Business Tax

Budget 2021 Announcements

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Here are the main provisions

Income Tax
Personal Allowances to increase to £12,570 and the basic rate threshold to £50,270
Rates and allowances will remain the same until 2026

Furlough
The scheme is to be extended to 30th Sep 21 with no change to employees – Employers will have to contribute top ups of 10% in July and 20% in August and September

Corporation Tax
Main rate to increase to 25% in 2023 with a small profits rate of 19% for profits up to £50k and taper relief up to £250k
Loss relief to be carried back 3 years

Self-Employed
Grants 4 and 5 announced covering Feb-Apr 21 of 80% of average profits; 5- May to Jul. Self Employed individuals who have filed a return by midnight of 2nd March will eligible for the grants

VAT
5% reduced rate for the hospitality sector to continue until 30th Jun then a staged return to the full rate in April 2022 by increasing the rate to 12.5% for the period 01/10/2021 to 31/03/2022
Registration limit of £85k to remain unchanged until 2024

SDLT
£500k nil rate band to continue until 30th June then £250k to 30th September returning to the original £125k on 1st October

Investments
Capital allowances for investments in innovation up to £10m will be given relief of 130%
www.gov.uk/helptogrow register for productivity grants
Green Gilts / Bonds – new products to be available in the summer

Capital Gains
Annual allowances remain unchanged until 2025/26 – no mention of a rate hike!

National Living Wage
This is to rise to £8.91 in April
£3k grants for new apprenticeship

Business Rates Holiday
Extended to the end of June

Restart Grants
Non-essential retail to receive grants of up to £6,000 and up to £18,000

Budget predictions

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Likely provisions on today’s budget:

Covid relief measures – Job retention scheme to be extended until September with increased employer contributions from July onward.

CGT – Looks like the rates will be gradually increased to match income tax. This is an obvious choice for the Chancellor.

Income tax personal allowances currently £12,500 and the income tax thresholds to be frozen

The main rate of Corporation Tax to rise to 23% or possibly the a split between the main rate and the small companies rate depending on profits.

Abolishment of higher rate income tax relief on pension contributions limiting relief to 20%.

Extension of the reduced rate of VAT for the hospitality sector.

Stamp Duty – perhaps an extension to the SDLT holiday for properties up to £600k.

Covid-19 Update #3

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There have been a number of updates recently regarding various provisions that the Government have put in place to help businesses.
Coronavirus Job Retention Scheme (CJRS)
For those of you that have employees (including sole directors) who are or have been furloughed, the CJRS portal for claims will be open as of Monday 20th April.
A Step-By-Step guide is available for making claims. If you have employees being furloughed, please read the guide even if we will be making the claim on your behalf. There are HR procedures (Not Accounting) that must be followed and that you must have in place for each employee being furloughed.
The latest guidance on the scheme can be found on the Government website at https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme
How to calculate the amount you can claim is set out in detail at https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme
Small Business Grants
This scheme is now open and many local authorities have written to eligible rate payers with details of how to access the scheme. This has typically been done through providing details to your local authority by means of a portal on their respective websites. If you have not yet received any communication from your local authority and you believe you are eligible for the grant, please check their website and contact them directly.
Deferred Payments
For Deferred VAT and self assessment payments in July you do not need to do anything to communicate to HYMRC that you are deferring the payment but you must still submit your returns on time. Please remember though to cancel any direct debit mandate you may have in place otherwise payment will be taken.
For time to pay for other taxes, you must agree these directly with HMRC. It is important to do this rather than just not pay. You could incur penalties.
Self Employment Scheme
This scheme is not yet open for claims but the latest details of how the scheme will work can be found on the Government website
https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
These are very challenging times for everyone. We hope you are all keeping safe and well and are coping with your new routines.

Budget 2020 Rates and Allowances

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Remember the budget? It was only three weeks ago but feels like a lifetime! We’ll be updating the rates and allowances on the website as soon as possible with adjustments for Coronavirus provisions.

