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Changes to Self Assessment this year

by Madaline Dunn

The Self Assessment deadline is just around the corner, and by 31st January self-employed individuals must file and submit their Self Assessment tax return and pay any tax owed to HMRC.

While there’s still time to submit, it’s always best to complete your tax return as soon as possible, so you don’t risk making any silly mistakes and avoid getting hit with late penalties. Also, this year, there are some changes to Self Assessment to look out for.

At The Salary Calculator, we’ll walk you through:

• How to report Capital Gains Tax
• How to report Covid support measures
• How to access Self-serve Time to Pay
• What to watch out for

Capital Gains Tax reporting

Capital Gains Tax applies to those who have sold or ‘disposed of’ an asset, for example, a house that’s increased in value. From 6 April 2020 to 26 October 2021, this had to be reported and paid for within 30 days of completion. However, there is an update here, and for property disposals made on or after 27 October 2021, the “report and pay” deadline has been extended to 60 days.

If you’re registered for Self Assessment, it’s important to remember that you must report this on your tax return in the capital gains pages. That said, there are exemptions. If your only disposal is of your home and private residence relief applies, you don’t have to report this on the capital gains pages.

Reporting any Covid support measures

HMRC recently issued a warning to self-employed individuals that they must declare any COVID-19 grants they received on their tax return for the year 2020-2021. According to HMRC, over 2.7 million people claimed at least one Self-Employment Income Support Scheme (SEISS) payment up to 5 April 2021, and if you did indeed receive SEISS, this must be recorded.

Likewise, other Covid support measures that must be included in one’s Self Assessment are:

• The Coronavirus Job Retention Scheme (otherwise known as the furlough scheme)
• Self-isolation payments
• Local authority grants
• Eat Out to Help Out scheme

That said, it’s also important to note that if you received a £500 one-off payment as a working household receiving Tax Credits, this does not need to be reported in your Self Assessment.

Self-serve Time to Pay

For many, the last couple of years has been a struggle financially. In 2020, according to a study by LSE, over a third (34%) of self-employed workers struggled to pay for basic expenses such as rent and mortgage payments. So, if you’re feeling the pinch this year, you’re not alone. That said, for those feeling anxious and overwhelmed at their tax bill this year, there is help out there if you’re worried you can’t pay your tax bill in full. You can now spread your tax bill over a period of time online via HMRC’s self serve Time to Pay system.

The Time to Pay system is available to eligible to Self Assessment taxpayers who:

• Don’t have other outstanding tax returns or any other tax debts
• Have debts between £32 and £30,000
• The plan made must be set up no later than 60 days after the tax payment’s due date (30 March 2021)

When setting up your payment plan online, you’ll need to be equipped with:

• Your unique Tax Reference number
• Your VAT registration number, if applicable
• Your Bank account details
• Details relating to any previous payments you’ve missed

When arranging your payment plan, HMRC will ask you some questions about your financial circumstances to gauge what will be affordable for you. Questions may include how much you’re earning, what an affordable payment scheme would look like for you, what your outgoings are, whether you have any savings or investments.

What to watch out for

HMRC has issued a warning around ​​copycat websites and phishing scams ahead of the Self Assessment deadline. As the deadline approaches, scammers are more likely to target taxpayers who are in a rush to submit their tax returns and have their guard down. According to HMRC, 800,000 tax-related scams have been reported in the last 12 months alone.

Myrtle Lloyd, HMRC’s Director General for Customer Services, has subsequently published advice on what to look out for if you think you might be being approached by a potential fraudster. Lloyd says to be wary of anyone who contacts you claiming to be from HMRC and rushes you. Likewise, anyone “threatening arrest” will not be calling from HMRC. Lloyd outlined: “If you are in any doubt whether the email, phone call or text is genuine, you can check the ‘HMRC scams’ advice on GOV.UK and find out how to report them to us.”

Tags: coronavirus, Employed and Self Employed, Self Assessment, self employed, The Salary Calculator

All you need to know about UTR numbers

by Madaline Dunn

[Sponsored Post]

Self Assessment: It’s coming around to that time of year again. While some may have already completed and sent off their annual tax return, there are also many who have not! In 2020, 700,000 taxpayers waited until the last day to file their return, and a staggering 26,562 taxpayers left it to the last hour.

