Developments in the tax world – Self Assessment and Capital Gains Tax
Self Assessment – Time to pay
Due to the ongoing COVID pandemic, Government has increased the threshold for Self Assessment customers and has issued new guidance for customers who can benefit from enhanced payment plans for paying tax liabilities. The threshold is now £30,000, increased from the previous £10,000 and the self-serve portal can be used to set up instalment payment plans up to the new threshold. This allows customers to pay their deferred payment on account bill from July 2020, in addition to any outstanding tax owed from 2019 through 2020, and their first payment on account for the current financial year in monthly instalments, up to 12 months. If the tax sum owed is higher than £30,000 or there is a need to extend payments beyond 12 months, customers are invited to contact HMRC directly rather than using the self-serve portal.
To use the self-serve portal, customers are required to meet the following criteria: They need to have no:
- outstanding tax returns;
- other tax debt; or
- other HMRC payment plans set up.
The debt needs to be between £32 and £30,000.
The payment plan needs to be set up no later than 60 days after the due date of debt.
All customers using the payment plan will be required to pay interest on the tax owed. Interest will be applied to any outstanding balances from 1 February 2021.
Capital Gains Tax – Is change afoot?
Recently, there has been a lot of speculation about tax changes in the next budget. One that has been reported on by the dental press relates to Capital Gains Tax (CGT). During the summer, Chancellor Rishi Sunak asked the Office of Tax Simplification (OTS) to investigate aligning CGT more closely with income tax. The number of CGT payers in the UK is less than 1% of the total tax paying population but generates in excess of £8 billion in tax revenue annually. This could be the tax the Chancellor looks at changing in the spring budget.
In March 2020, Rishi Sunak’s first budget as a Chancellor, he made significant changes to Entrepreneurs’ Relief (now known as Business Asset Disposal Relief) by reducing the lifetime limit from £10 million to £1 million. This is the proportion of capital gains that is eligible to be taxed at a lower 10% tax rate. For any dentist selling his or her practice, investment, or property with cumulative lifetime gains in excess of £1 million, he/she will now be taxed at 20% on gains in excess of the £1m lifetime limit.
Currently, any tax due is paid 10 months after the financial year end. In March 2020, Chancellor changed the rules for CGT on residential properties to 30 days from sale.
If you are interested in finding out more about how this may affect your practice valuation or sale please contact the MediEstates team on 01332 321692, email@example.com or visit www.mediestates.co.uk