3 things you might not know about self assessment tax returns

With the tax return filing deadline just around the corner (31st January if you weren’t sure!), here are 3 things you might not know about self assessment tax returns.

High income child benefit charge

If you receive child benefit and your individual income is over £50,000 then you may have to pay a high income child benefit charge.

If both your and your partners individual income is over £50,000 then whoever has the highest income will be liable for the charge.

If you earn over £50,000 then you have two options:

1. continue to receive child benefit and pay the tax charge at the end of each year

2. stop receiving child benefit

If you choose to continue to receive child benefit then you’ll need to submit a self assessment return each year to pay the high income child benefit charge.

Trading Allowance

Started a side hustle during Covid?

The first £1,000 of income from self employment is tax free. This means you don’t need to submit a tax return until earning over £1,000 from that new side hustle!

If your other income is between £1,000 and £2,500 then you need to notify HMRC.

Earning over £2,500? Then you’ll need to report your earnings on a self assessment tax return.

Property Allowance

Do you earn income from property? If so, the first £1,000 of the gross income is tax free.

If you earn between £1,000 and £2,500 then you need to notify HMRC and if earning over £2,500 you must register for self assessment.

If in doubt get in touch and we can let you know your options!

Autumn budget 2021 - our top 5 announcements affecting small businesses

On 27th October Rishi Sunak presented his Autumn Budget to parliament. Here we summarise the top 5 announcements that affect small businesses:

1.

National Living Wage to increase next year by 6.6%, to £9.50 an hour from April 2022. This coupled with the new Health & Social care levy will have an impact on wage costs for small businesses. It’s important to model how this will affect your business allowing plans to be put in place to cover the cost.

2.

Business rates reforms include:

• A 50% business rates discount for the retail, hospitality, and leisure sectors in England in 2022-23. To support local high streets as they adapt and recover from the pandemic, the government is introducing a new temporary business rates relief in England for eligible retail, hospitality and leisure properties for 2022-23, worth almost £1.7 billion. Over 90% of retail, hospitality and leisure businesses will receive at least 50% off their business rates bills in 2022-23.

• Reform of business rates will make the system fairer, more responsive and more supportive of investment. The proposals set out will collectively reduce the burden of business rates in England by over £7 billion over the next five years.

• The government is freezing the business rates multiplier in 2022-23, a tax cut worth £4.6 billion over the next five years. This will support all ratepayers, large and small, meaning bills are 3% lower than without the freeze.

• From 2023, a new business rates relief will support investment in property improvements so that no business will face higher business rates bills for 12 months after making qualifying improvements to a property they occupy. This will enable businesses to adapt to meet rising demand and make improvements to their premises that support net zero targets and enhance productivity as employees return to the workplace.

3.

Investment in R&D and innovation will help drive economic growth and create the jobs of the future. The government is increasing public R&D investment to record levels: £20 billion by 2024-25.

Reforms to R&D tax reliefs will ensure that they better support cutting-edge research methods and that the UK more effectively captures the benefits of R&D funded by the UK taxpayer through the reliefs. This will take combined public direct and indirect support for R&D to 1.1% of GDP in 2024-25 – well above the 2018 OECD average of 0.7%.

The government will also set out plans to tackle abuse of and improve compliance with the R&D tax reliefs later in the autumn.

4.

Apprenticeships funding will increase to £2.7 billion by 2024-25 to support businesses to build the skilled workforce they need.

Funding for the Help to Grow schemes will help SMEs improve their productivity through world-class management skills training and support for digital adoption.

5.

The Recovery Loan Scheme will also be extended until 30 June 2022 to ensure that lenders continue to have the confidence to lend to small and medium-sized businesses. Finance will be available up to a maximum of £2 million per business, supporting them to recover from the impact of the pandemic and to grow. The government guarantee will be reduced from 80% to 70% to encourage the lending market to move towards normality as the economy continues to recover.