Working from Home expenses claim information for 21/22 tax return

For the 21/22 tax year, for employees and Directors, there are 3 options, the simplest being option 1 below:

  1. Claim £6 per week – You’ll get tax relief based on the rate at which you pay tax. For example, if you pay the 20% basic rate of tax and claim tax relief on £6 a week you would get £1.20 per week in tax relief (20% of £6). HMRC recognise the ongoing lockdown restrictions that were in place during 21/22 and are accepting a full years claim for employees who are eligible . To be eligible for tax relief you must carry out work which forms all or part of the central duties of your employment and in doing so, you must have additional costs, such as heating, metered water bills or business calls, that are incurred as a direct result of working from home. They don’t include costs that would stay the same whether you worked at home or in an office.

    Please note that after 5/4/22, the relaxed rules will come to an end which means that homeworking arrangements need to be in place between the employer and the employee (usually via the employee’s contract)

  2. Claim a % of actual expenses – HMRC suggests the acceptable costs are:
    • Gas and electricity/heating
    • Metered water
    • Business phone calls
    • Other specific costs incurred such as business insurance, repairs of business equipment, cleaning materials to clean your work area (Covid being the reason)Mortgage Interest, Rent, Rates are not allowable as HMRC say that costs must be ‘wholly and exclusively for business’ and HMRC are unconvinced that employees/directors meet this criteria.

  3. Rent part of your home to your company – To do this you need to create a licence agreement with your company in order to allow it to occupy part of your property. It then pays you rent and you then claim all your expenses under Self-Assessment. This means you will need to complete the property section of the Self-Assessment return as you are effectively becoming a commercial landlord but it means you can recover all relevant overheads and variable costs, mortgage interest ( the relevant %)  would only be eligible for Finance cost allowance and hence may be further restricted.

    Whilst your home is usually exempt for Capital Gains Tax (PRR) your home office once rented out will not be.

View and download the above as a PDF:

Working form home expenses claim information for 2021-2022

Marriage Allowance Claim Information

Download PDF below:

Marriage Allowance Claim Information

 

Marriage Allowance

HMRC link – https://www.gov.uk/marriage-allowance

How it works

Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your husband, wife or civil partner.

This reduces their tax by up to £252 in the tax year (6 April to 5 April the next year).

To benefit as a couple, you need to earn less than your partner and have an income of £12,570 or less. Your partner’s income must be between £12,571 and £50,270 (£43,662 in Scotland) for you to be eligible.

You can backdate your claim to include any tax year since 5 April 2018 that you were eligible for Marriage Allowance. If your partner has since died you can still claim – phone the Income Tax helpline.

You can calculate how much tax you could save as a couple. You should call the Income Tax helpline instead if you receive other income such as dividends, savings or benefits from your job. You can also call if you do not know what your taxable income is.

Example

Your income is £11,500 and your Personal Allowance is £12,570, so you do not pay tax.

Your partner’s income is £20,000 and their Personal Allowance is £12,570, so they pay tax on £7,430 (their ‘taxable income’). This means as a couple you are paying Income Tax on £7,430.

When you claim Marriage Allowance you transfer £1,260 of your Personal Allowance to your partner. Your Personal Allowance becomes £11,310 and your partner gets a ‘tax credit’ on £1,260 of their taxable income.

This means you will now pay tax on £190, but your partner will only pay tax on £6,170. As a couple you benefit, as you are only paying Income Tax on £6,360 rather than £7,430, which saves you £214 in tax.

Who can apply

You can benefit from Marriage Allowance if all the following apply:

  • you’re married or in a civil partnership

  • you do not pay Income Tax or your income is below your Personal Allowance (usually

    £12,570)

  • your partner pays Income Tax at the basic rate, which usually means their income is between £12,571 and £50,270 before they receive Marriage Allowance

You cannot claim Marriage Allowance if you’re living together but you’re not married or in a civil partnership.

If you’re in Scotland, your partner must pay the starter, basic or intermediate rate, which usually means their income is between £12,571 and £43,662.

It will not affect your application for Marriage Allowance if you or your partner:

  • are currently receiving a pension

  • live abroad – as long as you get a Personal Allowance.

If you or your partner were born before 6 April 1935, you might benefit more as a couple by applying for Married Couple’s Allowance instead.

