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Newsletter September 2020

Newsletter September 2020

UK residence and tax

Your UK residence status affects whether you need to pay tax in the UK on your foreign income. For example, non-residents only pay tax on their UK income - they do not pay UK tax on their foreign income.

Whereas UK residents normally pay UK tax on all their income, whether it’s from the UK or abroad. However, there are special rules for UK residents whose permanent home or place of domicile is abroad.

The following notes reproduced from the GOV.UK website may help you to decide if you are resident or non-resident in the UK for tax purposes:

Work out your residence status

Whether you are UK resident usually depends on how many days you spend in the UK in the tax year (6 April to 5 April the following year).

You are automatically resident if either:

  • you spent 183 or more days in the UK in the tax year
  • your only home was in the UK - you must have owned, rented or lived in it for at least 91 days in total - and you spent at least 30 days there in the tax year

You’re automatically non-resident if either:

  • you spent fewer than 16 days in the UK (or 46 days if you have not been classed as UK resident for the 3 previous tax years)
  • you work abroad full-time (averaging at least 35 hours a week) and spent fewer than 91 days in the UK, of which no more than 30 were spent working

As with all tax rules there are grey areas. If you have any doubts regarding your tax status please contact us so we can help you decide.

VAT deregistration strategy

If you are presently registered for VAT but your turnover has dropped below 83,000 you could deregister for VAT. However, you do not have to deregister.

Disadvantages and advantages of deregistration

  • If you buy significant amounts of goods and services that include a VAT charge, then if you deregister you will not be able to recover any VAT charged.
  • If most of your sales are zero-rated or most of your customers are registered for VAT and can recover the VAT you charge, deregistering means you will lose any recovery of input VAT on purchases and your customers will gain no advantage.
  • If, however, you sell to the general public who cannot reclaim the VAT you charge, and if the VAT on your purchases is not significant, then deregistering could provide an opportunity to reduce your prices and regain a competitive advantage.

The process of deregistration is quite straightforward, but it is worth considering any knock-on effects before taking this option. Please call as we can help you crunch the necessary numbers.

Redundancy pay

If you are faced with making employees redundant, the terms that determine the amount payable may be written into your staff contracts of employment.
Otherwise, employees will normally be entitled to statutory redundancy pay if they have been working with you for two years or more.

Entitlement is usually based on:

  • half a week’s pay for each full year you were under 22 years of age,
  • one week’s pay for each full year you were 22 or older, but under 41
  • one and half week’s pay for each full year you were 41 or older

Length of service is capped at 20 years.

Your weekly pay is the average you earned per week over the 12 weeks before the day you got your redundancy notice.

Coronavirus furlough scheme

If an employee was furloughed prior to being made redundant the average weekly pay is their normal wage rather than any reduced amount they may have been paid during furlough.

According to HMRC sources, if you were made redundant on or after 6 April 2020, your weekly pay is capped at 538 and the maximum statutory redundancy pay you can get is 16,140. If you were made redundant before 6 April 2020, these amounts will be lower.

Also, please note that employees are not entitled to statutory redundancy pay if you offer to keep them on or if you offer suitable alternative work which an employee refuses without good reason.

Take advice

If you are faced with making staff redundant you should consider taking advice to ensure the process is dealt with correctly.

Tenants protection under the Coronavirus Act 2020

From the 26 March 2020, the following rights of landlords and tenants regarding eviction apply. A summary of the provisions is set out below:

  • The Coronavirus Act 2020 protects most tenants and secure licensees in the private and social rented sectors by putting measures in place that say where landlords do need to issue notices seeking possession, the notice period must be for three months. Landlords can choose to give a longer notice period. Any claims in the system or about to go into the system will be affected by the stay of possession hearings and orders. Court actions to evict a tenant will not be progressed before 20 September 2020.
  • At the expiry of the three-month notice, a landlord cannot force a tenant to leave their home without a court order. When the three-month notice period expires, a landlord would still need to take court action if the tenant was unable to move.

The government strongly advise landlords not to commence or continue eviction proceedings during this challenging time without a very good reason.

Tax Diary September/October 2020

1 September 2020 - Due date for Corporation Tax due for the year ended 30 November 2019.

19 September 2020 - PAYE and NIC deductions due for month ended 5 September 2020. (If you pay your tax electronically the due date is 22 September 2020)

19 September 2020 - Filing deadline for the CIS300 monthly return for the month ended 5 September 2020.

19 September 2020 - CIS tax deducted for the month ended 5 September 2020 is payable by today.

1 October 2020 - Due date for Corporation Tax due for the year ended 31 December 2019.

19 October 2020 - PAYE and NIC deductions due for month ended 5 October 2020. (If you pay your tax electronically the due date is 22 October 2020.)

19 October 2020 - Filing deadline for the CIS300 monthly return for the month ended 5 October 2020.

19 October 2020 - CIS tax deducted for the month ended 5 October 2020 is payable by today.

31 October 2020 - Latest date you can file a paper version of your 2020 self-assessment tax return.




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