March 29, 2022
by  Rubi Shan

Do I have to pay Tax on my Crypto assets?

Crypto assets have become current hot topic recently and is considered as one of the best investment options available in the market despite the lack of regulation and huge risk factor. Not to mention the scams that occur in the crypto world. Crypto assets take many forms and you may know them as cryptocurrencies such as Bitcoin and Ethereum.

This blog is not intended to discuss the various forms of Crypto Assets, we will leave that to those who understand that.  As an accountant and tax advisor, we would like to discuss the tax implements on crypto trading.

Majority of crypto traders assume the gains from crypto are not taxable. Unfortunately, this is incorrect. Crypto trading income is definitely taxable. The real question is which tax regime does your crypto trading fall under. There are two main taxes related to Crypto trading and they are Capital Gains Tax (CGT) and Income Tax.

Back in 2019, HMRC requested a few Crypto exchanges to provide them with client information involved in Crypto trading. HMRC are becoming more vigilant and getting in touch in more Crypto traders to collect the taxes due in this new and booming sector.

Christmas is around the corner and you may be throwing a Christmas party in the near future. We all need to be treated after the hectic year we’ve had.

Lets discuss the taxes on business parties, this could be an annual Christmas party or an annual barbeque. Depending on the event, you may or may not have to report this to HMRC and pay taxes.

The points to consider are:

1.Is this an annual event? (This includes virtual events)

It must be an annual event (happens once a year on a recurring basis). Parties such as retirement parties, team building events are taxable and must be reported to HMRC.

2. Is it open to all employees?

This event must be open to all employees and not selected employees

3. What is the cost per person? Is it above or below £150?

The total cost per person must be capped at £150. This will include employees, partners and any household members. This £150 total includes VAT, transport and overnight accommodation.

Cost per person = Total Cost/Number of Attendees

Number of Attendees includes non-employees such as partners.

4. The number of events during a tax year

You will not have to pay any taxes to HMRC if all of the following conditions are met.

What happens if I exceed the £150 per person?

If the cost per person exceeds £150, the whole amount will become taxable.

Can I only have one annual party?

No, the £150 limit could be used across more than one event. However, the combined cost  cannot exceed £150 per person.

Are there any exceptions?

In certain cases, if there is more than one annual event and the cost per person exceeds the £150 threshold, it is possible to get an exemption for the second party. This  is known as trivial benefit (you must meet the conditions of the Trivial benefits).

If the annual party conditions are met, what happens next?

If the conditions are met, the cost of the party must be reported on a P11D for employees (Section K) or reported on payroll if the company has registered for payroll benefits.

Employers will be required to pay Class 1A National Insurance contributions.

I have a PAYE Settlement Agreement (PSA), what do I do?

If you have a PSA, you will not have to report the annual party on payroll or your P11D. You will not need to pay Class 1A National Insurance. Employers will be required to pay Class 1B National Insurance (it is the same national insurance rate, it just falls under a different category).

The following types of expenses and benefits can be included in the PSA:

  • Minor
  • Irregular (one off)
  • Impracticable (shared expenses that are not easy to allocate to each individual employee)

For further information, you can find it here.

If you would like to discuss any of the above, please email us on rubi@pfconsult.co.uk about the party you are considering.

-PFC Team

“How does Income Tax work? Do I pay Tax on all my income?”

This has been a frequent question asked, I am here to answer your questions.

Each tax year, you get a personal allowance. In our current tax year, the personal allowance is £12,500. You do not pay tax on this income.

Your personal allowance may vary if you claim:

  •  Marriage Allowance
  • Blind Person’s Allowance
  • Your personal allowance can be smaller if your income exceeds £100,000

How does your Income Tax work?

BandTaxable IncomeTax Rate
Personal AllowanceUp to £12,5000%
Basic Rate£12,501 - £50,00020%
Higher Rate£50,001 - £150,00040%
Additional RateAbove £150,00045%

Are there any Income Tax Allowances?

Yes, there is a tax-free allowance for:

  • Saving interest
  •  Dividends
  • Your first £1,000 of income from Self-Employment
  • Your first £1,000 of income from property you rent (Rent a Room Scheme is not appliable for this tax allowance)

What do I pay Income tax on?

  • Employment income (your salaries)
  • Benefits from Employment such as company car, Medical insurance etc
  • Profits from your Self Employment – Online and offline (above the trading allowance - £1000)
  • State benefits such as
  •   Bereavement Allowance (previously Widow’s pension)
  • Carer’s Allowance
  • Contribution-based Employment and Support Allowance (ESA)
  • Incapacity Benefit (from the 29th week you get it)
  • Jobseeker’s Allowance (JSA)
  • Pensions paid by the Industrial Death Benefit scheme
  • The State Pension
  • Widowed Parent’s Allowance

Merry Christmas!

