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The Government announced last week that certain national insurance contributions (NICs) paid by both employed and self-employed workers will rise by 1.25 percentage points from April 2022. Dividend tax rates will also rise by the same amount from the next tax year. The move is in a bid to help fund health and social care costs.

Certain NIC rates will increase by 1.25 percentage points from April 2022.
From 2023, the health and social care levy element will then be separated out and the exact amount employees pay will be visible on their pay slips. It will be paid by all working adults, including workers over the state pension age – unlike other NICs.

This increase will apply to class 1 NICs paid by employees and class 4 NICs paid by self-employed workers. Class 2 self-employed NICs and class 3 NICs, which are voluntary payments made to top-up state pension gaps, are not impacted by the levy. The levy will also not be taken from pension income.

Dividend tax rates will rise by 1.25 percentage points from April 2022.
This is a tax on money given to you by a company you hold shares in, usually when it's made a profit. For those in the basic-rate band, this will increase from 7.5% to 8.75% and those in the higher-rate band from 32.5% to 33.75%.

As always, we will ensure as part of our service to you that you are compliant with all changes in regulation; whilst also maintaining tax efficiency so you don't overpay tax. If you have any questions regarding the above or any other matters, please contact your client manager or email This email address is being protected from spambots. You need JavaScript enabled to view it..

 

 

The government has suspended the "triple lock", the policy used to set how much the state pension rises each year.

It follows concerns it would have produced an unaffordable rise in the next year.

What is the triple lock and how does it work?

At present, the state pension is supposed to increase each year in line with whichever of the following three things is highest:

This is known as the triple lock.

It was introduced by the Conservative/Liberal Democrat coalition government in 2010.

In its 2019 election manifesto, the Conservative Party said it would keep the triple lock in place for the duration of this Parliament.

Men and women are currently entitled to the state pension at the age of 66, but this is scheduled to rise.

Why is it being suspended?

During the Covid pandemic, many people were earning less than usual because they were placed on furlough.

Now, as people come off furlough and return to full pay, this has been recorded as a large rise in average earnings - an estimated 8% from May to July 2021.

Under the rules of the triple lock, this would mean that state pensions would need to rise by a similar amount.

It is an unusual and unique situation as well as an awkward dilemma for the government. It is trying not only to pay back debts built up over the pandemic, but also to find money for its social care plan.

How much has the state pension increased each year?. .  .

What has the government announced?

Work and Pensions Secretary Therese Coffey has said the triple lock is to be suspended for 2022-2023. Instead, the state pension will be determined by either the inflation rate or 2.5%.

She said the triple lock would then be restored for the remainder of this Parliament, which ends in 2024.

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What is the current state pension worth?

  • The full, new flat-rate state pension (for those who reached state pension age after April 2016) is £179.60 a week
  • The full, old basic state pension (for those who reached state pension age before April 2016) is £137.60 a week. They may also get a Pension Credit top-up.

Could the triple lock disappear for good?

Charities representing the elderly are worried the suspension may turn out to be permanent.

They argue the state pension is relatively little to live on, and low alongside international comparisons.

For some pensioners, particularly women, it may be their only source of income if they had little or no opportunity to build up a private pension.

The triple lock guarantee was introduced to ensure pensioners did not see any rise in their state pension being overtaken by the rising cost of living, nor that the working population would be see a much bigger income rise than them each year.

However, it has proved to be a very expensive policy.

source: https://www.bbc.co.uk/news/business-53082530

 

Firms that benefited from government furlough cash should have their names published, MPs have urged.

The Public Accounts Committee called on the Treasury to set out new transparency guidance for government support in the next six months.

The committee repeated its earlier warning that fraud and error in government Covid schemes may have cost taxpayers billions of pounds.

But the government said it had acted "at speed" to help workers and firms.

Fraudsters could have benefited from the government's decision to drop basic checks in paying out Covid loans and furlough support, the committee said.

The committee said it was impossible to tell how much money had been wasted, because data issued so far had "insufficient detail to allow for public scrutiny".

For example, HM Revenue and Customs (HMRC) will not have a statistically valid estimate of how much fraud and error there was in the furlough scheme until December this year, 22 months after it began.

But the Department for Business has said the Bounce Back Loan Scheme could cost the taxpayer £27bn in fraud or credit losses, estimating that between 35% and 60% of loans might not be repaid.

Publishing a comprehensive list of companies claiming support would give transparency and an opportunity for whistle-blowers to report fraud, the committee said.

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Analysis

By Ramzan Karmali, business reporter

The various financial support packages introduced in response to the pandemic by Rishi Sunak received praise from many quarters. The International Monetary Fund even said they were "one of the best examples of co-ordinated action" that they'd seen globally.

This report recognises the quickness of that response, but puts a spotlight on some of the frailties of it too. It highlights the speed of the rollout of the schemes as one of the main reasons for losses in the tens of billions of pounds. But without hasty action, the Chancellor would argue, millions of businesses and individuals would currently be in dire straits.

The billions spent on various support schemes during the pandemic were deemed necessary, but the big upcoming test for the Treasury and other government departments now will be how effectively they are able to track down those who have defrauded the taxpayer and how much of the lost billions can be recouped.

