The IRS issued its annual inflation adjustment for health savings accounts for 2021, at a time when many taxpayers are worried about their health in the midst of the coronavirus pandemic.

In Revenue Procedure 2020-32, the IRS stated that for calendar year 2021, the annual limitation on deductions for an individual with self-only coverage under a high deductible health plan is $3,600 (increase from $3,550 the previous year). For 2021, the annual limitation on deductions for an individual with family coverage under a high deductible health plan is $7,200 (increase from $7,100 the previous year).

A “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage, and the annual out-of-pocket expenses do not exceed $7,000 for self-only coverage or $14,000 for family coverage.

The IRS announced in March that high-deductible health plans can now cover the cost of COVID-19 testing and treatment before the plan deductible is met.

As part of the CARES Act signed into law at the end of March, Congress is also now allowing people to use the HSA to pay for over-the counter drugs and medicine, such as pain relievers, without a doctor’s prescription. This essentially reverses a provision of the Affordable Care Act that required a prescription for such purchases. The CARES Act also allows the use of HSA’s for remote care services until 31st December 2021.

This summer for the first time, taxpayers will be able to electronically file their Form 1040-X, “Amended U.S. Individual Income Tax Return.” Making the 1040-X an electronically filed form has been a goal of the IRS for a number of years, adding that it’s also been an ongoing request from the tax professional community and a continuing recommendation from the Internal Revenue Service Advisory Council and the Electronic Tax Administration Advisory Committee.

About 3 million Forms 1040-X are filed each year. Currently, taxpayers must mail a completed 1040-X to the IRS for processing. For now, only tax year 2019 Forms 1040 and 1040-SR returns will be able to be amended electronically. In general, taxpayers will still have the option to submit a paper version of the Form 1040-X.

The US treasury department has now released proposed regulations in relation to changes to Like-Kind exchanges.

In Summary TCJA amended Section 1031 to limit its application to exchanges of real property. Deferral under section 1031, however, is not allowed for an exchange of real property held primarily for sale.

The proposed regulations add a definition for real property and address the receipt of personal property that is incidental to the real property exchange.

In the past the like-exchange rules applied to artwork and other collectibles for example.

It’s now been a few week since the IRS first started making Coronavirus stimulus payments, and for most taxpayers with an AGI up to $75,000 for single filers, $112,500 for Head of Household filers and $150,000 for married filing jointly filers, this payment is automatic, either by bank transfer if your bank details were on your prior year tax return or by cheque sent to the address the IRS holds for you. This payment ($1,200 per taxpayer and $500 per dependent) is not considered as taxable income. Taxpayers can usually track their payment directly on the IRS website at

https://www.irs.gov/coronavirus/get-my-payment

There are exceptions for some eligible taxpayers and their dependents where the payment is not being sent. An example is if the spouse has an ITIN instead of an SSN, the system does not allow automatic payments. In cases such as this one, there will be a new entry on the 2020 US return form for the stimulus payment, and taxpayers can claim their payment that way.

There is currently a proposed second stimulus payment package on which the Senate may start work on shortly. Debates are still ongoing within the US Government; therefore further details are to follow.

Recently we have seen an increase in the number of taxpayers being contacted by HMRC using the information they have received regarding taxpayer’s investment in Offshore Investment Funds.

It is important to understand the correct tax treatment of any income and gains arising from Offshore Investment Funds as these can be quite complex. If you think that you may have an investment in an Offshore Investment Fund, HMRC offers guidance on Offshore Funds to help you decide the status of your Offshore Investment Fund.

Some funds have applied to HMRC to be treated as ‘Approved offshore reporting funds’. To check if your investment is a Reporting Fund, you can visit www.gov.uk and search for ‘Approved Offshore Reporting Fund’. These Funds are treated differently compared to funds that do not have this status. The status of a fund will affect the tax treatment of any income and gains from these investments and the correct amount to be reported on your self-assessment Tax Return

Reporting Funds – UK Income Tax is due on all distributions made from a fund to an investor, or distributions they are deemed to have received such as Excess Reportable Income. Any disposal of an investment in a Reporting Fund will be treated as a Capital Gain Tax transaction.

Non-Reporting Funds – UK income Tax is only due on distributions made from a fund to an investor. Any gain arising from the disposal of an investment in a Non-Reporting Fund is treated as an income and taxed as Offshore Income Gain.

It is important to check that you have reported the correct interest, dividend and gains arising from Offshore Investment Funds on your previous year’s Tax Return. If you need to amend any Tax Return more than 12 months past the filing deadline, we can assist you with using the Digital Disclosure Service to HMRC in bringing your tax affairs up to date.

