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:
For more information, please click here.
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:
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:
These are OUR suggestions and not HMRC’s guidelines. Please click here for HMRC guidelines.
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).
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:
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).
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.
The current rate is £94.25 each week but this increases to £95.85 from the 6th April 2020.
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.
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.
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.
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
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.
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.
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
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.
Anyone who has received untaxed income from any source will have to file a self-assessment and pay the relevant taxes. Examples below:
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:
** 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.