The tax return filing deadline for 2019/20 returns remains at 31 January 2021, and penalties for late returns will be issued automatically as usual.
However, HMRC will allow taxpayers and tax agents up to 90 days to appeal against those late filing penalties, instead of the standard 30 days. This is thin gruel as the tax tribunals regularly allow late appeals in any case.
Where HMRC considers the taxpayer has a reasonable excuse, the late filing penalty will be cancelled. Coronavirus can be a reasonable excuse if the taxpayer explains how the pandemic affected their ability to file on time.
Support for the self-employed has always lagged behind that for employers. Individual traders can apply for the third SEISS grant before midnight on Friday 29 January 2021, and this will be based on their average annual profits for the tax years 2016/17 to 2018/19.
Sunak promised a fourth SEISS grant to cover three months from February to April 2021, but there are still no details of that.
The first Budget statement in 2021 will be presented on 3 March 2021, and I will be gathering a team of tax experts to comment on what Rishi Sunak throws at us.
In September former Chancellor Philip Hammond suggested that Sunak will seek to raise taxes to pay for the Covid-19 business support schemes in two stages. The first set of tax increases may be imposed for demonstrational and political purposes on those who have little or no voting power: corporations, foreigners in the UK and wealthy individuals.
A more fundamental tax hike will be needed to raise enough to “balance the books”, as Sunak vowed to do at the Conservative Party conference in October 2020. Hammond thinks this second stage of tax increases will be pushed back to after the 2024 general election. At this point then Chancellor will have to look seriously at raising the rates of three big taxes (VAT, income tax and NIC) to collect the sums required.
The long running off-payroll saga should finally come to a conclusion on 6 April 2021, when the revised version of the IR35 rules is imposed for certain private sector contracts. From that date there will three different sets of IR35 rules in place for:
- public sector contracts
- private sector contracts with large and medium sized engagers
- private sector contracts with small engagers
Coronavirus support ends
On 17 December Chancellor Sunak extended the support for employers under the coronavirus job support scheme to 30 April 2021. The CJRS was due to end on 31 October, then with only five hours to go it was extended to 31 March 2021. I’m sure the further extension to 30 April has absolutely nothing to do with the mega-election day less than a week later, but is solely related to the high level of business and social restrictions now imposed across most of the UK.
The course of the coronavirus pandemic in the UK almost exactly fitted into the 2020/21 tax year, during which many employees have been required to work at home or in different environments with varying degrees of support from their employer.
The employee benefits and expenses provided 2020/21 must be reported to HMRC by 6 July 2021, but HMRC introduced many Covid-related concessions to the benefit in kind rules. It’s going to take a significant degree of organisation to report everything correctly.