So, if you haven’t filed your tax return yet, and perhaps are doing so for the first time, you may have a few questions, including; what on earth is a UTR number?

Don’t worry; there’s still plenty of time to file your tax return before 31st January and make sure you’re not faced with late payment fines. At The Salary Calculator, in this article, we’ll get you to speed and explain:

• What a UTR number is
• When you need a UTR number
• How to register for a UTR number if you don’t have one
• What will happen after registering for a UTR number
• Where you can find your UTR number

What is a UTR number?

UTR stands for Unique Taxpayer Reference, and this is a 10-digit number that is unique for each person or business. Just as with a National Insurance (NI) number, once you have one, you have it for life. So, even if you’ve been out of business for a while, you’ll never lose your UTR number, your number will just become dormant.

A UTR number is issued by HMRC and sometimes includes the letter K at the end of it.

When do you need to provide a UTR number?

A UTR number is required if you:

• Need to create an online account with HMRC
• Are self-employed or have a limited company
• Owe tax on savings, capital gains, and dividends
• Must register individual taxes
• Work within the Construction Industry Scheme (CIS)

How do you register for a UTR number?

If you don’t already have a UTR number and need one, the most simple and fastest way to get one is to apply online on HMRC’s website.

Of course, not everyone’s preferred method involves a computer or laptop, so rest assured, you can also apply to get your UTR number via letter too. That said, this way is, unfortunately, much slower and will involve postage fees as well.

When it comes to registering for a UTR number, this must be done within the first three months of opening your business, regardless of your occupation.

In order to register, you must also submit a few different pieces of information. This information includes:

• Your name, DOB and address
• Your contact information (preferred number and email address)
• Your NI number
• When you commenced self-employment
• The type of business you have
• Basic business information (address, number, name)

What happens after registering for a UTR number?

Once you’ve applied for your UTR number, there are a few things to bear in mind. First of all, it can take up to ten days for your UTR number to arrive, sometimes longer.

In addition to this, once you’ve heard back from HMRC and received your activation code, don’t wait around too long before using it, as it expires at 28 days.

Where can you find your UTR number?

Your UTR number can be found in a number of places, including:

• Statements of accounts
• Your Self Assessment Tax Return
• HMRC payment reminders
• HMRC Self Assessment notices

If you think you’ve either misplaced or lost your UTR number, don’t panic. Contacting HMRC is your best bet. When reaching out to HMRC, you should have your NI number to hand, as you will be asked for it when you call.

HMRC can be contacted via:

• 0300 200 3310 (UK)
• +44 161 931 9070 (Outside UK)
• 0300 200 3319 (Textphone)

Final thoughts

Navigating the world of tax returns can be anxiety-inducing for some; that said, there are several sites out there that can lend a helping hand. HMRC are always available if you need guidance on your tax return and can answer any burning questions.

Go Simple Tax also helps to make things simple and straightforward. The software provides guidance, as well as hints and tips on how to save money.

Tags: Economy, Employed and Self Employed, Self Assessment, self employed, The Salary Calculator, UTR number

A guide to ‘Buy Now, Pay Later,’ deals, the dangers and safeguards

by Madaline Dunn

In recent years, ‘Buy Now, Pay Later’ deals (BNPL) have become increasingly popular and were particularly boosted by the pandemic, which created a significant increase in online shopping. Data from the FCA recently revealed that in 2020, the use of BNPL nearly quadrupled and is now at £2.7bn.

These deals offer buyers the option to pay for their purchase over a period of time, rather than all at once, and have been dubbed by some as “the future of millennial finance.” However, while this once niche form of credit has benefits, it’s not without its dangers. More and more people are raising concerns that it encourages unsustainable spending, leaving many with debts they can’t pay off. 

At The Salary Calculator, we’ll help you understand:

• The ins and outs of BNPL
• Why BNPL deals can be dangerous
• The safeguards out there to protect you from harm 

What is ‘Buy Now, Pay Later’?

Buy Now Pay Later (BNPL) agreements allow buyers to purchase items on credit and pay for them later down the line, typically through interest-free instalments. For many, this seems like a relatively hassle-free payment method and has been primarily adopted by the under 30’s demographic.

