17 April 2020

Tax self-assessment payments

Tax self-assessment payments that were due on 31 July 2020 are now deferred until 31 January 2021 as a result of the coronavirus situation.

This measure is not confined to the self-employed and applies to anyone who is due to pay their second self-assessment payment on account on 31 July 2020.

Residential letting income

Tax relief will be a maximum of 20% for all finance charges deductible from such income.

Non-resident companies currently paying income tax on UK rental income will be subject to corporation tax instead.

Gains on UK residential property

UK residents realising a capital gains tax liability on disposal of UK residential property after 5 April 2020 must advise HMRC and pay the tax within 30 days of completion.

And changes to the rules that allow capital gains tax exemption on a gain made in the sale of a main residence may result in an unexpected liability for some.

Pension contributions

The taper thresholds affecting the annual pension contribution limit of £40,000 are raised by £90,000 each, but the minimum is cut from £10,000 to £4,000.

National insurance contributions

The annual NIC threshold for contributions by employees and the self-employed is increased to £9,500. Employment allowance (increased to £4,000) will be confined to employers with a liability in 2019/20 for £100k or less secondary Class 1 NIC who are eligible for state aid. In addition, NIC will be due on the excess of termination payments over £30,000.

Company car benefits

These will be applied on a sliding scale according to whether the car is first registered before 6 April or later, when all benefit rates will be lower.

Money laundering changes for trusts

The 5th EU Money Laundering Directive was substantially enacted in the UK on 10 January, but excluded the section relating to trusts.

Many trusts have already had to register more formally with HMRC under the old rules, in any case where they had a UK tax liability. The new rules would require registration by all UK express trusts, any trust with UK real estate, or any trust with a new business relationship with the UK, such as employing a UK adviser.

The implementation of the trust rules is undergoing technical consultation and we will report further when the rules are clearer.

Company tax returns for non-resident landlords

Non-resident companies owning UK rental property previously reported their rental profits on non-resident company income tax returns and were subject to income tax.

However, from 6 April 2020, these companies become subject to corporation tax on those profits.

A final non-resident company return to 5 April 2020 will be required but no payments on account will need to be made for the 2020/21 tax year, and any income tax repayable must be claimed.

By 30 June 2020, HMRC should have issued all such companies a new corporate tax reference number, otherwise known as a Unique Taxpayer Reference (UTR). Any company that does not receive a UTR should contact HMRC.

Specific advice should be obtained before taking action, or refraining from taking action, on the basis of this information. Speak with your usual Shipleys contact or one of our specialist team, shown on this page, for more details and guidance.

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