Author: Glenn

If you have tenants in your home there can be Capital Gains Tax (CGT) consequences. Generally, there is no Capital Gains Tax (CGT) on a property used as the main family residence, thanks to a relief known as Private Residence Relief (PRR).

However, where part of the home has been let out the entitlement to relief may be affected. Homeowners that let out part of their house may not benefit from the full PRR but can benefit from letting relief. Letting relief is only available to homeowners who live in their property and rent out a portion of it.

The maximum amount of letting relief due is the lesser of:

• £40,000
• the amount of PRR due
• the same amount as the chargeable gain they made while letting out part of their home

Worked example:

• You rent out a large bedroom to a tenant that comprises 10% of your home.
• You sell the property, making a gain of £75,000.
• You're entitled to PRR of £67,500 on the part used as your home (90% of the total £75,000 gain).
• The remaining gain on the part of your home that's been let is £7,500.

The maximum letting relief due is £7,500 as this is the lower of:

• £40,000
• £67,500 (the PRR due)
• £7,500 (the gain on the part of the property that's been let)

There's no Capital Gains Tax to pay – the gain of £75,000 is covered by the £67,500 PRR and the £7,500 letting relief.

You are not considered to be letting out your home if you have a lodger who shares living space with you or your children or parents live with you and pay you rent or housekeeping.

The VAT Annual Accounting Scheme is available to most businesses with an annual turnover of up to £1.35 million. Key benefits of the scheme include the obligation to file just one VAT return per year, which can greatly reduce administrative time and costs compared to preparing and submitting quarterly VAT returns.

Designed for small businesses, the scheme can be used alongside the VAT Flat Rate Scheme or with standard VAT accounting. It also allows for regular interim payments throughout the year, which can assist businesses in managing their cash flow.

In order to qualify to join the scheme, the business must be up to date with VAT payments, solvent and new to the scheme. In addition, the business cannot be a division of a company or a part of a group of companies.

Under the scheme, businesses make interim VAT payments based on their last years VAT figures or on an estimated total annual liability for newly VAT registered businesses. These interim payments are followed by a final balancing payment submitted with the annual VAT return, which can be prepared at the same time as the annual accounts.

The final payment for the annual return is due within two months after the end of the 12-month VAT accounting period.

Businesses that are in the scheme can continue using it until their taxable supplies exceed £1.6m or they no longer meet the eligibility criteria.

The Bank of England’s Monetary Policy Committee (MPC) met on 1 August and in a very close 5-4 vote decided to reduce interest rates by 25 basis points to 5%. The 4 remaining members voted to keep the rate at 5.25%.

This was the first interest rate cut announced by the Bank of England since March 2020 and sees the interest rate fall from a 16 year high. The rolling twelve-month CPI inflation was at the MPC’s 2% target in both May and June, and this helped prompt the decision to reduce rates.

Whilst the figures demonstrated that inflationary pressure has eased there remains fears of higher inflation returning. The Governor of the Bank of England, Andrew Bailey was also keen to dampen expectations and point out that there is unlikely to be a succession of interest rate cuts in the near-term.

Delivering opening remarks at a press conference following the announcement, Bailey commented:

‘We need to make sure that inflation stays low. We need to put the period of high inflation firmly behind us. And we need to be careful not to cut rates too much or too quickly – all the while monitoring the evidence on how inflationary pressures are evolving.

The best and most sustainable contribution monetary policy can make to growth and prosperity is to ensure low and stable inflation – and an economy where people can plan for the future with confidence and in which money holds its value.

We have truly come a long way in returning inflation to target.’

1 September 2024 – Due date for corporation tax due for the year ended 30 November 2022.

19 September 2024 – PAYE and NIC deductions due for month ended 5 September 2024. (If you pay your tax electronically the due date is 22 September 2024)

19 September 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2024.

19 September 2024 – CIS tax deducted for the month ended 5 September 2024 is payable by today.

1 October 2024 – Due date for Corporation Tax due for the year ended 31 December 2023.

19 October 2024 – PAYE and NIC deductions due for month ended 5 October 2024. (If you pay your tax electronically the due date is 22 October 2024.)

19 October 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2024.

19 October 2024 – CIS tax deducted for the month ended 5 October 2024 is payable by today.

31 October 2024 – Latest date you can file a paper version of your 2023-24 self-assessment tax return.