SELF ASSESSMENT TAX CALCULATION AND SEISS

Maharishi

Hello Good People of the forum, a little help required please;

I have just opened a letter from HMRC that says they have revised my tax return to include more SEISS grants, and therefore I owe them some class 4 on top of my class 2 NI.  It's not much - £70 and change but I thought that I had done the return correctly and just wanted someone to agrre or disagree with it.

My basis period is 18 June to 17 June.  Always has been since I started 40 years ago.  So this recent return was for Jun 19 to Jun 20.
I received the full 5 SEISS grants on the following dates;
19.05.20
24.08.20
07.12.20
29.04.21
05.08.21
so therefore, as the first one falls into that above basis period, I duly included it on the return.  However, our chums at HMRC have added the next two as well, even though they fall into my next return which becomes due after April 5th 2022.  So are they correct here, adding payments that fall into other years (for me), or do I just swallow it and make a note that they are dealt with, especially as the other two remaining grants will appear on that next return?

All help welcome and thanks in advance.

M

Dazed_and_C0nfused

They are correct yes.

https://www.gov.uk/government/news/dont-forget-to-declare-covid-19-grants-on-your-tax-return#:~:text=These grants are taxable and,2020 to 13 July 2020

So you need to remember not to include grants 1, 2 or 3 on your 2021:22 return.

Maharishi

Dazed_and_C0nfused said:

They are correct yes.

https://www.gov.uk/government/news/dont-forget-to-declare-covid-19-grants-on-your-tax-return#:~:text=These grants are taxable and,2020 to 13 July 2020

So you need to remember not to include grants 1, 2 or 3 on your 2021:22 return.

No I won't be double declaring, LOL.  It was odd because when I was completing the form, and duly changed theor SEISS amount, a big red box came up.  Naturally I assumed that, as my basis period for that return effecively ended on June 17 2020, then the other two should be carried over to the pertinent return (for me).  I thought that I was on top of this too.  Seems not.  Just seems odd to include monies that fall outside of the return's date period.

Worse part is that I claimed no WDA on my equipment pool and the 18% would have wiped that liability out.  I am reluctant to go and change the return though and poke the hornets' nest unnecessarily ...

Thank you.

Jeremy535897

Maharishi said:

Dazed_and_C0nfused said:

They are correct yes.

https://www.gov.uk/government/news/dont-forget-to-declare-covid-19-grants-on-your-tax-return#:~:text=These grants are taxable and,2020 to 13 July 2020

So you need to remember not to include grants 1, 2 or 3 on your 2021:22 return.

No I won't be double declaring, LOL.  It was odd because when I was completing the form, and duly changed theor SEISS amount, a big red box came up.  Naturally I assumed that, as my basis period for that return effecively ended on June 17 2020, then the other two should be carried over to the pertinent return (for me).  I thought that I was on top of this too.  Seems not.  Just seems odd to include monies that fall outside of the return's date period.

Worse part is that I claimed no WDA on my equipment pool and the 18% would have wiped that liability out.  I am reluctant to go and change the return though and poke the hornets' nest unnecessarily ...

Thank you.

The legislation specifically states that SEISS grants are taxed in the year of receipt, so your basis periods are irrelevant to that.

If you have your profits unexpectedly increased by HMRC, you are perfectly at liberty to claim capital allowances you didn't claim before (particularly as it should reduce any interest/penalty charge) by amending your return.

Maharishi

Jeremy535897 said:

Maharishi said:

Dazed_and_C0nfused said:

They are correct yes.

https://www.gov.uk/government/news/dont-forget-to-declare-covid-19-grants-on-your-tax-return#:~:text=These grants are taxable and,2020 to 13 July 2020

So you need to remember not to include grants 1, 2 or 3 on your 2021:22 return.

No I won't be double declaring, LOL.  It was odd because when I was completing the form, and duly changed theor SEISS amount, a big red box came up.  Naturally I assumed that, as my basis period for that return effecively ended on June 17 2020, then the other two should be carried over to the pertinent return (for me).  I thought that I was on top of this too.  Seems not.  Just seems odd to include monies that fall outside of the return's date period.

Worse part is that I claimed no WDA on my equipment pool and the 18% would have wiped that liability out.  I am reluctant to go and change the return though and poke the hornets' nest unnecessarily ...

Thank you.

The legislation specifically states that SEISS grants are taxed in the year of receipt, so your basis periods are irrelevant to that.

If you have your profits unexpectedly increased by HMRC, you are perfectly at liberty to claim capital allowances you didn't claim before (particularly as it should reduce any interest/penalty charge) by amending your return.

Thank you for that Jeremy.  Why would I be penalised for a NI short-fall that was from an error not pointed out until today?  Be tough enough to find what they say I owe anyway without further additions.

Jeremy535897

Your interpretation of the law was incorrect, and that means you underdeclared your income, and as a result you will be paying your tax that was due on 31 January 2022 late.

Dazed_and_C0nfused

But if you pay it by the end of February you will only be charged interest and not a late payment penalty.

On £70 that's likely to be less than 20p.

Maharishi

Jeremy535897 said:

Your interpretation of the law was incorrect, and that means you underdeclared your income, and as a result you will be paying your tax that was due on 31 January 2022 late.

I see.  So if I amend and either claim my 18% WDA OR £913 AIA, which would cancel out the class 4 liability, then it just reverts to class 2 only, which, incidentally I paid on Jan 30th ...

So if there was then no liability for any extra, any interest or penalties would disappear I suppose?

Dazed_and_C0nfused

Maharishi said:

Jeremy535897 said:

Your interpretation of the law was incorrect, and that means you underdeclared your income, and as a result you will be paying your tax that was due on 31 January 2022 late.

I see.  So if I amend and either claim my 18% WDA OR £913 AIA, which would cancel out the class 4 liability, then it just reverts to class 2 only, which, incidentally I paid on Jan 30th ...

Although could not claiming leave £70 to pay with the potential to then save 29% tax and Class 4 NI in a future tax year?

Maharishi

Dazed_and_C0nfused said:

Maharishi said:

Jeremy535897 said:

Your interpretation of the law was incorrect, and that means you underdeclared your income, and as a result you will be paying your tax that was due on 31 January 2022 late.

I see.  So if I amend and either claim my 18% WDA OR £913 AIA, which would cancel out the class 4 liability, then it just reverts to class 2 only, which, incidentally I paid on Jan 30th ...

Although could not claiming leave £70 to pay with the potential to then save 29% tax and Class 4 NI in a future tax year?

No, because the next year (for me) was all covid and I earned a total of £778 so not any liabilities there even with grants lV and V.  Total will still be under £4k before expenses.

Oh and this is my last year for NI as pensionable in June 22.

Jeremy535897

Maharishi said:

Jeremy535897 said:

Your interpretation of the law was incorrect, and that means you underdeclared your income, and as a result you will be paying your tax that was due on 31 January 2022 late.

I see.  So if I amend and either claim my 18% WDA OR £913 AIA, which would cancel out the class 4 liability, then it just reverts to class 2 only, which, incidentally I paid on Jan 30th ...

So if there was then no liability for any extra, any interest or penalties would disappear I suppose?

There can't be interest or late payment penalties if you don't owe any tax or NIC.