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self employed tax bills going up

SEISS

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I have done a few tax returns for 2020/21 and am finding that clients income isnt that much down, they have claimed all SEISS grants and tax bills are rocketing. Clients saying they can't afford to pay all that tax.  Happy days !!!!

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By Duggimon
27th Apr 2021 10:30

Don't forget to reduce PsOA for those whose income is only up due to SEISS, presumably with little to no drop in trading income they won't be in receipt of grants 4 & 5 so will have income in line with pre-Covid times next year, all else being equal.

Other than that the clients need to understand more income means more tax, they must have noticed they were earning more.

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By pauld
27th Apr 2021 10:54

It would have made life a bit easier if Govt grants were excluded from POA. Have that hassle as well now.

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By Paul Crowley
27th Apr 2021 10:40

Good News
Tax can be reduced by repaying all that unwanted and unneeded SEISS

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By pauld
27th Apr 2021 10:53

Good point. I will tell them that if they start moaning about their tax bills.

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By BudgetB
27th Apr 2021 11:03

If they shouldn't have claimed the grants they should be repaying them via self assessment. If HMRC can find some staff from somewhere in the future they will have a field day with opening enquiries on people who weren't actually eligible and subsequently didn't repay!

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By pauld
27th Apr 2021 11:17

Cant see it happening really. Not sure how HMRC will have the resources or will be be able to prove that they should not have claimed. Think they will just check that the box on the return has the correct amounts in for SEISS i.e. claims for first 3 grants.

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By Tax Dragon
27th Apr 2021 11:22

It's potentially self-funding (and more) - it'll be interesting to see how this does play out. Could go either way.

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By Paul Crowley
27th Apr 2021 11:24

Not aware of any client that not entitled
HMRC invited them all to claim and and asked questions

Are you suggesting that covid had no effect on the self-employed at all?

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By BudgetB
27th Apr 2021 14:22

Paul Crowley wrote:

Are you suggesting that covid had no effect on the self-employed at all?

No, I'm not sure where you got that idea from. Just that many self employed people carried on working at normal income levels and claimed anyway, either 'just in case' or because their mates had told them it was free money. These people would not actually be eligible to claim and should therefore be paying it back via self assessment.

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By Robyn
27th Apr 2021 11:28

It would not take much for HMRC to use some sort of algorithm to compare subcontractors month by month from previous years. I have told at least one of my subbie clients they should not have claimed the 3rd grant and should not be claiming the 4th either as the income this year is more than the same time last year. He just said all his mates are doing it and they are getting bigger refunds than he is and he doesn't understand why. I give up!!

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By Paul Crowley
27th Apr 2021 12:42

All his mates bought a new £20,000 van
The same one bought 5 times by 5 different people

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By BudgetB
27th Apr 2021 14:23

Absolutely. And he'll be just as upset when you tell him he has a tax bill for 20/21 instead of a refund!!

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By pauld
27th Apr 2021 11:38

I personally don't think its down to the accountant to tell clients they should not claim. They all have to make a declaration when claiming so they know what they are doing. I am so glad agents were not allowed to claim on their behalf.

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By DaveyJonesLocker
27th Apr 2021 13:13

Definitely agree with this. From the few cases I've already seen since 6th April, I'm pleased I wasn't involved!!!

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By Tax Dragon
28th Apr 2021 06:09

pauld wrote:

I am so glad agents were not allowed to claim on their behalf.

Well said. It is odd how so many contributors seem to wish otherwise.

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