COVID-19 Update – 18 May – Small changes across the tax system

The government continues to announce small changes across the tax system in response to difficulties encountered as a result of Covid-19.

Temporary exemption from BiK rules for home computers

A temporary exemption from tax and National Insurance (NIC) has been announced in respect of an employer reimbursing employees’ personal expenditure on home office equipment which resulted from arrangements to work from home during the coronavirus outbreak. The rules will have effect from 16 March 2020 until the end of the tax year 2020/21.

Lifetime Individual Savings Accounts
The rules on Lifetime Individual Savings Accounts have been amended to reduce the charge for unauthorised withdrawals in the period from 6 March 2020 to 5 April 2021 from 25% to 20% with effect from 4 June 2020.

Deferral of self-assessment tax liabilities

Deferral of your 31 July 2020 2nd payment on account will not attract interest or penalties if you make the payment by the rescheduled due date of 31 January 2021.

Inheritance Tax Account (IHT100) Form

In order to cut down on personal contact IHT100 forms no longer need to be signed, regardless whether you use a professional agent or not.

Anyone submitting a return needs to ensure:

• the names and personal details of all trustees are visible on the declaration page
• the account has been seen by all the trustees and they all agree to be bound by the declaration

If submitting without an agent include the following declaration:

‘As trustee acting in this matter, I confirm that all the people whose names appear on the declaration page of this Inheritance Tax Account are the trustees and have both seen the Inheritance Tax Account and agreed to be bound by the declaration on page 8 of the IHT100’

If you are a professional agent, your declaration should read:

‘As the agent acting on their behalf, I confirm that all the people whose names appear on the declaration page of this Inheritance Tax Account have seen the Inheritance Tax Account and agreed to be bound by the declaration on page 8 of the IHT100’

VAT – Opting to tax land and buildings
The time limit to notify an option to tax land and buildings has been temporarily extended from 30 days to 90 days. This change applies to decisions made between 15 February and 31 May 2020. New guidance on [8216]Changes to notifying an option to tax land and buildings during coronavirus (COVID-19)[8217] has been published to provide more information.

VAT – deferral of liability

The automatic VAT payment deferrals resulting from Coronavirus will not attract any interest or penalties if paid before the rescheduled due date of 31 March 2021.

Newly incorporated businesses and the SEISS

This scheme is now open for applications and the self-employed are encouraged to check their eligibility online. However, if you have recently incorporated your business into a limited company, you are unlikely to be eligible for the Self Employed Income Support Scheme (SEISS) grant, even when HMRC’s eligibility checker indicates that you are eligible. This is because the checker uses information from tax returns for 2018/19 or earlier.  However, in order to claim the grant, claimants are required to declare that they were self-employed in 2019/20, intend to continue into 2020/21 and are carrying on a trade which has been affected adversely by coronavirus (COVID-19). If claims are audited later, an incorrect claim could lead to penalties, as well as having to repay the grant.

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