With only a few days left in the current tax year, as a company directors that’s enough time in which you can improve your income tax efficiency.
What steps should you be taking to achieve this?
Because of tax and NI increases which happen in April there’s more talk than usual about director shareholders setting a tax-efficient level of profit and income extraction for the new tax year. However, that’s only half the story.
In practice it’s rare that the plans made at the start of a tax year will remain ideal by the time it ends. That means now is the time to consider if the planning you did a year ago needs tweaking, for example, by taking more income from your company or making tax-deductible payments.
Using your tax-free allowance
The first step is to check that you’ve drawn enough income from your company so that together with any other income you’ve received in this tax year, e.g. rental income, bank interest, etc., it at least equals to your personal tax-free allowance of £12,570 for 2021/22. If necessary, draw more income from your company.
Using your rate bands
Next, aim to use all of your basic rate band; in England and Wales that’s £37,700 for 2021/22. As already mentioned, taking dividends is the most tax efficient for this. The tax rate is 7.5% (but 8.75% for 2022/23) until your total income exceeds the basic rate band, compared to 20% for salary or other income.
Tip. Your tax-free allowances and basic rate band can be greater than the figures stated if you pay tax-deductible expenses, e.g. pension contributions and gift aid payments. These increase the amount of income you can receive tax free or how much of it is taxable at the basic rate of tax.
Tip. If you’re in the position that you want more cash now but taking more income from your company would be taxable at higher rates, consider borrowing the cash from your company this tax year and repaying it next. This gives you another bite at the cherry to keep your income tax at the basic rate only.
For more tips and advice speak to a member of the a4c team today by calling on 01737 652 852.
The Chancellor, Rishi Sunak, delivered the UK Spring Statement on 23rd March 2022. What do small businesses need to know about the announcements?
Coronavirus Pandemic Response
From April 2022 taxpayers will begin to pay for the significant costs associated with the Government’s pandemic response. These include:
An increase in National Insurance by 1.25% to pay for health & social care
An equal increase in dvidiend tax of 1.25%
A ‘stealth tax’ in the form of a personal allowance freeze, which keeps the amount you can earn tax-free frozen at £12,570 until 2026.
But amid the increases there were some reliefs, to soften the blow!
NIC will increase by 1.25% from 6th April, before being replaced by the Health and Social Care Levy next year.
However the NI thresholds were raised, which means that you need to be earning more before you start paying National Insurance contributions.
The primary threshold for Class 1 NICs and the lower profits limit for Class 4 NICs will increase from £9,880 to £12,570 in July 2022.
Self-employed people with lower earnings will also benefit. If you have profits between the small profits threshold (£6,725 in 2022-23) and the lower profits limit, you’ll build up National Insurance credits but won’t need to pay Class 2 NICs.
For employer’s there was some good news with the announcement that the annual Employment Allowance would be increased to £5,000 from April 2022.
A cut of 5p per litre in fuel duty is one of the headlines from the Budget speech, however it’s likely to make little impact on the price of filling your fuel tank.
Homeowners will pay 0% VAT to install energy saving products, like solar panels or heat pumps, for the next five years.
Income Tax reductions for the future
By 2024 it is expected that the basic rate of income tax will drop from 20% to 19%.
Or to discuss how the Budget Report 2022 will impact you and your business give us a call on 01737 652 852.
In recognition of the Queen’s platinum jubilee, there will be an additional bank holiday in June 2022.
What does this mean from a payroll perspective – what rights do your staff have?
A long weekend
There are normally eight bank holidays a year in England and Wales, nine in Scotland, and ten in Northern Ireland. The government has announced an additional bank holiday in 2022 (Friday 3 June), to celebrate the Queen’s platinum jubilee. In addition, the late May bank holiday has been moved to Thursday 2 June. This means that employers face the unusual situation of there being two back-to-back bank holidays in June 2022.
What type of holiday?
The Working Time Regulations 1998 do not differentiate between bank holidays and other days and do not prevent employers from including them in the 5.6-week minimum annual leave entitlement. There is no statutory right for employees to take bank holidays as leave (other than in the banking sector). If the contract provides that the employee is entitled to take bank holidays as annual leave, you cannot insist that the employee works and cannot take any form of disciplinary action if they don’t come to work.