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Officials will use different methods to estimate how much fraud and error there was in the Self-Employed Income Support and Eat Out To Help Out schemes, which between them paid out more than £25bn.

HMRC says those estimates will be published in its annual report this autumn.

In a normal year, the government loses approximately £51.8bn to fraud and error in public spending, according to the Cabinet Office. Fraud is estimated to account for 40% of all crime committed across the UK.

"When so many were suffering as a result of Covid, the government needs to tackle the fraudsters robustly," said Dame Meg Hillier, who chairs the committee.

Another of its members, Liberal Democrat MP Sarah Olney, said: "The government should really pay closer attention to who they give our cash to, or they face making our economic recovery even harder."

A government spokesperson said: "Our priority was to act at speed to protect workers and businesses, including through loans, grants, furlough and the Self-Employment Income Support scheme."

The government added that the schemes were "designed to minimise fraud from the outset".

It said it had "rejected or blocked thousands of fraudulent claims" and would "take action against perpetrators, including through criminal prosecution".

source: https://www.bbc.co.uk/news/business-57657790

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Contents

Private Residence Relief

You do not pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all of the following apply:

  • you have one home and you’ve lived in it as your main home for all the time you’ve owned it
  • you have not let part of it out - this does not include having a lodger
  • you have not used a part of your home exclusively for business purposes (using a room as a temporary or occasional office does not count as exclusive business use)
  • the grounds, including all buildings, are less than 5,000 square metres (just over an acre) in total
  • you did not buy it just to make a gain

If all these apply you will automatically get a tax relief called Private Residence Relief and will have no tax to pay. If any of them apply, you may have some tax to pay.

Find out if you’re eligible for Private Residence Relief.

Married couples and civil partners can only count one property as their main home at any one time.

The rules are different if you sell property that’s not your home or if you live abroad.

source: https://www.gov.uk/tax-sell-home?&utm_source=t.co_hmrcgovuk&utm_medium=social&utm_campaign=capital_gains_tax&utm_content=homepage

#watergates #cloudaccounting #xero #Tax #accounting #business-start-up #businessplanning #VAT #Tax #Payroll #IR35

Find out how to pay all or some of your grant back if you’ve overclaimed, or if you do not need the grant and want to make a voluntary repayment.

The Coronavirus Job Retention Scheme has been extended until 30 September 2021. Find out more about how the scheme is changing.

Claims for furlough days in April 2021 must be made by 14 May 2021.

You can no longer submit claims for claim periods ending on or before 31 October 2020.

If you’ve claimed too much through the Coronavirus Job Retention Scheme, or you’d like to make a voluntary repayment because you do not want or need the grant to pay your employees’ wages, tax and National Insurance and pension contributions, you can either:

How to pay

You must use the online service to get your payment reference number before you can pay HMRC back. You should only do this if you’re not making another claim.

Your payment may be delayed if you use the wrong reference number.

Pay by online or telephone banking, CHAPS and Bacs

You can pay by Faster Payments, CHAPS or Bacs to HMRC’s account.

Sort code Account number Account name
08 32 10 12001039 HMRC Cumbernauld

Payments by:

  • Faster Payments (online or telephone banking) usually reach HMRC on the same or next day, including weekends and bank holidays
  • CHAPS usually reach HMRC the same working day if you pay within your bank’s processing times
  • Bacs usually take 3 working days

Pay by card

You can also pay by debit card or corporate credit card.

If you’ve overclaimed

If you’ve overclaimed a grant and have not repaid it, you must notify HMRC by the latest of (one of the following):

  • 90 days after the date you received the grant you were not entitled to
  • 90 days after the date you received the grant that you were no longer entitled to keep because your circumstances changed
  • 20 October 2020

If you do not do this, you may have to pay a penalty. If you do repay any overclaimed grant, this will prevent any potential tax liability in respect of the overpayment of Coronavirus Job Retention Scheme. We will not be actively looking for innocent errors in our compliance approach.

Find out more about when you may have to pay a penalty and other information, including:

  • how HMRC decides how much the penalty will be
  • when HMRC will not charge a penalty
  • how to appeal against a penalty
Published 26 June 2020
Last updated 6 May 2021 + show all updates

source: https://www.gov.uk/guidance/pay-coronavirus-job-retention-scheme-grants-back?&utm_source=t.co_hmrcgovuk&utm_medium=social&utm_campaign=covid19&utm_content=jrs_pay_back

#watergates #cloudaccounting #xero #Tax #accounting #business-start-up #businessplanning #VAT #Tax #Payroll #IR35

Please see guidance below on the following two grants being made available:

  • Coronavirus Restart grant
  • Grant to help businesses new to importing or exporting

Coronavirus Restart Grant
The Restart Grant scheme supports businesses in the non-essential retail, hospitality, leisure, personal care and accommodation sectors with a one-off grant, to reopen safely as COVID-19 restrictions are lifted.

