Budget 2021 Update
It’s an introduction only and should not be used as a definitive guide, since individual circumstances may vary. Specific advice should be obtained, where necessary. The message from the Chancellor was that this is a Budget with three aims: protecting the jobs and livelihoods of the British people strengthening the public finances supporting an investment-led recovery You can read the individual measures and details of some of the numerous consultations below. Rates and allowances 2021/22 2020/2021 £ £ Income tax rates (non-dividend income) 0% lower rate tax – savings rate only Up to 5,000 Up to 5,000 20% basic rate tax 12,571 to 50,270 12,501 to 50,000 40% higher rate tax 50,271 to 150,000 50,001 to 150,000 45% additional rate tax Above 150,000 Above 150,000 Scottish income tax rates (non-dividend income) 19% starting rate tax 12,571 to 14,667 12,501 to 14,585 20% basic rate tax 14,668 to 25,296 14,586 to 25,158 21% intermediate rate tax 25,297 to 43,662 25,159 to 43,430 41% higher rate tax 43,663 to 150,000 43,431 to 150,000 46% top rate Above 150,000 Above 150,000 Personal allowance Personal allowance 12,570 12,500 Capital gains tax annual exempt amount (after personal allowance) These are frozen at £12,300 for individuals and £6,150 for trusts. Dividend allowance The tax-free dividend allowance is unchanged at £2,000. Corporation tax The corporation tax rate will remain at 19% but from April 2023 the applicable corporation tax rates will be 19% and 25%. Businesses with profits of £50,000 or below will still only have to pay 19% under the small profits rate. Grants – restart ‘Restart Grants’ are available in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses Grants – export The SME Brexit Support Fund grant provides up to £2,000 to help with training or professional advice. Enhanced capital allowances: super deduction This introduces increased reliefs for expenditure on plant and machinery. For qualifying expenditures incurred from 1 April 2021 up to and including 31 March 2023, companies can claim in the period of investment: a super-deduction providing allowances of 130% on most new plant and machinery investments that ordinarily qualify for 18% main-rate writing-down allowances a first-year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances Annual investment allowance (AIA) Companies will be able to claim £1m as AIA for expenditure incurred from 1 January 2019 to 31 December 2021. The announcement was made in November and before the ‘super deduction’. Apprenticeship funding Apprenticeship incentive payments for employers will increase to £3,000 per new hire until September 2021. Making tax digital (MTD) There were no announcements on MTD except that the government will publish an evaluation on the introduction of MTD for VAT, expected on 23 March. VAT 2021/22 2020/21 £ £ VAT Standard rate 20% 20% Registration threshold 85,000 85,000 Deregistration threshold 83,000 83,000 The VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2022. The reduced rate of VAT of 5% to the hospitality, holiday accommodation and attractions sector is extended until 30 September 2021. After this date, the VAT rate will be 12.5% to the end...
read moreNew HMRC Penalties
Making Tax Digital (MTD) New points based penalty model HMRC have been exploring changes to the penalty system for late submission failures under Making Tax Digital (MTD). They have now decided to adopt a points based model with the draft legislation expected in summer 2018. This will see the introduction of a system where late submission of a return or of the filing obligations under MTD attract points. A penalty will be charged for every failure to provide a submission on time once points have been accumulated up to a certain threshold. Penalty thresholds The penalty thresholds will be: Submission frequency penalty threshold Annual 2 points Quarterly 4 points Monthly 5 points Good compliance points reset After a period of good compliance, the government is ‘minded’ to use the following periods of good compliance before resetting penalty points back to zero. Submission frequency good compliance period Annual 2 submissions Quarterly 4 submissions Monthly 5 submissions Both the accumulation of points and any subsequent penalties will be fully appealable. When will this start? April 2019 sees the start of mandatory reporting of VAT obligations for all VAT registered businesses with a turnover in excess of £85,000. A 12 month soft landing period will follow, before the new points system commences in 2020. This will then be rolled out across the other taxes. What will the penalties be? The actual penalty amount has yet to be announced. Watch this space, once we know more details we’ll be sure to share...
read moreTax Guide 2017/2018
Great news, our tax guide for 2017/2018 is online and can be downloaded here: Courtley West tax guide 2017 2018 If you have any questions or we can help you in anyway way, please don’t hesitate to get in touch.
read moreChanges to Making Tax Digital
We’re very pleased with HMRC’s announced changes to the roll-out of its Making Tax Digital scheme, which was due to go live from April 2018. The proposed scheme was far reaching and due to be implemented in a short timescale, however due to concerns from business owners, accounting professionals and software developers, HMRC have made a number of changes to the Making Tax Digital Scheme. Businesses that trade above the VAT threshold will now only have to keep records digitally for VAT purposes and only from 2019. Businesses will now no longer be asked to keep digital records or update HMRC quarterly for taxes other than VAT until at least 2020, instead of 2018 as originally proposed. Smaller business will be able to file digitally for other taxes on a voluntary basis. While we are skeptical of HMRC’s agenda we do believe that the taxpayer and the accounting industry should be given time to adapt to new methods of compliance regarding record-keeping. At Courtley West, we are comfortable with all the popular cloud platforms for record keeping and so you can be assured that when the MTD (Making Tax Digital) scheme goes live, we will be best placed to support...
read moreAxe the Tenant Tax – Buy-to-let mortgage tax relief setback
In October 2016, the group legally challenging the government’s decision to cut tax relief on buy-to-let loans, suffered a setback when their challenge was rejected by a judge advising that it was “bound to fail” and therefore should not proceed to court. The group is called “Axe the Tenant Tax” and was represented by Cherie Booth QC who owns buy-to-let properties and therefore has an interest in the case. If the challenge had been successful then the plan would have been put on hold until the courts had time to consider the case in full. What are the changes to buy-to-let mortgage tax relief? Starting in April 2017 and over a period of 4 years, tax relief at higher rates will be phased out for interest on loans to buy or improve buy-to-let residential properties. Therefore from April 2021, the maximum tax relief will only be available at the basic rate. If you are a basic rate tax payer only, then you won’t be affected. If you think you may be affected please don’t hesitate to get in touch to see how we can help you. Courtley West Chartered Certified Accountants Wakefield ...
read moreHMRC – Making Tax Digital
Below is a brief summary about the ‘Making Tax Digital’ consultations and proposals from HMRC. HMRC’s vision is for businesses to be able to easier understand and manage their tax affairs. It wants to make greater use of the information that it already holds such as bank and building society interest to make things easier on the tax payer without them having to compile this information again. Digital record-keeping will be required from 2018 for most businesses, sole traders and landlords in order to report quarterly to HMRC. HMRC aren’t looking to become software providers, they will expect the tax payer to use third party software although they are trying to ensure free options are available. Those with income below £10,000 will not be required to use the new ‘making tax digital’ system. Further thresholds haven’t been decided yet. This is being looked at while HMRC are reviewing how they can simplify the tax system. Other areas they are looking at are the thresholds for cash vs revenue accounting and similar areas. One thing we can say for certain is that tax administration in the UK will look very different in 5 years time. At Courtley West we keep up to date on all the current developments at HMRC and we proactively engage with many of our clients using the cloud based book-keeping systems which ultimately will be very instrumental in the delivery of the quarterly reports. As always, if you have any queries about how this may affect you or you’d just like to know how we may help your business, please get in...
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