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Benefit extension to Post Office card account holders

If you receive HM Revenue and Customs (HMRC) or Department for Work and Pensions benefit payments (DWP) into a Post Office card account you need to change your account.

The government acknowledges the important financial support these Benefits and Allowances provide to individuals and families. They have therefore extended the contract with the Post Office card account holders until 5th April 2022.

If you receive benefits into your Post Office card account you will need to open another current before that date to continue receiving benefits directly into your account.

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HMRC plans to review FHL declared income

Due to the increase in staycations, it is anticipated that HMRC will look at self-assessment returns declaring Furnished Holiday Lettings income to see that income reflects the recent boom in UK holidays and the substantial increases in the cost of these holidays.

If you use a letting agent in the UK, they are likely to report increased income from their business and HMRC will expect to see this reflected in individual self-assessment tax returns. If you market your property with AirBNB, they have agreed to share information on income earned by UK hosts to the tax authorities as part of a settlement with HMRC.

HMRC have for a number of years believed that FHL income is underreported. If you have received increased income from this business, it is strongly recommended to report the true earnings as it is anticipated that HMRC are going to look more closely at returns containing FHL income.

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Making Tax Digital for Income Tax

The start date for HMRC’s plans for making the self-employed, sole traders including landlords keep accounting records electronically has been delayed. The new start date is 6th April 2024.

From that date if you are a self-employed individual or sole trader with a gross income from business over £10,000 you will need to keep your accounting records on approved software that can send information electronically to HMRC.

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VAT Rate Change for the Hospitality Sector

The reduced rate of VAT offered to the hospitality sector as part of the governments business support during Covid. The current reduced rate of 5% changes to 12.5% from 1st October 2021. This rate will be available until 31st March 2022. When it is envisaged that the rate will return to the standard rate.

The supplies to which the temporary reduced rates will apply remain the same, that is supplies relating to hospitality, hotel and holiday accommodation and admissions to certain attractions.

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HMRC Month To Date (MTD) Income Tax

HMRC are planning to introduce MTD for income tax from 6th April 2023 for unincorporated businesses. In the initial proposals your business would have had to start following the rules from the beginning of the accounting period starting on or after 6th of April 2023. HMRC have now amended their proposal to include any business accounting period starting from 1st April 2023. As a lot of unincorporated businesses end their accounting period on 31st March, they will now need to start a year early than previously proposed.

You will need to start following the rules if you are a UK resident and a sole trader with income from one business only or a landlord who rents out UK property (or both).

If you need to report income from any other sources you will not need to follow the rules.

To follow the rules for Making Tax Digital for Income Tax, you’ll need to:

  • keep digital business records
  • get compatible software
  • send business income and expenses updates quarterly
  • finalise your business income
  • submit a final declaration instead of a Self Assessment tax return

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VAT: reduced rate for hospitality, holiday accommodation and some attractions

The temporary reduced VAT rate of 5% that applied to supplies that are made between 15 July 2020 and 31 March 2021 has been extended to 30th September 2021.

The government proposes to amend the reduced rate to 12.5% from 1st October 2021 to 31st March 2022.

The following supplies will benefit from the temporary 5% reduced rate of VAT:

  • Food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs
  • Hot takeaway food and hot takeaway non-alcoholic beverages
  • Sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities
  • Admissions to the following type of attractions that are not already eligible for the cultural VAT exemption: theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions, similar cultural events and facilities.
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Self-Employment Income Support Scheme fifth grant

You will be able to make a claim on the new scheme from late July 2021. The grant will be paid in a single instalment.

For you to make a claim you must have been trading in the 2019-20 tax year and have been unable to trade or be able to show a reduction in turnover since then.

Full guidance about claiming the grant will be available from early July 2021.

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VAT deferred due to Coronavirus

VAT deferred in 2020 due to coronavirus was payable earlier this year or you should have joined the online payment scheme before 21/06/21.

If you did neither, payment must be made by the end of this month to avoid a penalty charge or interest.

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Making Tax Digital for Income Tax

HMRC’s plans for making the self-employed and sole traders including landlords to keep accounting records electronically from 6th April 2023 continues to cause concern.

From that date if you are a self-employed individual or sole trader with income from business over £10,000 you will need to keep your accounting records on approved software that can send information electronically to HMRC. This will take more time and probably increase cost.

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Mileage rates for company vehicles increased from 1st June 2021

If you have a company vehicle and claim mileage for business travel or reimburse the company for private mileage in the company vehicle HMRC rates have changed from1st June.

Engine sizePetrol – rate per mileLPG – rate per mile
1400cc or less11 pence8 pence
1401cc to 2000cc13 pence9 pence
Over 2000cc19 pence14 pence
Engine sizeDiesel – rate per mile
1600cc or less9 pence
1601cc to 2000cc11 pence
Over 2000cc13 pence