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Why are there so few Residential Lets on the Isle of Wight? Is this a long-term opportunity?

Currently (12/05/21) there are less than 20 properties on the isle of wight available for residential letting. Speaking to estate agents on the island this is because so many properties are being snapped up as holiday lets.

This is almost certainly due to the consequences of the pandemic and the Staycation. This may offer a good return this year but will tell tourist numbers justify these purchases in the longer term?

I recently heard details of a quotation a client had received to let their property as a residential let, the agent informed them that the monthly rental they could expect was now 30% more than they quoted 15 months ago.

If properties remain as holiday lets, demand for residential lets will continue to outstrip supply.

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Making Tax Digital VAT

From April 2022, all VAT-registered businesses including those with turnover below £85,000 will be required to sign up for ‘Making Tax Digital for VAT’, meaning you will have to get one set up this year.

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Minimum Wage Record Keeping

The National Living Wage (NLW) increased from 1st April 2021 for those over 23 is now £8.91. National Minimum Wage (NMW) rates for younger age groups and apprentices have also increased.

The record keeping rules for employers paying the national living and minimum wages also changed on 1 April. Records now need to be kept for six years previously they had to be kept for only three.  Records from 2018 should now be kept at least until 2024. The records must be enough to establish that the rate paid is equal to or greater than the applicable minimum wage rate.

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The effect of Covid on Furnished Holiday Lets

To qualify as a Furnished Holiday Let (FHL) the property has to be available to let for 210 days in the year and actually let for 105 days, due to Covid restrictions this has not been possible for the tax year ending 5th April 2021. If you let the property as an FHL in the previous year which met the availability and occupancy requirements you will be able to make a Period of Grace election for the tax year ending 5th April 2021.

For those of you who have purchased an FHL property during the pandemic or shortly before and have therefore have never meet the availability and occupancy requirements the current situation may mean having to record income as non-FHL which would have an effect on the treatment of any costs improving the property or household items.

The government have at the moment have not announced any concession, before completing your tax return you should make sure you are aware of your options.

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VAT Deferred due to Coronavirus

If you deferred VAT last year due to Coronavirus, payment is now due by 31 March 2021. HMRC, have set up a new VAT Deferral Scheme and you can transfer any deferred VAT to the new scheme. You can pay in up to 11 monthly instalments. Full details of the scheme can be found at https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19

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HMRC Self Assessment late filing penalty extension

HMRC have announced a further extension to payment of tax due from Self Assessment customers. Normally tax is due by 31st January however this was extended to 28th February in light of COVID. HMRC have now extended this further to 1st April 2021. If you pay the tax or make a Time to Pay arrangement by 1‌‌ April you will not be charged the standard 5% penalty. However, any tax due and unpaid by 31st January will still incur interest charges.

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HMRC Tax Relief on Membership of Professional Organisations and Learned Societies

HMRC has updated their list of organisations and societies on which you can claim tax relief on your fees or subscriptions. The current list is available at https://www.gov.uk/government/publications/professional-bodies-approved-for-tax-relief-list-3

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HMRC Self Assessment late filing penalty delay

HMRC have announced this week that self assessment returns sent in after the deadline of 31st January 2021 but before 28th February 2021 will not be charged a penalty. However, any tax due and unpaid by 31st January will incur interest charges.

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HMRC VAT Extra Statutory Concessions

With the UK’s departure from the EU, HMRC have updated their list of Extra Statutory Concessions (ESC).

A full list of ESC’s can be found on the gov.uk web site at https://www.gov.uk/government/publications/vat-notice-48-extra-statutory-concessions/vat-notice-48-extra-statutory-concessions

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HMRC Property Income, treatment of grants and contributions

With the recent local and national government grants for COVID, HMRC have revised part of their property income manual covering the treatment of grants and subsidies from UK government departments, private amenity groups and local authorities.

For property income purposes, grants and subsidies are normally treated as taxable income. Receipts from insurance policies for non-payment of rent is also taxable income.

Insurance claims for repairs or replacements should not be treated as taxable income unless the amount received is more than the cost. For bookkeeping purposes when the insurance claim and repair costs are different, you can post the difference as income or cost depending which is greater or post both full amounts.

From a VAT perspective a grant, contribution or insurance claim is not normally part of Vatable income.

This information is correct as at 10 December 2020. It has been provided by Spicer’s Accounting Services for information purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax or accounting advisor before taking any decision.