It is that time of the year again, but not like other years.

Christmas is not the same this year. Every year there are big celebrations and the whole country is upbeat during this festive period however this year, the UK is in a sombre mood.

The biggest culprit being Coronavirus but let us not forget Brexit too. There is a lot of uncertainties and the ban on gatherings (rightly so) has painted a glum picture during Christmas Celebrations.

However, there has been one gift granted by HMRC. No, it is not extra taxes nor is it April fools. HMRC have confirmed that Virtual Christmas party costs can be deducted from your Taxes. Please see below for further information.

Usually, entertainment costs are usually disallowed for Tax Purposes. An exception being that limited companies can host an annual party (or two) including Christmas party/dinner. These expenses can be deduced for your Corporation Tax.

The following rules apply:

  • It is an Annual Event – It is hosted once or twice a year and not every month or week
  • It is available for all company employees
  • The total cost per employee is capped at £150 – This includes Travel/Taxes/Food/Drinks and Entertainment
  • Aggregate on all events (if you have more than one event)
  • If this limit is exceeded on one single event, the whole cost is disallowed.

For more information, please click here.

Virtual Christmas Parties

2020 has been full of challenges and hosting a Christmas Party is near impossible. However, virtual parties have become the new norm. Many of you have decided to host your own Virtual Christmas Party. 

HMRC have confirmed they will allow the £150 exemption to Virtual Parties given the rules above are met.

The challenges concerning these are:

  • How do I prove everyone was invited?
  • What are the costs incurred?
  • Was it a Party?

It would be ideal to document the Christmas party if you plan on hosting one and claim it as an expense when filing your Corporation Tax.

Our suggestions to tackle these challenges would be:

  • Email the invitations to ALL your employees in a digital format – This will be trackable and make sure to keep a backup
  • Organise someone to be an entertainer or nominate someone to organise a quiz night or Karaoke
  • Record a section of your Virtual Party in a digital format, in case HMRC wants to audit it (You will have to get permission from all your staff to record it)
  • Send out a Christmas Hamper with food, drinks and Christmas goodies!
  • Enjoy the party without the worry of a hangover! We recommend a good shot!

These are OUR suggestions and not HMRC’s guidelines. Please click here for HMRC guidelines.

What can I do if I do not want to host a Virtual Christmas Party?

If you are not planning on throwing a virtual Christmas party, you can still give something little to your team. Please considering using the Trivial benefits options.

There are a few conditions, this can be deducted as an expense for Corporation Tax purposes. There are no tax impacts on the employees such as Benefit in Kind).

  • Cost of the benefit is £50 or less
  • The benefit is not cash or cash voucher
  • It is not a contractual obligation to provide this benefit
  • This is not provided in recognition of their services

If the benefit is provided to a director of a close company (or a member of their family or household) the benefit is limited to £300 per tax year.

Please click below for further information:

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim21864

https://www.gov.uk/expenses-and-benefits-trivial-benefits

We wish everyone a Merry Christmas and a healthy 2021!

How does Statutory Sick Pay (SSP) work for Coronavirus?

Coronavirus has become a pandemic it is becoming a growing concern for the world. The UK government have set a guidance on Coronavirus (Covid-19), but we are here to answer a few questions that you might have.

The UK 2020 budget has been set and there have been a few changes, this includes a temporary change to the Statutory Sick Pay (SSP).

Should I self-isolate?

If you believe you have symptoms of COVID-19, even mild, please stay at home and do not leave your house for 7 days. From the 13th of March 2020, individuals who have been advised to self-isolate will be covered by SSP.

What is the current rate for SSP?

The current rate is £94.25 each week but this increases to £95.85 from the 6th April 2020.

How does SSP work?

SSP will be payable from the first day rather than the fourth day for affected individuals. This includes individuals who are not ill but unable to work due to self-isolation.

Do I need a sick note to be eligible for SSP?

You do not need a note from your GP or Doctors regarding COVID-19. Instead, you’ll be able to obtain one from NHS 111 if you require a note.

What happens if I am not eligible for SSP?

If you are an individual who is not eligible for SSP, for example if you are self employed or someone earning below the lower earning limit (£118 per week or £512 per month), you can make a claim for Universal Credit or Contributory Employment and Support Allowance.

Information regarding SSP for Employers

If you are a small or medium sized business or employer (less than 250 employees), the government intend to fund your extra costs related to Covid-19 SSP. This includes refunds for business who have employees who have claimed SSP due to Covid-19. Employers are still asked to record absences. However, there is no need to obtain a GP or Doctors fit note, instead one can be obtained from NHS 111.