There are a few different types of BNPL deals, the first works on the basis of a buyer splitting their payments into segments, typically with an upfront payment. Following the first payment, the buyer agrees for the provider to take the rest of the money over an agreed period of time. 

Another example of a BNPL deal works by the buyer delaying their payment for purchase for a set number of days, usually between 14-30 days.

The final form of BNPL involves arranging a formal payment plan at the point of purchase, and the buyer may have to pay interest and may have their means-tested.

Some examples of BNPL providers include Clearpay, Laybuy and Klarn, the biggest provider.

Speaking about the draw of BNPL to The Guardian, one BNPL investor said: “It increases the basket size, and it also reduces dropped baskets.”

Why are BNPL deals dangerous? 

Of course, as with anything, there are drawbacks to BNPL deals, and they have the potential to put consumers at significant risk.

Speaking about the dangers associated with BNPL deals, Sue Anderson from StepChange, a debt charity, said: “Buy now, pay later services don’t give individuals enough time or protection to stop, pause and understand the consequences of their purchase. Sometimes this even means people end up using BNPL at the online checkout without actually realising they have signed up.”

She added: “Second, affordability checks are only used by some BNPL lenders, and protections against taking out multiple BNPL loans are lacking. Finally, due to a lack of regulation, it’s not clear whether these services are treating customers fairly and in a way that is consistent with other credit products.”

Meanwhile, Citizens Advice likened BNPL deals to “quicksand” in that they’re “easy to slip into” but “very difficult to get out of”.

Of course, BNPL deals don’t take into consideration circumstance changes either.

This year, in response to these concerns, the government announced this area would be regulated by the Financial Conduct Authority (FCA) due to the risk posed to consumers. Now a consultation is underway to assess how to navigate the regulation issue.

What safeguards are out there to protect buyers from harm?

For a long time, personal finance experts have called for regulation around BNPL deals, and now it appears the government is finally taking heed with their consultation.

Going forward, the government is proposing that BNPL users should have the ability to take complaints to the independent Financial Ombudsman Service. On top of this, the government has also proposed that advertising and promotions relating to BNPL should be regulated by, for example, the Advertising Standards Authority or the Committees of Advertising Practice.

Moreover, the government says that statutory protection should be outlined under Section 75 of the Consumer Credit Act. Further protections have been suggested in the form of compulsory credit checks so that those who wish to take on BNPL products can afford to do so. 

The consultation ends at the beginning of next year, so it’s unlikely we’ll see any immediate changes. That said, in the meantime, when encountering BNPL products, it’s important to ask yourself the following questions:

• Can I afford the repayments?
• Are there better options out there regarding borrowing?
• Am I interested in buying this item because of the BNPL offer?

Tags: Loans, Money, savings, The Salary Calculator

UK expenses: From grocery shopping and travel to days out

by Madaline Dunn

When it comes to day-to-day expenses, prices can vary widely depending on where you’re located in the UK. The North-South price divide is indeed true, too, and the further you go up North, typically, the cheaper things get.

At The Salary Calculator, we’ll walk you through the sort of prices you can expect to pay across the country at supermarkets, restaurants and pubs and where you can go for a cheap day out. We’ll cover:

• A comparison of UK supermarket prices
• Dining out across the UK
• Price differences for activities
• Travel costs contrasts

The UK Supermarket comparison

Across the UK, the price of your groceries will change depending on which supermarket you decide to shop at. There’s a pretty wide range to choose from, too.

Nimblefins analysis of ONS data also reveals that, on average, a UK household spends £3,312 on groceries a year, but where can you find the cheapest trolley?

Which? found Lidl is the cheapest supermarket in the UK. For 23 essential items, a Lidl shopping trolley comes in at £24.11, while not far behind, an Aldi trolley comes in at £24.54. The location with the most Lidls is London, which has a whopping 72 supermarkets. Elsewhere, Sheffield, London, Cardiff and Liverpool are the cities with the most Aldi stores.

Meanwhile, Asda sits at third place, with a trolley of 23 essential items costing £25.22. Fourth is Morrisons, where 23 essential items cost £27.14.