Eligibility
Your business may be eligible if it is:
• rate-paying
• in the non-essential retail, hospitality, accommodation, leisure, personal care or gym sectors
• trading on 1 April 2021

What you get
Local councils will use their discretion to determine whether businesses meet the eligibility criteria for this grant scheme. The grant amounts are as follows.
Non-essential retail properties:
• Rateable value of £15,000 or less: a grant of £2,667
• Rateable value over £15,000 and less than £51,000: a grant of £4,000
• Rateable value of £51,000 or above: a grant of £6,000
Hospitality, accommodation, leisure, personal care and gym properties:
• Rateable value of £15,000 or less: a grant of £8,000
• Rateable value over £15,000 and less than £51,000: a grant of £12,000
• Rateable value of £51,000 or above: a grant of £18,000

How to apply
Visit your local council’s website to find out how to apply. Some councils will pay this automatically where you have received the previous lockdown grants, whereas other councils may require an application.

The latest update from Leicester Council is that they will make automatic payments therefore an application will not be necessary. They aim start paying the grants from mid-April and have asked not to be contacted in the meantime. Once the automatic payments have been made, they will open an application process for any other eligible businesses.


Grant to help small and medium-sized businesses new to importing or exporting
The SME Brexit Support Fund could give you up to £2,000 to help with training or professional advice, if your business has up to 500 employees and no more than £100 million annual turnover.

What you’ll be able to use the grant for
You can use the grant for training on:
• how to complete customs declarations
• how to manage customs processes and use customs software and systems
• specific import and export related aspects including VAT, excise and rules of origin
It can be used to help you get professional advice so your business can meet its customs, excise, import VAT or safety and security declaration requirements.

Who will be able to apply
Your business must:
be established in the UK
• have been established in the UK for at least 12 months before submitting the application, or currently hold Authorised Economic Operator status
• not have previously failed to meet its tax or customs obligations
• have no more than 500 employees
• have no more than £100 million turnover
• import or export goods between Great Britain and the EU, or moves goods between Great Britain and Northern Ireland
Your business must also either:
• complete (or intend to complete) import or export declarations internally for its own goods
• use someone else to complete import or export declarations but requires additional capability internally to effectively import or export (such as advice on rules of origin or advice on dealing with a supply chain)

How to apply
PricewaterhouseCoopers (PwC) is administering the grants for HMRC.
Applications will close on 30 June 2021 or earlier if all funding is allocated before this date.
Apply online through PwC.

Get help on the off-payroll working rules (IR35) with online webinars, workshops and educational calls from HMRC.

From 6 April 2021 important changes to the off-payroll working rules (sometimes known as IR35) will come into effect. Find out which resources are best suited to you, and how to access them.

Guidance and tools on GOV.UK

The following resources are useful for everyone affected by the off-payroll changes:

If you’re a client or fee-payer

The following additional resources will be most relevant to you:

  • webinars
  • workshops for some customers
  • tailored education calls for some customers

Webinars

HMRC is running a range of off-payroll webinars from October 2020 to April 2021. They cover both overviews of the reforms, as well as more specific topic areas. Dates will continue to be added when available.

Clients or fee-payers who need a general overview of the rules should sign up for these 2 webinars:

  • overview of the off-payroll working rules
  • making the determination, disagreements and record keeping

Off-payroll working rules from April 2021 - Organisations

Register for the next live webinar about off-payroll working rules from April 2021 organisations.

This webinar gives an update on changes to the off-payroll working rules (IR35) from April 2021 for:

  • the public sector
  • medium and large sized organisations

Watch a catch up webinar about off-payroll working rules from April 2021 organisations

Off-payroll working rules from April 2021: Status Determinations and Disagreements

Register for the next live webinar off-payroll working rules from April 2021: Status Determinations and Disagreements

This webinar explains what Status Determination Statements (SDS) are, within the off-payroll working rules, and how to deal with disagreements following the status determination.

Watch a catch up webinar about off-payroll working rules from April 2021: Status Determinations and Disagreements.

Additional webinars are being provided on specific topics where clients and fee-payers may need more detailed information. Customers attending these events should have a good understanding of the basics of the off-payroll working rules. The most relevant topic-based webinars due to take place for clients and fee-payers are about:

  • international issues - how off-payroll working interacts with international and overseas issues
  • engagements where the rules apply
  • fee-payer responsibilities

Off-payroll working rules from April 2021 – international matters

Register for the next live webinar about off-payroll working rules from April 2021 – international matters

This webinar will be most relevant for customers in gas and oil, media, transport and the utilities sectors.

This webinar explains how the off-payroll working rules interact with international and overseas issues.

Watch a catch up webinar about off-payroll working rules from April 2021: international matters

Off-payroll working rules from April 2021 - engagement

Register for the next live webinar about off-payroll working rules from April 2021 - engagement.

This webinar looks at different types of engagements and explains when the off-payroll working rules apply and whose responsibility it is to consider them.

Watch a catch up webinar about off-payroll working rules from April 2021 – engagement.

Off-payroll working rules from April 2021: fee-payer responsibilities

Register for the next live webinar about off-payroll working rules from April 2021: fee-payer responsibilities.

This webinar looks at fee-payers responsibilities under the off-payroll working rules including:

  • who feepayers are and their responsibilities
  • qualifying persons
  • deemed employers and
  • how to work out the Deemed Direct Payment

Watch a catch up webinar about off-payroll working rules from April 2021: fee-payer responsibilities.