If you require more information, please click here

I use my personal phone and home internet for my Limited company - Can I claim the full or part of of mobile bills as an expense the VAT on it?

Telephone / Mobile Costs

If the Mobile contract you can claim the 100% cost of the bill and the VAT as an expense. Even though there could be personal use of the mobile, the company or employee does not have to pay any Benefit in Kind taxes (BIK).

However if the Telephone / Mobile contract is in the employee’s name, it gets little complex.  So, if the employee use their personal mobile phone to make a business call only the actual call cost necessarily incurred for the business can be claimed as an expense and not the line rental. Please see the example provided by HMRC.

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim32951

A construction engineer often works out of the office on construction sites. She uses a mobile phone so that she can keep in touch with the office. The phone is mainly used for business calls.

The tariff for the mobile phone includes up to 10 minutes of free calls each month. In one month she pays £22, which is the rental charge only, because her total calls, all of which were business calls, amounted to 8 minutes. No deduction can be permitted because no expense has been incurred in making the business calls.

The following month she pays £28, which is £22 for rental and £6 for calls. Calls that are charged are paid for at a rate of 20p per minute. In the month she made calls totalling 40 minutes, of which 30 minutes were for business and 10 minutes were private. A deduction should be permitted for the cost of business calls, see EIM32945. The amount that can be deducted is £4.50, which is 75% of the call charges, because 75% of the total call time was made up of business calls.

We recommend to have the mobile contract in the company’s name to claim 100% of the mobile cost and to enjoy the tax free benefit.

In the meantime, if the employee have two mobile contracts and one mobile is used 100% for the business purpose, then this cost can be claimed proven it’s used only for business use. 

Broadband

As far as Broadband costs incurred by the employee at home, if the employee is already paying for a broadband contract, the employer cannot reimburse the cost as there will be no additional cost to the employee for using it for business. If the employer decides to reimburse the broadband cost, this will be subject to PAYE and NIC.

In the meantime, if the employee does not already pay for a broadband internet connection at home, and needs one in order to work from home then this cost can be reimbursed by the employer without any PAYE or NIC implications. 

Please refer HMRC’s guidance here

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim01475

Have you filed your Self-Assessment?

Probably you are tired of hearing “Have you filed your Self-Assessment” on radio, TV, Newspapers and on the Tube!. Yes, the deadline for filing your Self-Assessment for tax year 2018/19 is 31st of January 2020.

Who should file a Self-Assessment?

Anyone who has received untaxed income from any source will have to file a self-assessment and pay the relevant taxes. Examples below:

  • Self Employed Sole trader
  • Anyone receiving Property Income
  • Anyone receiving Dividend income
  • Anyone receiving Bank interest
  • Anyone have any other investment income
  • Anyone earning over £100,000 salaries
  • Anyone earning over £50,000 and receiving Child Benefit
  • Anyone who has disposed a chargeable asset (Capital Gains Tax payable)
  • And the list goes on

Self Assessment is not always paying more taxes to HMRC. There are instances where you will actually get a refund from HMRC if you have overpaid Taxes:

  • If you have suffered CIS deductions (Your main contractor has deducted CIS from your pay)
  • If you have two jobs and paid more taxes due to a wrong tax code
  • If you have made a trade loss which could have been set off against your other income
  • If you have made an EIS or SEIS investment.
  • If you have incurred employment-related expenses which are not reimbursed by your employer etc

What will happen if I don’t file a Self-Assessment?

  • If you don’t file your Self Assessment on time ( for 2018/19 returns - paper returns by 31st of October 2019 and online returns by 31.01.2020), you will get a penalty of £100.
  • If the return is not filed after 3 months of the deadline, HMRC will impose a penalty of £10 per day for the next three month up to a maximum of £900.00
  • If you are late by 6 months, you will pay an additional 5% of the Tax due or £300, whichever is greater.
  • If you are late by 12 months, you will pay further 5% of the Tax due or £300, whichever is greater.

What if I don’t pay on time?

  • If you have not paid the tax  due within 30 days of the payment due date you will be charged 5% of the taxes due
  • If you have not paid the tax within 6 months from the payment deadline, a further 5% penalty will be applicable
  • And if you are 12 months late, another 5% will be charged on the tax due.

** Please note the late filing penalties and late payment penalties are independent to each other and you may be liable to pay both the penalties.

** If you are missing information, you can always make estimates and notify in the tax return that you have made estimates.

** You can also amend your tax return online within 12 months of your online filing deadline.

If you would like to discuss your self Assessment with us, please contact us and an expert in our team will be happy to assist you.

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