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                 Class 2 National Insurance
If you are self-employed or in a partnership, you may be liable to pay Class 2 National Insurance. This is currently £3.05 per week and collected via Self-Assessment. There is an exemption if your profits for the tax year are below £6,475 (2020/21) which could apply to more people this year if their businesses have been affected by Coronavirus. However, by paying Class 2 National Insurance, you will get a credit towards your state pension.
The new state pension is currently £9,110 per year. To qualify in full, you need
35 qualifying years but need a
minimum of 10 qualifying years to receive any state pension. An
additional qualifying year could increase your pension by £260 per year at retirement, based on the current rates. Therefore, paying Class 2 National Insurance of £158.60 could be a good investment.
You can check your current state pension entitlement through the HMRC website.
Use of home as an office
Another key feature of the lockdown is to see many people working from home. It is quite likely that some industries will see a longer-term change in working practices as people become accustomed to – even enjoy – the flexibility of working from home. Likewise, businesses that have been forced to embrace remote working technology may take forward the positive benefits into a permanent change of culture.
If you are self-employed or in a partnership you may be able to claim an allowance against your income to reflect the costs of using your home as an office.
You can choose to calculate the
deduction as an actual expense claiming a relevant proportion of your house running costs.
Alternatively, HMRC offer a flat rate allowance which can be claimed. This is £10 per month if you work from home for 25 to 50 hours a month, £18 for 51 hours and £26 for 101 hours or more. This flat rate deduction does not include telephone or internet costs which can be claimed separately.
If your employer has requested that you work from home, rather than you
Principal Private Residence Relief
Principal Private Residence Relief (PPR) is a relief that, in most circumstances, means that you do not have to pay Capital Gains Tax when you sell your home.
The reason to be aware of this in light of the other topics raised is that if you have, for example, a room in your house which you solely use for business, this room will not qualify for PPR. This is because it is not being used as a residence. As such, on disposal of the property, Capital Gains Tax could be due.
Alternatively, you may have a spare bedroom which is set up as an office but used for family when they come and visit. This room has a mixed use and is therefore not solely used in the business. As such, it should be covered by PPR.
The financial effect of Coronavirus will be wider than the issues we have raised and will vary for each family.
There has been a significant effect on many aspects of people’s lives. From a financial perspective this includes people’s income and assets and could change how a business runs moving forward. We have seen an impact on investments and clients have been keen to ensure that they have their affairs in order, for example, reviewing their wills and powers of attorney.
At Churchgates we have a large tax team, along with accountants, investment advisers and solicitors, who would be happy to offer you a free initial meeting to discuss any of the issues raised above, or any other matter which you need help with.
n Take a look at our website www.churchgates.co.uk or contact Robin Jackson or Matthew Boardman on 01284 701271, or email info@churchgates.co.uk if you would like to find out more.
 choosing to do so voluntarily, you can claim tax relief on some of your relevant household bills. The relief covers expenses such as business telephone calls or heating and lighting costs for the room in which you are working. Expenses that are for both private and business use (such as broadband) cannot be claimed.
Since 6 April 2020, the amount your employer can pay you to cover your additional costs as a result of working from home has increased to £6 per week (£26 a month if you are paid monthly). You will not need to keep any specific records if you receive this fixed amount.
Alternatively, you can claim tax relief from HMRC. You can claim more than the quoted amount, but you will need to provide evidence.
                                             Whatever stage in life, good advice is invaluable. We’d like to hear from you - contact Robin Jackson, left, or Matthew Boardman, right
18 Langton Place, Bury St Edmunds, Suffolk, IP33 1NE
T: 01284 701271 W: churchgates.co.uk E: info@churchgates.co.uk
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