Workshops

Workshops for small groups of customers will be delivered virtually to provide a comprehensive overview of what the changes mean and will be targeted to specific sectors or customer groups.

These workshops will start in November 2020 and HMRC will work closely with stakeholders to ensure that the right customers are invited to workshops. Invitations will be sent via trade and representative bodies.

The most relevant workshops for clients and fee-payers will be:

  • sector specific - aimed at specific sectors and the issues that affect them for example banking, oil and gas, public sector and construction (more sectors may be added based on customer feedback)
  • agencies - focused towards the requirement of recruiters and agencies when dealing with contractors and clients

Education calls

Tailored education calls will be offered to customers with the greatest support needs. HMRC will directly contact customers to invite them to an education call.

If you’re a contractor

Contractors are workers operating through a Personal Service Company (PCS) or other intermediary. In some industries, such as construction, these are known as ‘subcontractors’.

The following additional resources will be most relevant to you:

Webinars

HMRC is running a range of off-payroll webinars from October 2020 to April 2021. They cover both overviews of the reforms, as well as more specific topic areas. Dates will continue to be added when available.

Contractors who need a general overview of the rules should sign up for these 2 webinars:

  • overview of the off-payroll working rules for contractors
  • making the determination, disagreements and record keeping

Off-payroll working rules from April 2021: contractors

Register for the next live webinar about off-payrol working rules from April 2021: contractors

This webinar gives an overview of the changes to the off-payroll working rules which come into effect on 6 April 2021. It is specifically designed to help contractors understand what these changes will mean for them.

Watch a catch up webinar about off-payroll working rules from April 2021: contractors.

Off-payroll working rules from April 2021: Status Determinations and Disagreements

Register for the next live webinar Off-payroll working rules from April 2021: Status Determinations and Disagreements.

Watch a catch up webinar about off-payroll working rules from April 2021: Status Determinations and Disagreements.

This webinar covers HMRC’s view on requirements to make a determination and what constitutes a disagreement, some aspects of this webinar may be relevant for contractors.

Additional webinars are being provided on specific topics to provide more detailed information. Customers attending these events should have a good understanding of the basics of the off-payroll working rules. These are aimed at clients and fee-payers but contractors might also find some aspects of them useful. The most relevant topic-based webinars due to take place for contractors will be:

  • international issues - how off-payroll working interacts with international and overseas issues
  • engagements where the rules apply
  • fee-payer responsibilities

Off-payroll working rules 2021 – international matters

Register for the next live webinar about off-payroll working rules 2021 – international matters

This webinar explains how the off-payroll working rules interact with international and overseas issues.

This webinar will be most relevant for customers in gas and oil, media, transport and the utilities sectors.

Watch a catch up webinar about off-payroll working rules from April 2021: international matters.

Off-payroll working rules from April 2021 - engagement

Register for the next live webinar about off-payroll working rules from April 2021 - engagement.

This webinar looks at different types of engagements and explains when the off-payroll working rules apply and whose responsibility it is to consider them.

Watch a catch up webinar about off-payroll working rules from April 2021 – engagement.

Off-payroll working rules from April 2021: fee-payer responsibilities

Register for the next live webinar about off-payroll working rules from April 2021: fee-payer responsibilities](https://attendee.gotowebinar.com/rt/3721378880985458189?source=Gov).

This webinar looks at fee-payers responsibilities under the off-payroll working rules including:

  • who feepayers are and their responsibilities
  • qualifying persons
  • deemed employers and
  • how to work out the Deemed Direct Payment.

Watch a catch up webinar about off-payroll working rules from April 2021: fee-payer responsibilities.

If you’re a tax agent

The following additional resources will be most relevant to you:

  • communication resources on GOV.UK
  • webinars
  • workshops

Communication resources

Off-payroll working rules - communication resources - use these materials to communicate with your members, clients and customers about changes to the off-payroll working rules, these will be of most use in communicating the changes to contractors.

Webinars

HMRC is running a range of off-payroll webinars from October 2020 to April 2021. They cover both overviews of the reforms, as well as more specific topic areas. Dates will continue to be added when available.

Tax agents may find all of the webinars useful.

Tax agents who need a general overview of the rules should sign up for these 3 webinars:

  • overview of the off-payroll working rules
  • overview of the off-payroll working rules for contractors
  • making the determination, disagreements and record keeping

Off-payroll working rules from April 2021 - Organisations

Register for the next live webinar about off-payroll working rules from April 2021 - organisations

This webinar gives an update on changes to the off-payroll working rules (IR35) from April 2021 for:

  • the public sector
  • medium and large sized organisations

Watch a catch up webinar about off-payroll working rules from April 2021 - organisations.

Off-payroll working rules from April 2021: contractors

Register for the next live webinar about off-payroll working rules from April 2021: contractors

This webinar gives an overview of the changes to the off-payroll working rules which come into effect on 6 April 2021. It is specifically designed to help contractors understand what these changes will mean for them.

Watch a catch up webinar about off-payroll working rules from April 2021: contractors.

Off-payroll working rules from April 2021: Status Determinations and Disagreements

Register for the next live webinar Off-payroll working rules from April 2021: Status Determinations and Disagreements.

