to be renewed annually by 31st July, which involves letting the Tax Credit Office know what your income is.
Although you can submit temporary estimates, it is far more beneficial for you to submit the actual figures as soon as possible to avoid being over or underpaid while the Tax Credit Office waits for your actual figures.