Ask the CFO: Four ways the pandemic might affect Self-Assessment returns

17th Dec 2020
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We’re fast approaching a January like no other, and many accountants will be looking forward to a short break before the busy season hits hard. Rather than rehash the usual tips (we’ve got a handy guide available here!), take a look at the ways your clients’ returns might differ this year thanks to the direct or indirect impact of the Coronavirus pandemic - featuring tips from our CFO Ian Katté.

Four ways the pandemic might affect Self-Assessment returns

Remote working during a pandemic means more at-home expenses

Many self-employed people who have worked from home this year may not be aware that they can offset a portion of their household bills against their tax burden. Consider claiming a tax deduction for rent or mortgage interest, council tax, heating, lighting, phone and internet bills, but be sure to accurately calculate the business element by taking account of the time spent working at home rather than living there and the proportion of the house used for business work. Alternatively, clients can claim a deduction using HMRC’s flat-rate amounts.

Ask the CFO

Ian says: If there is equipment used at home for work, clients can claim capital allowances on it, again to the extent of the business use of those assets.

Changing legislation around Coronavirus means keeping up to date

Subscriptions to trade publications that have helped businesses stay up-to-date with changes to their business marketplace this year could be considered legitimate business expenses. However, the claim should be supported by receipts.

Novel income sources on the Self Assessment return

Alternative income may feature heavily this year on Self Assessment returns. For example, if your client has been unable to continue their usual trade, they may have traded on eBay or a similar marketplace to supplement their income. That means they could benefit from the trading allowance; currently an exemption of up to £1,000 per annum.

Ask the CFO

Ian says: Remember that this only applies if ALL trading income is less than £1,000 – so may not always be relevant to many sole traders who continue trading but develop an eBay or similar ‘sideline’. However, don’t forget the allowance for those clients who have less than £1,000 trading income in total.

Self-Employment Income Support Scheme

Although SEISS grants do not need to be repaid, they are subject to Income Tax and self-employed National Insurance and must be reported on the 2020/21 Self-Assessment tax return. Any self-employed person who missed their payment on account in 2020 and deferred it will also be expected to make this payment by 31st January 2021.

If your client will struggle to make a full payment, they may be able to spread the cost. Find out more at gov.uk.

BTCSoftware tips and tricks for SA Solution

Q: How do I change a tax code?
A: Within the individual tax return, click on the Tax Calculation Summary (SA110) tab, then amend the code.

Q: How do I complete a Self-Assessment return if the period is over 18 months?
A: Capital Allowance claims only allow for self-employment of 18 months. That means that a period longer than 18 months will be split into two self-employment schedules on the tax return. The first schedule will cover the first 18 months, and then the second schedule will cover the remainder of the period.

Q: What does “Details to be checked on roll forward” mean?
A: This message indicates that you haven’t reviewed the roll forward data from the previous year’s tax return. You can review each section within the Tax Return screens.

Can we help?

BTCSoftware customers get unlimited phone and email support, and we will be extending our support hours in January to ensure you get the help you need to minimise your stress. Keep an eye on our social media and your inbox for full details in the end-of-year newsletter!

If you’re new to us, our demo bookings are now open for 2021. Get in touch for an initial, no-obligation conversation on 0345 241 5030 or request a demo here.

Please do not consider any information within this article as advice. Always use professional judgement, and if you are doing your own tax return, it’s best to consult an accountant.