You cannot get Marriage Allowance and Married Couple’s Allowance at the same time.

Backdating your claim

You can backdate your claim to include any tax year since 5 April 2018 that you were eligible for Marriage Allowance.

Your partner’s tax bill will be reduced depending on the Personal Allowance rate for the years you’re backdating.

If your partner has died since 5 April 2018 you can still claim – phone the Income Tax helpline. If your partner was the lower earner, the person responsible for managing their tax affairs needs to phone.

Stopping Marriage Allowance

Your Personal Allowance will transfer automatically to your partner every year until you cancel Marriage Allowance – for example if your income changes or your relationship ends.

How to apply

It’s free to apply for Marriage Allowance.
If both of you have no income other than your wages, then the person who earns the least should make the claim.
If either of you gets other income, such as dividends or savings, you may need to work out who should claim. You can call the Income Tax helpline if you’re unsure.
Changes to your Personal Allowances will be backdated to the start of the tax year (6 April) if your application is successful.

How your Personal Allowances change

HM Revenue and Customs (HMRC) will give your partner the allowance you have transferred to them either:

  • by changing their tax code – this can take up to 2 months

  • when they send their Self Assessment tax return

If your new Personal Allowance is lower than your income after you’ve made a claim, you might have to pay some income tax. However, you might still benefit as a couple.

How your tax code will change

You and your partner will get new tax codes that reflect the transferred allowance. Your tax code will end with:

  • ‘M’ if you are receiving the allowance

  • ‘N’ if you are transferring the allowance

Your tax code will also change if you’re employed or get a pension.

Before you apply

You need your National Insurance number and your partner’s.

If you have come to the UK and you do not plan to work or study, you cannot get a National Insurance number. Phone the Income Tax helpline to apply for Marriage Allowance.

You also need a way to prove your identity. You can use any 2 of the following:

  • your P60

  • one of your 3 most recent payslips

  • your UK passport details

  • information held on your credit file (such as loans, credit cards or mortgages)

  • details from your Self Assessment tax return (in the last 3 years)

  • your Northern Ireland driving licence

Apply online

The quickest way to apply for Marriage Allowance is online. You’ll get an email confirming your application within 24 hours.

Other ways to apply for Marriage Allowance

You can apply for Marriage Allowance through your personal account , under ‘services you might need’.

You can also call HM Revenue and Customs (HMRC) to make an application.

You will need to know you and your partner’s National Insurance number.

You can call HMRC on:

Telephone: 0300 200 3300
8am to 8pm, Monday to Friday
8am to 4pm, Saturday. Closed Sundays and bank holidays.
Phone lines are less busy before 10am, Monday to Friday.

Pre Year end tax planning

Here is a pre year end planning checklist which has been put together by our associated Independent Financial Advisors at Continuum.  If you would like any further information on any of the topics mentioned please do get in touch with us or contact Terri Hall at Continuum direct.

Please remember that any additional contributions to personal pension schemes or payments into EIS schemes (or similar) need to be made BEFORE 5/4/22. To make sure that you use your tax allowances for 2021/22 and minimise your tax bills, its important to make sure that you have this planned in advance to allow the providers to get the relevant paperwork in place.

Liric – Tax Year End Planning Checklist

Autumn 2021 – Budget Report

Yesterday the Chancellor Rishi Sunak presented his third Budget and set out plans to “build back better” – whilst there was not a lot of new information, our Budget Report summary recaps  the current tax rules and forthcoming changes.

Budget Newsletter – Autumn 2021

2021 Budget Review

With the UK having been adversely affected by the coronavirus (COVID-19) pandemic, Chancellor Rishi Sunak presented the 2021 Budget against a backdrop of ongoing economic hardship.

Our Budget Summary (see the link at the bottom of the page) provides an overview of the key announcements arising from the Chancellor’s speech. Measures for businesses include the extension of the furlough scheme until September, a £5 billion restart grant fund as England comes out of lockdown and an increase in corporation tax scheduled for 2023. 

Meanwhile drivers will benefit from a freeze in fuel duty and homebuyers will welcome an extension of the stamp duty holiday.