In England and Northern Ireland, you are subject to an additional amount of SDLT of 3% of the purchase price when you purchase a second home. Where you are simply replacing your main home but there is a delay in selling the original home, providing you sell the original home within 3 years, you can claim a refund of the additional 3% SDLT paid.

HMRC have recently updated their guidance to extend the 3-year time limit for selling the original home where the sale could not take place in time due to exceptional circumstances. This is to assist those who have been unable to sell their original homes within the time limit due to Covid-19 lockdown restrictions. In order to still qualify for the refund outside the 3 year time limit the original home must be sold as soon as reasonably possible and a refund claim must be made which should include an explanation as to why the original home could not be sold within the 3 years. Decisions will be made by HMRC on a case-by-case basis.

In Scotland, the time limit to sell the original home of 18 months has been extended to 3 years where the replacement home was purchased between 24th September 2018 and 24th March 2020.

HMRC have announced changes to the 2019/2020 UK Tax Deadline amid the Coronavirus (COVID-19) crisis. HMRC have introduced a relief whereby individuals can defer income tax payments. Self-Assessment payments on account due on 31 July 2020 can now be deferred until 31 January 2021. This is automatic and does not require any applications. Additionally, no penalties or interest for late payment will be charged in the deferral period. However, HMRC are encouraging those taxpayers who are able to make the payment outside of the deferral period to do so. HMRC are committing 2,000 experienced call handlers to support taxpayers. This includes a dedicated COVID-19 helpline to help those in need. The helpline number is +44 (0) 800 024 1222. Opening hours are Monday to Friday 8am to 8pm, and Saturday 8am to 4pm. Please do not hesitate to contact us if you feel the need to defer the payment on account or if you have any questions with regards to COVID-19 support.

Non-residents have restrictions on the number of days (in fact midnights) that they may enter the UK based on their personal circumstances. COVID-19 may have seen unplanned returns to the UK or individuals not able to leave the UK, thus leading to an increase an individual’s UK day count. The Statutory resident test does have a relief where days spent in the UK for exceptional circumstances (up to the maximum of 60 days per tax year), are not counted. Following the outbreak of COVID-19, HMRC have recently updated their guidance manual to confirm that the following circumstances will be regarded as ‘exceptional circumstances’ for days spent in the UK;

1. you are quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus,
2. where official Government advice is not to travel from the UK as a result of the virus,
3. you are unable to leave the UK as a result of the closure of international borders, or
4. you are asked by your employer to return to the UK temporarily as a result of the virus

There will be many individuals who returned to the UK, not at the clear request of their employer, knowing the limitations that COVID-19 would put on them leaving the UK. The original guidance provided by HMRC in respect of exceptional circumstances was always to assist those who were unable to leave the UK, not those that chose to return, and it would appear that HMRC have not altered their stance on this.

In light of the current global situation due COVID-19, both the Treasury Department and IRS have announced an extension to the April 15th deadline for Federal Income tax filing, and payment of taxes due.

This new change allows for both the filing of a Federal Tax Return and payment of any taxes owed to be deferred from the standard filing deadline of April 15th, to July 15th. This change also provides relief from any interest and/or penalties, that the IRS would otherwise have assessed.

The extension applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers, as well as those who pay self-employment tax.

In order to qualify for this automatic federal tax filing and payment relief, there is no requirement from the taxpayer to file any additional forms and calls to the IRS are not necessary either.

The IRS urges that if any tax filings that reflect a refund position for the taxpayer, these filings are made as soon as possible to reduce any delay from receiving the actual refund itself. Currently, the IRS have advised that most tax refunds are still being issued within 21 days.

To summarise:

• As of now, no income tax returns are due on April 15, 2020. The due date for income tax returns is July 15. The July 15, 2020 due date can be extended to October 15, 2020

• Any payments otherwise due on April 15, 2020 are not due until July 15, 2020

• Second quarter estimated income tax payments due on June 15, 2020, as of now, are still due on June 15, 2020

• Currently, this relief only applies to federal income returns and tax (including tax on self-employment income) payments which are due on April 15, 2020. State filing and payment deadlines vary and are not always the same as the federal filing deadline. On this basis, it will be prudent to check the State Tax Agencies themselves for specific details on this, and the following link may help:

Click here

Overseas based buyers of residential property in England and Northern Ireland will be forced to pay a 2% stamp duty surcharge beginning April 2012. Additionally, it is worth noting that for overseas buyers who are not intending to move to the UK and live in the property themselves, there will be an additional 3% levy on top, bringing the total surcharge to 5%.