When should you start implementing your tax planning strategy for the current tax year?
- When filing your tax return at the end of January 2022?
- When I get last minute reminders in March next year?
Don’t leave it too late. The earlier you start, the better.
You can always make adjustments over the course of the tax year and this is where you get real value from your accountant. Clicking submit on your online accounting software that has “Checked Everything” does not mean that it is the most tax efficient.
Here are the main provisions
Personal Allowances to increase to £12,570 and the basic rate threshold to £50,270
Rates and allowances will remain the same until 2026
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
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
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
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
£500k nil rate band to continue until 30th June then £250k to 30th September returning to the original £125k on 1st October
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
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
Non-essential retail to receive grants of up to £6,000 and up to £18,000
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.
HMRC have announced that there will be no penalties issued for returns filed late up to the end of February.
This does not mean the filing deadline has been moved. It is still 31st Jan and we’ll be working towards that date to get returns filed on time.
Self-Employment Income Support Scheme
HMRC will start contacting self-employed businesses from this week who may be eligible for support.
The scheme will allow you to claim a taxable grant of 80% of your average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500 altogether. This is a temporary scheme, but it may be extended.
If you receive the grant you can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.
Who can claim
You can claim if you’re a self-employed individual or a member of a partnership and:
- you carry on a trade which has been adversely affected by coronavirus
- you traded in the tax year 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
- you traded in the tax year 2019 to 2020
- you intend to continue to trade in the tax year 2020 to 2021
Your business could be adversely affected by coronavirus, for example if:
- you’re unable to work because you:
- are shielding
- are self-isolating
- are on sick leave because of coronavirus
- have caring responsibilities because of coronavirus
- you’ve had to scale down or temporarily stop trading because:
- your supply chain has been interrupted
- you have fewer or no customers or clients
- your staff are unable to come in to work
How to claim
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.
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
These are very challenging times for everyone. We hope you are all keeping safe and well and are coping with your new routines.
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.