Job Retention Scheme Update

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Guidance has just been published with answers to many of the questions surrounding this scheme. There will not be a portal open for claims until late April so you can’t access it yet.
The Government website has been updated and provides answers to questions raised such as what constitutes wages. This is particularly important for those paid irregular amounts and commissions.
https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19
 

Small Business Grants

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Many local authorities are writing to the registered ratepayers now for small business premises to advise them of their eligibility for the grants.

They are requesting that you go to their respective websites to provide bank details with some looking to make payment this month.

Please be mindful of scams. Check the sources of any communication and who you are providing bank details to!

Deferral of VAT payments as a result of COVID-19

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The Chancellor announced a VAT payments deferral on 20 March to support businesses with cash flow during the COVID-19 pandemic.
This means that all businesses with a UK VAT registration have the option to defer VAT payments due between 20 March and 3‌0‌‌ June.
You therefore have until 3‌1‌‌ March 2021 to pay any VAT deferred as a result of this announcement.
You do not need to inform HMRC if you wish to defer payment. You can opt in to the deferral simply by not making VAT payments due in this period. If you pay by Direct Debit you should cancel this with your bank. You should do so in sufficient time so that HMRC does not attempt to automatically collect on receipt of their VAT return.
Should you wish, you can continue to make payments as normal during the deferral period. HMRC will also continue to pay repayment claims as normal. You must continue to submit VAT returns as normal.

Self-employment Income Support Scheme

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Below are extracts from HMRC’s website. Please be particularly aware of the warnings regarding scams. HMRC never contact you directly by phone or email.
https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.

Who can apply

You can apply if you’re a self-employed individual or a member of a partnership and you:

  • have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
  • traded in the tax year 2019-20
  • are trading when you apply, or would be except for COVID-19
  • intend to continue to trade in the tax year 2020-21
  • have lost trading/partnership trading profits due to COVID-19

Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:

  • having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
  • having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.

If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.

HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.

How much you’ll get

You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):

  • 2016 to 2017
  • 2017 to 2018
  • 2018 to 2019

To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount.
It will be up to a maximum of £2,500 per month for 3 months.
We’ll pay the grant directly into your bank account, in one instalment.

How to apply

You cannot apply for this scheme yet.
HMRC will contact you if you are eligible for the scheme and invite you to apply online.
Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.

You will access this scheme only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.

After you’ve applied

Once HMRC has received your claim and you are eligible for the grant, we will contact you to tell you how much you will get and the payment details.
If you claim tax credits you’ll need to include the grant in your claim as income.

Other help you can get

The government is also providing the following additional help for the self-employed:

If you’re a director of your own company and paid through PAYE you may be able to get support using the Job Retention Scheme.

Help for Self Employed

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There will be more questions than answers and we’ll do our best to keep abreast of them to be up to speed on what is available and how to claim.
Welfare benefits of up to £1,800 per month. 80% of average earnings as declared over the last 3 years – up to £2,500 per month. Open to businesses with business profits up to £50K.
This scheme looks like it is to be adminstered by HMRC and will be up and running by the beginning of June – hopefully!
 
 

Furloughed workers

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If your employer cannot cover staff costs due to COVID-19, they may be able to access support to continue paying part of your wage, to avoid redundancies.

If your employer intends to access the Coronavirus Job Retention Scheme, they will discuss with you becoming classified as a furloughed worker. This would mean that you are kept on your employer’s payroll, rather than being laid off.

To qualify for this scheme, you should not undertake work for them while you are furloughed. This will allow your employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month.

You will remain employed while furloughed. Your employer could choose to fund the differences between this payment and your salary, but does not have to.

If your salary is reduced as a result of these changes, you may be eligible for support through the welfare system, including Universal Credit.

We intend for the Coronavirus Job Retention Scheme to run for at least 3 months from 1 March 2020, but will extend if necessary.

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees