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January questions and answers

Q. I want to pay for my employees to be screened regularly for COVID-19. Is this a taxable benefit or is it exempt?

A: When the initial guidance for employers was published back in July 2020, HMRC stated that an employer paying for an employee to be tested would constitute a taxable benefit in kind. This received a lot of criticism and resulted in a U-turn. It has now been announced that from 8 December 2020 to 5 April 2021, employer-funded tests for COVID-19 (but not the test for antibodies, i.e. to check whether the individual has previously had it) will be exempt. HMRC will also not seek to recover tax or national insurance where employers have paid for tests prior to 8 December.

What is not currently clear is whether the payments will need to be reported on form P11D – particularly those made in the period to 7 December 2020. It will be worth checking the published guidance when making the filings later in the year.

Q. I took advantage of the VAT deferral scheme back in June 2020. The payment date is 31 March 2021, but we had to close again on Christmas Eve – meaning we’re going to struggle with cash flow. Is it possible to defer the payment?

A: There has been no further deferral for VAT announced – though things may change between now and the end of March. However, the government did confirm that businesses who used the initial deferral scheme could opt into a payment scheme that would allow them to spread the repayment over up to eleven instalments. You can read more about this here.

Q. I am looking to buy a substantial new property later this year. I have found one that is ideal on the Welsh Borders, but I’ve checked the Land Registry and it turns out that the land included is partly in England and partly in Wales. What does this mean for SDLT purposes?

A: This is what is known as a single cross-border property transaction. Wales and England have different systems of taxing land transactions, though they are similar in their mechanisms. Stamp Duty Land Tax (SDLT) applies in England, and Land Transaction Tax (LTT) in Wales. There are different rates and thresholds.

You will need to apportion the consideration between the English and Welsh parts using a “just and reasonable” method. You will then need to check the apportioned amounts against the SDLT and LTT thresholds. If either or both exceed the respective thresholds you will need to make a return in that jurisdiction. Your solicitor should be able to assist you with this, but you can also contact the Valuation Office Agency for advice on how to apportion the consideration.

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