This webinar covers HMRC’s view on requirements to make a determination and what constitutes a disagreement, some aspects of this webinar may be relevant for contractors.

Watch a catch up webinar about off-payroll working rules from April 2021: Status Determinations and Disagreements.

Additional webinars are being provided on specific topics to provide more detailed information. Customers attending these events should have a good understanding of the basics of the off-payroll working rules. The most relevant topic-based webinars due to take place will be:

  • international issues - how off-payroll working interacts with international and overseas issues
  • engagements where the rules apply
  • fee-payer responsibilities

Off-payroll working rules 2021 – international matters

Register for the next live webinar about off-payroll working rules 2021 – international matters

This webinar explains how the off-payroll working rules interact with international and overseas issues.

This webinar will be most relevant for customers in gas and oil, media, transport and the utilities sectors.

Off-payroll working rules from April 2021 - engagement

Register for the next live webinar about off-payroll working rules from April 2021 - engagement.

This webinar looks at different types of engagements and explains when the off-payroll working rules apply and whose responsibility it is to consider them.

Watch a catch up webinar about off-payroll working rules from April 2021 – engagement.

This webinar covers the responsibilities of relevant entities within the contractual chain and what engagements should be considered, including contracted out services.

Off-payroll working rules from April 2021: fee-payer responsibilities

Register for the next live webinar about off-payroll working rules from April 2021: fee-payer responsibilities.

This webinar looks at fee-payers responsibilities under the off-payroll working rules including:

  • who feepayers are and their responsibilities
  • qualifying persons
  • deemed employers and
  • how to work out the Deemed Direct Payment

Watch a catch up webinar about off-payroll working rules from April 2021: fee-payer responsibilities.

Workshops

Workshops for small groups of customers will be delivered virtually to provide a comprehensive overview of what the changes mean and will be targeted to specific sectors or customer groups.

These workshops will start in November 2020 and HMRC will work closely with stakeholders to ensure that the right customers are invited to workshops. Invitations will be sent via trade and representative bodies.

For tax agents, the most relevant workshops will be:

  • tax agents - focused on accounting treatment and record keeping for tax agents who deal with contractor’s intermediaries
  • sector specific - aimed at specific sectors and the issues that affect them for example banking, oil and gas, public sector and construction, more sectors may be added based on customer feedback
  • agencies - focused toward the requirement of recruiter and agencies when dealing with contractors and clients
 

Rishi Sunak has chosen a fine line between raising taxes to start paying down the massive Government borrowings but at the same time stimulate economic recovery and save jobs
 
Maybe he will delay the announcement of significant increases in taxation until later in the year as it is anticipated that there will be a further Budget in the Autumn. By then the economy will hopefully have started to bounce back.

We have provided below an overview of each of the significant areas. Please get in touch with us if you would like to discuss any of these further.


CJRS FURLOUGH SCHEME EXTENDED TO 30 SEPTEMBER
 
The CJRS furlough grant for May and June will remain at 80% of the employees’ usual pay for hours not working but it will then be limited to 70% for July and then 60% for August and September.
 
This phased reduction will operate in a similar way as in September and October 2020 with the employer being required to contribute the remaining 10% and then 20% of an employee’s regular pay so that they continue to receive 80% pay for furloughed hours.
 
In addition to the 10% and 20% contributions employers will continue to be responsible for paying employers national insurance and pension contributions on the full amount being paid to employees.


SELF-EMPLOYED INCOME SUPPORT GRANTS ALSO EXTENDED
 
The support will continue to be 80% of average profits for the reference period capped at £2,500 a month and can be claimed from late April. There will then be a fifth SEISS grant covering the 5 months to 30 September.
 
Those who commenced self-employment in 2019/20 will now be included provided they had submitted their 2019/20 tax return by 2 March 2021. This is potentially a further 600,000 traders.
 
Conditions for the fifth grant will be linked to a reduction in business turnover. Self-employed individuals whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £2,500 a month. Those whose turnover has fallen by less than 30% will receive a 30% grant, capped at £950 a month. We are awaiting further details of this fifth grant.


CORPORATION TAX RATES TO INCREASE TO 25% BUT NOT FOR ALL COMPANIES
 
The UK corporation tax rate is currently one of the lowest rates of the G20 countries and the government states it is committed to keeping the rate competitive.
 
 
The rate will increase to 25% from 1 April 2023 where profits exceed £250,000. However, where a company’s profits do not exceed £50,000 the rate will remain at the current 19% rate and there will be a taper above £50,000. Businesses will however be able to take advantage of new tax breaks to encourage investment in equipment and an enhanced carry back of losses.


SUPER-DEDUCTION FOR INVESTMENT IN NEW EQUIPMENT
 
In order to encourage companies to invest in new capital equipment the chancellor announced a radical new “super-deduction” of 130% where they invest in new plant. This would mean that when a company buys plant costing £10,000 they would qualify for a £13,000 deduction in arriving at business profits. The new deduction, which will run for two years from 1 April 2021, will not be available for motor cars. Certain assets such as fixtures in buildings will only qualify for 50% relief in the first year instead of the normal 6% writing down allowance.


