The lockdown was bound to create difficulties. In tax terms, however, it could hardly have come at a worse time with entertainment venues missing out on the party season and retailers, hoping to recoup some of their earlier losses during the festive shopping season, finding themselves forcibly closed.
All businesses are waiting for the potential cash-flow catastrophe of rents and March year-end corporation tax payments falling due in December, while personal tax returns and payments will be due on 31 January 2021.
At Signature Tax we have put together some top tips for managing tax liabilities at this time.
- January tax bills for the self-employed will be both the balancing payment for the year ended 5 April 2020 and the first payment on account for 2020/21. So if this year’s profits are likely to be reduced consider reducing your payments on account as well.
- Claim the self-employed support offered by the Government but don’t forget that anything you receive will have to be added to your earnings for the current year. This isn’t such a bad thing when you consider that:
- you’ll only be paying tax on the support payments you receive, not repaying them in full; and
- that tax will be part of next year’s tax bill, so you’ll have time to plan how to pay it.
- Covid will affect your customers’ ability to pay, so consider which debts are or will go bad and provide for them.
Christmas parties look like being out of the question and many employers will be looking at the job retention scheme. But those that can offer their employees some cheer can give tax-free Christmas presents and reschedule their parties for next year.
- Employees who expect a tax bill for 2019/20 should get their returns in by 30 December and elect to have their tax collected through their PAYE codes for next year where possible.
- If you have a payment that you’ll struggle to meet, remember that HMRC may offer you time to pay (TTP) and, if you obtain a TTP agreement HMRC won’t apply penalties or surcharges for late payment.