That said, a new supermarket chain, Mere, is set to launch in the UK, and founders claim that it could be up to 30% cheaper than competitors Lidl and Aldi.

Contrastingly, the most expensive supermarket in the UK is Waitrose, where a trolley with 23 items is priced at £32.20, over £8 more expensive than Lidl. Ocado, the online supermarket, is the second most costly at £30.33.

London is also home to the most Waitrose stores in the UK, with a total of 54 stores.

Dining out and drinks across the UK

In the UK, the average household spends £1,716 on restaurants and takeaways each year. That said, UK inflation recently saw its biggest increase on record in August 2021, meaning food and drink are getting even pricier. So, where can you find the cheapest places to eat out and buy drinks?

Sheffield is the most affordable city to buy a pint, according to research from Numbeo, costing £3.36. Liverpool and Leicester offer similar prices, with a pint costing £3.47 and £3.66 respectively.

Unsurprisingly, some of the most expensive pints can be found in London, where a pint will see you part with nearly £6 (£5.60). Meanwhile, Bristol pints cost £4.76 on average, and you’ll pay around £4.72 a pint in Norwich.

If you’re looking for a cheap bite to eat, on average, the most affordable place to buy a 12’’ Margherita pizza is Belfast, costing just £5.99. London, again, is the most expensive place comparatively, costing £10.99.

Meanwhile, for those looking to taste the finer things in life on a budget, the Michelin Cornerstone in Hackney, London, will set you back just £21.50 pp, and outside of London, the Coach in Marlow, Buckinghamshire, which cost you £23 pp.

Dundee offers the cheapest night out for those hitting the town, costing around just £25.35 on average. Cardiff and Swansea are also cheap options at just £27.33 and £27.35 per night, respectively. London and Oxford are much more expensive, ​​at £49.66 and £42.30 on average a night.

The cost of activities

It may be confusing to understand why there’s such a difference in price for activities like going to the cinema or joining a gym depending on where you live, but typically these price differences are due to rent and running costs varying regionally.

If you’re a fitness enthusiast trying to review where the cheapest places to workout are, up north in Newcastle, you can find a gym membership for just £16. This jumps up considerably the further you move down south.

Cinema prices vary widely, too. In Bradford, an adult ticket costs just £6.74, but this doubles if you move further south. In Wandsworth, for example, an adult ticket soars to £13.74.

Travel expenses

Travelling across the UK can be pretty expensive, especially if you choose to travel by train. These days, choosing the train costs 50% more than flying by plane!

According to Nimblefins, on average, a UK household spends around £1,100 a year (£94 a month) on public transport.

Here, London again tops the list of the most expensive places regarding public transport. Deutsche Bank’s 2019 survey found that transportation costs £150 a month for a travel card for zones 1-3. However, London prices are lower for buses, and a single hopper ticket will cost just £1.55. Elsewhere in the UK, a single ticket for a 20-minute journey from Middleton to Manchester city centre will set you back £4.50.

Tags: 2021, Economy, savings, The Salary Calculator, Travel

Stamp duty in the UK

by Madaline Dunn

Stamp duty has hit the headlines recently, following the end of Chancellor Rishi Sunak’s end-of-June stamp duty holiday deadline. Reports have highlighted that transactions have slumped after a surge of homebuyers taking advantage of the government’s housing market policies.

So what exactly is stamp duty, and what does the end of the stamp duty holiday mean for homebuyers and the housing market?

At The Salary Calculator, we’ll walk you through:

• What stamp duty is
• When stamp duty applies
• How much stamp duty costs
• When you must pay stamp duty
• What the stamp duty holiday was
• What the end of the stamp duty holiday means for the housing market

What is stamp duty?

Stamp duty, or Stamp Duty Land Tax (SDLT), refers to the tax you must pay to HM Revenue & Customs when purchasing a residential property or piece of land in England or Northern Ireland.

When does stamp duty apply?

Standard stamp duty applies to those purchasing a property valued at £125,000; that said, this does not apply to first time buyers unless their property is valued at over £300,000. Those who are purchasing a second property are also required to pay stamp duty, although the amount you pay here can be claimed back if you sell your first property within three years.

Exemptions apply where a portion of one’s home is transferred to a spouse or partner after a separation or divorce, or an individual inherited a property in a will.