THREE YEAR CARRY BACK OF TRADING LOSSES
 
Many businesses will have made a loss in the last year as a result of the Coronavirus pandemic and the difficult trading environment.
Trading losses can normally only be set against profits of the preceding accounting period or previous tax year in the case of unincorporated businesses.
 
The carry back period will be temporarily increased to three years thereby enabling the business to obtain a tax refund. For companies this will apply to loss making accounting periods ending in the period 1 April 2020 to 31 March 2022. For unincorporated traders, the extended loss relief will apply to losses incurred in 2020/21 and 2021/22.


NO CHANGES TO INCOME TAX RATES AND PERSONAL ALLOWANCE FROZEN
 
The basic rate of income tax and higher rate remain at 20% and 40% respectively, and the 45% additional rate continues to apply to income over £150,000.
 
The personal allowance and higher rate threshold have been increased in line with inflation to £12,570 and £50,270 respectively for 2021/22. These thresholds will then be frozen until 2025/26.


NATIONAL INSURANCE RATES
 
Employees and the self-employed will not pay national insurance contributions (NIC) on the first £9,570 of earnings for 2021/22, an increase of £1 a week. The employee contribution rate continues to be 12% up to the Upper Earnings limit £50,270, with the self-employed paying 9% on their profits up to the same level. Note that employer contributions will apply to earnings over £170 per week, £8,840 per annum which is also a £1 a week increase.
 

5% VAT RATE FOR FOOD, ATTRACTIONS AND ACCOMMODATION EXTENDED
 
The reduced 5% rate of VAT will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK until 30 September 2021.
 
The 5% reduced rate of VAT will also continue to apply to supplies of accommodation and admission to attractions across the UK.
From 1 October until 31 March 2022 the rate will be set at 12.5% and will then revert to 20% from 1 April 2022.
 

VAT REGISTRATION LIMIT FROZEN AT £85,000 UNTIL 1 APRIL 2024
 
The VAT registration limit normally goes up each year in line with inflation but will remain at £85,000 for a further two years. Arguably this makes it easier for businesses to assess whether or not they are required to register for VAT as it is no longer a moving target.
 

MAKING TAX DIGITAL EXTENDED TO ALL VAT REGISTERED BUSINESSES FROM 1 APRIL 2022
 
The government has confirmed that the requirement to maintain accounting records in a digital format and submit the data to HMRC electronically will be extended to all VAT registered businesses from 1 April 2022 regardless of the level of taxable supplies.
 

NEW GRANTS FOR HIGH STREET BUSINESSES AND HOSPITALITY SECTOR
 
Businesses forced to close due to the Coronavirus lockdown will be eligible to apply for grants of up to £18,000 depending upon the rateable value of their business premises. Pubs, restaurants, hotels, gyms and hairdressers will be eligible for a grant of up to £18,000 per premises whilst non-essential retail businesses will be eligible to apply for a grant up to a maximum of £6,000.
 
The government will also continue to provide eligible retail, hospitality and leisure properties in England with 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021.
 
 
NEW RECOVERY LOAN SCHEME
 
The government have already announced a longer repayment period for “Bounce-back” and CBIL loans. From 6 April 2021 a new Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to give them confidence in continuing to provide finance to UK businesses. The scheme will be open to all businesses.
 

SDLT THRESHOLDS EXTENDED
 
This has now been further extended until 30 June 2021 so that transactions in progress will continue to benefit from the reduced rates.

From 1 July 2021 the Nil Rate Band of Residential SDLT will then decrease to £250,000 for 3 months until 1 October 2021 when it will revert to £125,000 for purchases completed on or after that date. There has been no change to the SDLT rates above the Nil Rate Band. The 3% supplementary charge for second and subsequent homes will continue to apply.


5% MORTGAGE SCHEMES EXTENDED
 
Another measure announced to stimulate the housing sector is a new 95% mortgage scheme guaranteed by the government that will mean that people buying a house will only need a 5% deposit where the purchase price is no more than £600,000.
 

APPRENTICESHIP SCHEMES EXTENDED
 
The current apprenticeship scheme will be improved with payments of £3,000 to employers in England for each new apprentice they hire aged under 25 and continue to pay the employer £1,500 for each new apprentice they hire aged over 25. The schemes will now run until 30 September 2021.
 
Starting in January 2022 there will be a new “flexi-job” apprenticeship which will allow individuals to work for more than one company via an agency.
 
The “Kickstart” Scheme announced in the Summer 2020 Plan for Jobs will continue to be available for the 2021/22 academic year to create 6-month work placements aimed at those aged 16-24 who are on Universal Credit and at risk of long-term unemployment. Employers who provide trainees with work experience will continue to be funded at a rate of £1,000 per trainee.
 

EIGHT NEW FREEPORTS ANNOUNCED
 
In eight locations around England there will be generous tax breaks to encourage businesses to locate there. These tax breaks include an exemption from SDLT, 100% first year allowances on plant and a 10% per annum structures and buildings allowance.

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In a Budget which ‘meets the moment’, the Chancellor has today (3 March) set out a £65 billion three-point plan to provide support for jobs and businesses as we emerge from the pandemic and forge a path to recovery.

