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HMRC homes in on Airbnb landlords

Online platforms such as Airbnb are now obliged to provide HMRC with data about the payments it makes to individuals who let rooms on a short-term basis. HMRC is matching that data to tax returns and writing to taxpayers who have apparently not declared their rental income correctly.

If you receive such a letter don’t be alarmed by the aggressive tone, as HMRC is asserting that you owe tax, but that may not be the case.

If you…

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Relief for mortgage interest on let properties

As an individual landlord you can’t deduct finance costs, including interest, from your residential property rents for tax purposes. Instead, you get tax relief for those costs as a basic rate tax credit calculated as 20% of the lower of:

– finance costs for the year plus any unused finance charges brought forward;
– your property income profits with no deduction for finance costs,
– or your adjusted total income for the year that exceeds your Personal Allowance.

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HMRC is chasing down the gig-economy

HMRC is writing to online sellers, gig economy workers, and influencers, asking them for unpaid taxes.

There are two versions of the HMRC letter.

– This letter is directed to those who sell goods, or their own services, through an online marketplace. This will include people who sell items on eBay or Etsy, as well as taxi drivers who find their customers through apps such as Uber.

– This letter is addressed to people who have created…

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Reporting crypto profits and losses

HMRC defines crypto assets as: “cryptographically secured digital representations of value or contractual rights that can be transferred, stored, and traded electronically”. The various ‘tokens’ that have been created including Bitcoin, Litecoin, and Ether are all virtual, they exist only on computer servers.

The tax law hasn’t been written to cope with crypto assets, but that doesn’t mean the profits made on investing in crypto are tax-free. HMRC expects most individuals who buy and sell crypto assets to be treated as investors rather than traders,…

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How to challenge a K-code

The PAYE system should deduct approximately the right amount of tax from your salary so that you do not have further tax to pay on that income. However, it assumes that your income remains steady from year to year. This may not be the case.

If you have a PAYE code including the letter K, this means your personal allowance has been reduced to zero and a notional amount of income has been added to your salary to be taxed. The imposition of a K…

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HMRC questions claims for Lettings Relief

If you have claimed lettings relief to reduce the capital gains tax (CGT) payable on the disposal of a let property after 5 April 2020, you should expect to receive a letter from HMRC asking you to amend your tax return to remove that claim.

The conditions for lettings relief to apply were altered on 6 April 2020, with a retrospective effect. For disposals on or after that date, lettings relief can only apply where both the following conditions are met for residential property:

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Late VAT payments and interest

The new penalty regime for late payment of VAT is fairer to those who miss the VAT payment deadline by a few days.

For Vat due in relation to periods beginning on and after 1 January 2023 you will have up to 15 days to pay, or arrange a time to pay agreement, without incurring a penalty. For the first year of this new system, you will have 30 days to pay the VAT liability in full instead of 15 days.

From 2024 onwards the new…

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VAT late filing penalties

VAT registered businesses must now use MTD-compatible software to file VAT returns, as the old online form where you typed in your VAT figures has been closed.

To encourage businesses to file on time under the MTD regime the late filing penalties are being separated from the late payment penalties for VAT periods beginning on and after 1 January 2023.

Late filing penalties will be based on points awarded for each late submission. A penalty is levied only when the appropriate points threshold is reached, which…

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Beware of electronic sales suppression

Electronic sales suppression (ESS) is the use of software or hardware tools to manipulate the sales recorded by an electronic point of sale (EPOS) device, such as a shop till.

Traders may think that HMRC won’t find out about the sales hidden using ESS tools as the transactions are put through the till as normal, but selected sales are not recorded or are deleted.

To ensure the trader’s bank receipts match the total amount of sales recorded by the till, the card payments for those missing…

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Claiming employment related expenses

There is a very limited range of expenses that employees can claim, but these can include the flat rate deduction (£6 per week) for working from home, if you are required to work from home, have not alternative place to work at, and your employer doesn’t pay you a home-working allowance. You may also be able to claim uniform or tool allowances, which are specific to your trade, and claim mileage ( at 45p per mile) when you use your own vehicle while on a business journey.

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