If you rent out a residential property, HMRC will want to know the total amount received and the expenses you’ve paid for. It applies even if there were periods when the property was empty.
So what to do if you’ve missed the submission date for a tax year? Or even a few tax years?
The Let Property Campaign exists to cover situations like this. After signing up for this process, HMRC will give you 90 days to send them the figures for the missing years and your tax liability will be calculated.
This means that penalties will be reduced because you made the initial step to admit you are late to HMRC. Also, if you cannot afford to pay the tax in a lump sum, HMRC will agree an initial payment with you and then monthly payments going forward.
The DDS form can be found on HMRC’s website; filling this in online will inform HMRC of your decision to sign up for the Let Property Campaign, and HMRC will send you a Disclosure Reference Number to use for the process of disclosing the information.
Yes is the short answer. You certainly must sign up for self-assessment with HMRC if you earned more than £1,000 through self-employment. Once you register for self-assessment, you will be given a Unique Taxpayer Reference as proof that you are a self-employed taxpayer. You will also have to pay National Insurance contribution payments which will go towards benefits (pension etc.) you can receive in future years.
It is possible to be employed in a PAYE job and to also work as a sole trader, and even though you might pay tax through your job (PAYE), you will still need to register the ‘sole trade’ for self-assessment and declare both sets of income to HMRC in your annual Income Tax Return.
How to leave the Flat Rate VAT scheme and the rules you must follow.
When setting up a Limited Company, there are several types of business addresses to be considered:
- Registered Office – this is an official address where a Company’s statutory books are generally kept, and is where official documents are sent to. It must be in the same country in which the Company was originally registered. It is very common for a Company’s accountants to be the Registered Office (and we are Registered Office for most of our Limited Company clients) – although many small Companies use the main director’s home address as the Registered Office.
- Service addresses – Although directors have to inform Companies House of their home address, they can choose to stop this being visible to the public by electing to have a Service address. A Service address is the official mailing address of a director and can be anywhere in the World – but, typically, it is the same as the Registered Office.
- Trading address – This is the address where the Company’s business is based. It is where invoices are sent to, and is where the business is physically run from. It is also the address that has to be given to HMRC when a Company registers for VAT.
At AMS we are happy to be both the Registered Office and Service address for our clients - to help our clients retain privacy and also so that any official forms are sent to us in the first place.
Yes – you can. An employer can spend up to £150 per head over the year which includes employees and their spouses and partners on annual events such as a Christmas party, a summer barbeque or a combination of events. If you spend more than £150 per person, then the staff will have to pay tax on the total amount spent (not just the amount above £150) so watch, and plan, your event costs. Regarding the clients, their share of the cost counts as entertainment - which is not tax deductible.
Every person who is resident in the UK is given a personal allowance each tax year. It operates as follows:
The personal allowance is the amount of income you can receive before paying tax – and it increases each tax year. For the 2018/19 tax year, it will be £11,850. So, if you earn £20,000 in 2018/19, you will be subject to income tax on £8,150 of your earnings.
The personal allowance is reduced when your income exceeds £100,000 in a tax year (by £1 for every £2 your income exceeds £100,000) – so that when your income reaches £123,700 (in 2018/19), you will no longer receive a personal allowance.
Identifying what can and cannot be claimed as an expense when renting out a property to help minimise tax.
Tax relief: Gift Aid is a way you can increase the value of a charitable donation - at no extra cost to you. If you pay tax in the UK, a charity can reclaim 25% of your donation from tax you have paid. You should be aware that if you have not paid enough tax to cover the Gift Aid portion of the donation, HMRC may recover unpaid tax from you.
Example: If you donate £100 to a charity, the total donation is worth £125 to the charity (the Gift Aid portion being £25). And, if you are a 40% taxpayer, you can also claim a tax refund of £25 for yourself – via your own Self Assessment Tax Return.
Yes - assuming they are adults, and provided the salaries, and any other benefits you pay them, are commercially justifiable.
These benefits could include:
- A company car
- Medical insurance
- Making payments into a registered pension scheme
However, HMRC could consider the overall package excessive, when they take into account the value of the work done by your son and daughter. They could possibly “disallow” some of the payments – then your business will not get tax relief on all of the costs – which would be bad news.
So, ensure their pay is the market rate for what they do in order to justify their pay. You should also make sure that they receive and sign a formal contract of employment.