Chancellor’s three-point plan to protect jobs and strengthen public finances

  • billions to support businesses and families through the pandemic
  • investment-led recovery as UK emerges from lockdown
  • future changes to strengthen public finances

Chancellor of the Exchequer Rishi Sunak said his immediate priority continues to be supporting those hardest hit, with extensions to furlough, self-employed support, business grants, loans and VAT cuts – bringing total fiscal support to over £407 billion.

He also set out plans to drive jobs, growth and investment to help the economy rebound - and spoke honestly about the tough choices required to put the public finances on a more sustainable path.

Delivering the budget in Parliament Chancellor of the Exchequer Rishi Sunak said:

This Budget meets the moment with a three-part plan to protect the jobs and livelihoods of the British people.

First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis.

Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that.

And, third, in today’s Budget we begin the work of building our future economy.

Protecting jobs and livelihoods

In line with the government’s roadmap for the cautious easing of social distancing rules, the Chancellor pledged to keep economic support in place until we are out of lockdown.

To protect the livelihoods of those hardest hit, the Coronavirus Job Retention Scheme will be extended to September and the Self-Employment Income Support Scheme (SEISS) will continue with a fourth and a fifth grant. The Chancellor announced that more than 600,000 people, many of whom became self-employed in 2019-20, may now be able to claim direct cash grants under SEISS.

In addition, the business rates holiday in England has been extended by an additional three months. That means 750,000 retail, hospitality and leisure properties in England will pay no business rates for three months from 1 April when combined with Small Business Rates Relief, with further relief available for the rest of the year.

To continue supporting the 150,000 businesses in the tourism and hospitality sectors and to protect 2.4 million jobs, the government has extended the temporary 5% reduced rate of VAT until 30 September 2021. To help businesses manage the transition back to the standard rate, a 12.5% rate will then apply for a further six months, until 31 March 2022.

Grant funding will be available to businesses in England through a new £5 billion Restart Grant scheme to help the high street, providing up to £18,000, bringing the total spent on business grants to £25 billion.

A new Recovery Loan Scheme will also be launched to replace the existing government guaranteed schemes which have supported £73 billion of lending to date and close at the end of March.

To maintain momentum for the Covid-19 vaccination programme, the Budget will inject an extra £1.65 billion to ensure the roll-out in England continues to be a success and invest a further £50 million to boost the UK’s vaccine testing capability.

As part of the UK Government’s Plan for Jobs to support, protect and create jobs, the Chancellor is increasing support with £126 million of new money to enable 40,000 more traineeships, and doubling the cash incentive to firms who take on an apprentice to a £3,000 payment per hire. The National Living Wage will be increased to £8.91 from April and there will also be a six-month extension of the £20 per week Universal Credit uplift, with eligible Working Tax Credit claimants receiving a one-off payment of £500.

A new mortgage guarantee scheme will enable homebuyers to secure a mortgage up to £600,000 with a 5% deposit, and an extension to the temporary cut in Stamp Duty Land Tax to September will support the housing market and protect and create jobs.

£700 million will support the UK’s arts, culture and sporting institutions as they reopen, backing the UK and Ireland’s joint bid to host the World Cup in 2030.

To put more money in the public’s pocket, fuel duty will be frozen for the 11th consecutive year and there will be a freeze in duty rates for beer, cider, wine and spirits.

Strengthening the public finances

The Chancellor was honest with the public about the need to get public finances back on track and give people and businesses the certainty they need for the future while not raising rates of income tax, national insurance or VAT.

Income tax personal allowance and the higher rate threshold will rise next year as planned and will then be maintained at that level until April 2026. Nobody’s take home pay will be less than it is now, and the UK’s allowances remain the most generous of any G20 country.

To balance the need to raise revenue with the objective of having an internationally competitive tax system, the rate of Corporation Tax will increase to 25%, which will remain the lowest rate in the G7. In order to support the recovery, the increase will not take effect until 2023. Businesses with profits of £50,000 or less, around 70% of actively trading companies, will continue to be taxed at 19%. A tapered rate will also be introduced for profits above £50,000, so that only businesses with profits of £250,000 or greater will be taxed at the full 25% rate.

An investment-led recovery

The Budget will spread investment and opportunity across the UK, helping businesses to grow, and improving access to skills, capital and ideas.

New English Freeports will be based in East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside and will be special economic zones with different rules to make it easier and cheaper to do business. Combined with changes to immigration rules, the Towns Fund, the UK-wide Levelling Up Fund, and the UK Community Renewal Fund, opportunities for well-paid jobs, innovation and growth will be leveled up across the country.

The Budget also coincides with the publication of the the government’s new Build Back Better: our plan for growth strategy, setting out how infrastructure, skills and innovation will drive the UK economy.

130,000 small and medium sized businesses will be supported through the new Help to Grow scheme, providing the digital and management tools needed to innovate, grow and help drive recovery.

Beginning April 2021, a new super-deduction will cut companies’ tax bill by 25p for every pound they invest in new equipment meaning they can reduce their taxable profits by 130% of the cost. This is worth £25 billion to companies over the two-year period the super-deduction will be in full effect.