Thankfully there are no immediate changes to VAT threshold, tax rate on dividend income or national insurance rates as had been feared. The increased corporation tax rate to 25% from April 2023 will potentially have an impact on how company profits are most tax-efficiently extracted and we will be looking at this further once more detailed information becomes available.

Additionally, throughout the Summary you will find informative comments to help you assess the effect that the proposed changes may have on you personally, as well as a handy 2021/22 Tax Calendar.  

Don’t forget, we can help to ensure that your accounts are accurate and fully compliant. We can also suggest strategies to minimise your tax liability and maximise your profitability.  

If you would like more detailed, one-to-one advice on any of the issues raised in the Chancellor’s Budget speech, please do get in touch or call on 01763-853633

Please find our budget newsletter below:

Budget newsletter February 2021

Changes to the Coronavirus Job Retention Scheme – written 12 June 2020

This guidance page was updated on 12 June to include details on how the scheme will change from 1 July. The first time you will be able to make claims for days in July will be 1 July, you cannot claim for periods in July before this point. 31 July is the last day that you can submit claims for periods ending on or before 30 June. Read more below:

Changes to the Coronavirus Job Retention Scheme

C19 Business News Update

Today face masks become compulsory on public transport in England and the Government has outlined its recovery strategy.

The Coronavirus job retention scheme rules (CJRS) are changing, and these are outlined below and other Government news.

At the end of the newsletter are details of allowable expenses for home working.

Please contact us if you have any queries. Stay safe! Read more below:

C19 Business News Update

How Different Circumstances Affect The Self Employed Grant Scheme

The Self-Employment Income Support Scheme currently allows you to claim a taxable grant worth 80% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total. Read more below:

How different circumstances affect the Self employed grant scheme

THE CORONAVIRUS JOB RETENTION SCHEME (CJRS) IS CHANGING! – Written 29 May 2020

UK Chancellor Rishi Sunak outlined changes to the furlough scheme during the daily press briefing (29 May 2020).

The Chancellor stated that in June and July the furlough scheme will continue as before, but employers will be asked to cover National Insurance and employer pension contributions in August.

By September, businesses will pay 10% of wages for furloughed staff, and in October 20%, the UK chancellor said.

This means the subsidy will taper off from August, with businesses expected to pay a greater share of their staff salaries, starting with covering National Insurance and pension contributions. From September the government will cover only 70% of salaries, to a cap of £2,190 and from October it will pay 60%, to a cap of £1,875. Employers will make up the shortfall to get salaries back to 80% of pre-Covid lockdown levels.

After that, the scheme will close.

Flexible Furloughing of employees

From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked. When claiming the CJRS grant for furloughed hours employers will need to report and claim for a minimum period of a week.

The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3-week period prior to 30 June.

This means that the final date by which an employer can furlough an employee for the first time will be 10 June, in order for the current 3-week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.

Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.

See: https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention- scheme

At this stage we do not know more details – calculating furlough for workers returning part time will, we suspect, prove to be challenging, especially if there are variable working patterns . We will provide further information and guidance as soon as it is known.

Lisa and the Liric Team

SELF-EMPLOYED GET SECOND GRANT FROM GOVERNMENT – Written 29 May 2020

Chancellor Rishi Sunak has said self-employed workers across the UK will be able to access a second Grant from the government to cover lost income while the country is in lockdown.

The grants paid out by the Self-Employment Income Support Scheme (SEISS) will be worth 70% of a self-employed person’s average monthly trading profits to cover three months’ worth of income. The eligibility criteria are the same for both grants, and individuals will need to confirm that their business has been adversely affected by coronavirus when applying for the second and final grant. An individual does not need to have claimed for the first grant to be eligible for the second. They will be capped at £6,570.

This is the second and final time grants will be offered, the chancellor said.

Applications will open in August 2020. Further information will be available on gov.uk on 12 June 2020.

The scheme so far has been used by 2.6 million people and has paid out £6.8bn in claims to self-employed who have been affected by the impact of coronavirus on the economy.

The Government offered the first grant to the self-employed in March, paying 80% of average monthly trading profits, capped at £7,500. Applications for the first grant will close on 13 July 2020.

No announcement or Grant was made at the Daily press conference regarding Company Directors and those who became self-employed after April 2019.

If you have not yet applied for your first grant and require any assistance – please contact us