How much is stamp duty?

The amount of stamp duty one pays is dependent on a property’s purchase price and is tiered in the same way as income tax. This is as follows for the period between 1 July 2021 – 30 September 2021:

For England and Northern Ireland:

• The stamp duty rate for a main residence property valued at between £180,001 – £250,000 is 0%. For those with additional properties, a 3% surcharge is applied to the entire purchase price of the property
• The stamp duty rate for a main residence property valued at between  £250,001 – £925,000 is 5% and rises to 8% for additional properties
• The stamp duty rate for a main residence property valued at between £925,001 – £1,500,000 is 10% and rises to 13% for additional properties
•  The stamp duty rate for a main residence property valued at over £1,500,001 is 12% rising to 15% for additional properties

For Wales from 1 July:

• The stamp duty rate for a main residence property valued at between £180,001 – £250,000 is 3.5% and rises to 7.5% for additional properties
• The stamp duty rate for a main residence property valued at between £250,001 – £400,000 is 5% and rises to 9% for additional properties
• The stamp duty rate for a main residence property valued at between £400,001 – £750,000 is 7.5% and rises to 11.5% for additional properties
• The stamp duty rate for a main residence property valued at between £750,001 – £1,500,000 is 10% and rises to 14% for additional properties
• The stamp duty rate for a main residence property above £1,500,000 is 12% and rises to 16% for additional properties

For Scotland from 1 April:

• Land and buildings transaction tax rate for a main residence property valued at up to £145,000 is 0% and rises to 4% for additional properties
• Land and buildings transaction tax rate for a main residence property valued at between £145,001 – £250,000 is 2% and rises to 6% for additional properties
• Land and buildings transaction tax rate for a main residence property valued at between £250,001 – £325,000 is 5% and rises to 9% for additional properties
• Land and buildings transaction tax rate for a main residence property valued at between £325,001 – £750,000 is 10% and rises to 14% for additional properties
• Land and buildings transaction tax rate for a main residence property valued at over £750,001 is 12% and rises to 16% for additional properties

When must you pay stamp duty?

When buying a property in the UK, it’s a legal requirement to pay your stamp duty within 14 days of the date of completion/date of entry. After this timeframe, interest may be applied, and you may be hit with a fine. This follows legislative changes introduced in 2019.

What was the stamp duty holiday?

The stamp duty holiday was introduced back in July 2020. This tax cut was introduced to stimulate the property market amidst the Covid-19 pandemic and make it more accessible to homebuyers. It resulted in savings of up to £15,000 for around 1.3 million homebuyers.

Although the stamp duty holiday was set to expire in March, it was extended until June 2021. Temporary stamp duty rates are now higher than before and apply between July to September. Standard stamp duty rates will apply from 1 October 2021 onwards.

Standard rates for England and Northern Ireland are as follows:

• The stamp duty rate for a main residence property valued at up to £125,000 is 0% and 3% for additional properties
• The stamp duty rate for a main residence property valued at between £125,0001 – £250,000 is 2% and rises to 5% for additional properties
• The stamp duty rate for a main residence property valued at between £250,001 – £925,000 is 5% and rises to 8% for additional properties
• The stamp duty rate for main residence property valued at between £925,001 – £1,500,000 is 10% and rises to 13% or additional properties
• The stamp duty rate for main residence property valued at £1,500,001 and over is 12% and rise to 15% for additional properties

What does the end of the stamp duty holiday mean for the housing market?

The end of the stamp duty has been predicted to have some negative effects, such as:

• Buyers pulling out of deals
• A decline in buyer interest, and;
• A drop in house prices

That said, the future is uncertain, and industry experts’ forecasts are varied. Recently, Nationwide recorded a “surprising” 2.1% rise in sold prices, which Robert Gardner, Nationwide’s chief economist, has attributed to a demand for properties between £125,000 and £250,000.

Meanwhile, Gabriella Dickens, a senior UK economist at Pantheon Macroeconomics, commented: “We think that house prices will pick up again in 2022, finishing the year about 4% higher than at the end of 2021.”

Tags: coronavirus, Economy, house prices, houses, income tax, recovery, SDLT, stamp duty, The Salary Calculator