And to help progress the Prime Minister’s ambitious Ten Point Plan for a green industrial revolution, new port infrastructure will be built to support the next generation of offshore wind projects in Teesside and Humberside. The UK will issue at least £15 billion in green bonds to help finance the transition to net zero and the government will launch the world’s first sovereign green savings bond for retail investors.

Support for the whole UK

Many of today’s announcements such as the extension of job support schemes and VAT cut will directly benefit people across the UK.

In addition, this budget provides an additional £2.4 billion to the devolved administrations in 2021-22 through the Barnett formula.

  • the Scottish Government will benefit from a £1.2 billion funding boost

  • the Welsh Government a £740 million funding boost

  • the Northern Ireland Executive a £410 million funding boost

Further measures announced by the Chancellor can be found at this factsheet.

source: https://www.gov.uk/government/news/budget-2021-sets-path-for-recovery

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Find out how to pay VAT payments deferred between 20 March and 30 June 2020. You can pay now or join the VAT deferral new payment scheme.

If you deferred VAT payments due between 20 March 2020 and 30 June 2020 and still have payments to make, you can:

  • pay the deferred VAT in full, on or before 31 March 2021
  • join the VAT deferral new payment scheme – the online service is open between 23 February 2021 and 21 June 2021
  • contact HMRC on Telephone: 0800 024 1222 by 30 June 2021 if you need extra help to pay

You may be charged interest or a penalty if you do not:

  • pay the deferred VAT in full by 31 March 2021
  • opt into the new payment scheme by 21 June 2021
  • agree extra help to pay with HMRC by 30 June 2021

Pay your deferred VAT in full

You can pay your deferred VAT in full by 31 March 2021.

You do not need to contact HMRC.

Join the VAT deferral new payment scheme

The VAT deferral new payment scheme is open from 23 February 2021 up to and including 21 June 2021.

If you’re on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, you’ll be invited to join the new payment scheme later in March 2021.

The new scheme lets you:

  • pay your deferred VAT in equal instalments, interest free
  • choose the number of instalments, from 2 to 11 (depending on when you join)

Instalment options available to you

The month you decide to join the scheme will determine the maximum number of instalments that are available to you. If you join the scheme in March, you’ll be able to pay your deferred VAT in 11 instalments or fewer.

The table below sets out the monthly joining deadlines (to allow for Direct Debit processing) and the corresponding number of maximum instalments (including the first payment):

If you join by: Number of instalments available to you:
19 March 2021 11
21 April 2021 10
19 May 2021 9
21 June 2021 8

How to join

Before joining, you must:

  • create your own Government Gateway account (if you do not already have one)
  • submit any outstanding VAT returns from the last 4 years – otherwise you’ll not be able to join the scheme
  • correct errors on your VAT returns as soon as possible
  • make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid

To use the online service, you must:

  • join the scheme yourself, your agent cannot do this for you
  • still have deferred VAT to pay
  • be up to date with your VAT returns
  • join by 21 June 2021
  • pay the first instalment when you join
  • pay your instalments by Direct Debit (if you want to use the scheme but cannot pay by Direct Debit, there’s an alternative entry route for you)

Join the scheme now

If you join the scheme, you can still have a Time to Pay arrangement for other HMRC debts and outstanding tax.

If you cannot use the online service

There may be circumstances where you cannot use the online service, for example if you:

  • do not have a UK bank account
  • cannot pay by Direct Debit
  • have dual signatories on your account

If you want to join the new payment scheme, but cannot use the online service, contact the COVID-19 helpline when the scheme opens on Telephone: 0800 024 1222. An adviser will help you join.

Correcting errors on VAT returns for the VAT deferral period

The VAT deferral period covered accounting periods for:

  • February 2020
  • March 2020
  • April 2020
  • May 2020 - for payment on account customers and certain non-standard tax periods only, in addition to the above periods

If you notice an error on a VAT return which relates to a period covered by the scheme, you should:

  1. Fill in form VAT652.

  2. Send it to the VAT Error Correction Team.

Deferring extra payments resulting from error corrections

If you want to defer extra payments resulting from error corrections, contact the COVID-19 helpline (Telephone: 0800 024 1222) after both of the following have happened:

  • HMRC have processed your error correction
  • you’ve received a statement of account confirming the balance

You can then either:

  • include the payments in your deferred balance and pay in full by 31 March 2021
  • include the payments in your deferred balance and join the new payment scheme while it is open
  • contact HMRC if you need more help to pay on Telephone: 0800 024 1222

You cannot include extra payments after you’ve joined the scheme. Any error correction relating to the deferral period that is notified to HMRC after 31 March 2021, cannot be deferred.

You may be contacted by HMRC if we’ve carried out a VAT compliance check and found that extra payments are due for the deferral period. You must also contact our COVID-19 helpline (Telephone: 0800 024 1222) if you want to defer these payments.

If you’re not able to pay your deferred VAT

If you’re still unable to pay and need more time, find out what to do if you cannot pay your tax bill on time. 

To find what other support is available, use the Get help and support for your business guide.

Published 26 March 2020
Last updated 23 February 2021 + show all updates

source: https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19?&utm_source=t.co_hmrcgovuk&utm_medium=social&utm_campaign=vat_nps&utm_content=guidance

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