Making protective tax credits and/or child benefit claims
Many self-employed individuals in farming and agricultural businesses have not made a child benefit claim on the basis that one parent has adjusted net income of over £50,000 for a tax year.
If you are in this position and are expecting your taxable income to drop you may now be eligible to receive benefits. By making a claim now you will be able to maximise the amount you may receive. If you do receive child benefit and your income for the tax year is over £50,000 you will need to pay some or all of it back.
By making a claim now you can backdate it by three months, therefore you could receive the full entitlement for 2019/20.
BPS submission deadline
The Government has confirmed that farmers, land managers and agents now have until midnight on 15 June to submit their 2020 basic payment scheme (BPS) applications, an extension of one month.
Additional schemes such as the countryside stewardship revenue claims, environmental stewardship claims, and woodland legacy revenue claims, have also been extended without any penalties arising.
The period for making amendments without penalty is extended to midnight on 30 June 2020 and the final deadline, with penalty, is extended to midnight on 10 July 2020.
The extension on the deadline should not impact the timing of your payment and the RPA have said they are continuing to monitor the situation and will provide further assistance to support farmers, if necessary.
Wills, time for review
Ensuring that a will has been made and has been drafted tax efficiently, has always been important, however in the current situation we now find ourselves in, this seems to be even more important.
Where you have a will in place a periodic review should be carried out and updates made for any changes required. This could be due to a change in family circumstances, like the addition of new family members or changes in tax legislation. For example, the residential nil rate band (RNRB) relief was introduced from April 2017, the relief from April 2020 being £175,000. This could enable a family home with a value of £1 million to be passed on to direct descendants (e.g. children, grandchildren etc.) without having to suffer inheritance tax. The RNRB is restricted where the total value of the deceased estate is over £2 million and is lost completely where the estate is over £2.35 million.
The timing of expenditure
The current restrictions may mean that you are unable to carry out planned necessary repair work on the business premises before the accounting year end. For example, if a yard surface or building is damaged before the end of your accounting period, but contractors are not able to carry out work to repair this before the end of the period. If this is the case, and an accurate estimate of the cost can be obtained, then a tax-deductible provision should be included in in the accounts.
The work needs to be carried out at the earliest opportunity after the period end and before the end of the next accounting period.
Get your tax return completed early
Completing your self-assessment tax return is often put off by many individuals until later in the year, however as the spring crops have now been drilled and livestock now in the fields, it could be a good time to collate your personal tax information before the start of the busy summer ahead.
The Government has allowed individuals to defer their second payment on account due on 31 July 2020 until 31 January 2021. This will help many individuals with cashflow in the short term, however this could mean that you may have a considerable income tax payment due in January 2021.
Completing your self-assessment tax return early will allow you to be able to plan for future income tax payments due between now and July 2021. Similarly, if your overall profits have reduced considerably for the tax year ended 5 April 2020, you may even be due a refund. The sooner your return is submitted, the sooner the refund will be issued.
CGT on residential property sales
From 6 April 2020, disposals of UK residential property are now subject to a 30-day reporting requirement with the capital gains tax on the sale being due at the same time. Currently, very few sales have taken place but with the recent news that the Government want to kick start the housing market, this could quickly change.
So far HMRC have taken a reasonably relaxed approach to issuing penalties for late submission and payment, but this will not last for ever. If you are looking to sell a UK residential property soon, if is worth getting all the acquisition details and valuation information together before sale.