It’s important to check the wording in your contracts to determine whether you need to honour the additional day’s holiday. Where the contract entitles employees to take leave on “all bank and public holidays”, you will be required to grant the extra day as leave. Conversely, if the contract states that employees are entitled to the “usual” bank holidays or stipulates 20 days plus eight bank holidays you need not grant an extra day. But you might choose to do so as a goodwill gesture. If an employee is asked to work on a bank holiday, and their contract indicates that they may be required to do so, they cannot refuse to work. If the employee requests holiday rather than working, you can refuse the request by giving a counter notice which must be at least equivalent to the number of days leave that the employee is requesting.
In sectors where employees will be required to cover a bank holiday, you may need to get their agreement to work on specified bank holidays in return for a day off in lieu at another time. Additional payment rates may also be used to incentivise attendance but are not compulsory. However, if these have been paid historically they may be seen as custom and practice and therefore an implied contractual term.
Pro advice. Premium rates for working on a bank holiday are not to be treated as national minimum wage pay, the enhanced rate over and above normal pay should be stripped out of the calculation.
You must ensure that part-time employees are not treated less favourably than full-time employees and this can be the case if part-time employees do not work on Mondays or Fridays where most bank holidays fall. To avoid a grievance related to less favourable treatment, many employers provide part-time employees with a pro rata bank holiday entitlement based on the number of hours worked.
If a full-time employee working 37.5 hours per week is entitled to eight bank holidays per year, that equates to 60 hours of leave on bank holidays, i.e. eight days of 7.5 hours.
A part-time employee working a three-day week of 22.5 hours would be entitled to a pro rata bank holiday allowance of 36 hours (22.5 ÷ 37.5 x 60).
The employer should allow the part-time employee to book their 36 hours of pro rata bank holiday entitlement as normal annual leave and if they are due to work on a bank holiday equally they would have to book this as annual leave in order to take the day off. If the business is closed on a bank holiday the employee would have to book that as annual leave.
There is no statutory right to take holiday on a bank holiday or to be paid an additional rate for working that day but if this has happened regularly in the past it may have become an implied contractual entitlement. To avoid issues with part-time staff, consider giving them a pro rata bank holiday entitlement based on the number of hours worked.
The Autumn Budget and Spending Review 2021 was delivered on Wednesday 27th October by the Chancellor, Rishi Sunak.
What was announced and how might it affect you?
The speech began with claims that the economy is back on track, as the Chancellor unveiled a post-Covid spending package of £150 Billion by 2024/25.
The successful vaccination programme and the government’s economic plan have led to faster than anticipated growth, and a strong recovery in employment across the country. It therefore means that the Government’s focus now shifts to investing in public services, driving economic growth, leading the transition to net zero, and supporting people and businesses.
Caution is advised as inflation is expected to rise to 4% over the next year. Explained by two forces;
Economies reopening following the global pandemic which means the demand for goods is higher than the supply chains can meet.
And surges in energy consumption means that global wholesale prices of oil, coal and gas have more than doubled.
Key points from the Budget
Changes to duty on alcohol. The stronger the drink, the higher the rate. This means that sparkling wines, like Prosecco, rosé wine, fruit ciders, liqueurs, lower strength beers and wines will see their costs go down. However, some drinks such as stronger red wines, fortified wines, or high-strength ‘white ciders’ will be taxed more.
Fuel Duty. The planned rise in fuel duty will be cancelled.
Air Passenger Duty. This will be reduced for domestic flights between airports in England, Scotland, Wales and Northern Ireland. However, there will be an increase in Air Passenger Duty for long haul flights, over 5,500 miles.
Universal Credit. The work allowance will be increased by £500 per year and the taper rate will drop from 63p to 55p, both measures to be implemented no later than 1st December 2021.
Business Rates. A new 50% business rates discount for businesses in the retail, hospitality, and leisure sectors, including pubs, music venues, cinemas, restaurants, hotels, theatres, and gyms.
National Living Wage. This will be increased from April next year by 6.6%, to £9.50 an hour. For a full-time worker, that’s a pay rise worth over £1,000.
CGT on Property. The reporting deadline will be extended from 30 days to 60 days.
Or to discuss how the Budget Report 2021 will impact you and your business give us a call on 01737 652 852
In August, Esther Guy joined a team of ladies to swim to France as part of a relay, to raise money for Bowel Cancer UK.
Here’s a journal of the event…
girls ALIVE Channel Relay
Wednesday 4th August 2021
The Team (in swim order):
Coach: Amanda Sharples
Observer: Lorraine Mackie
Pilot: Eddie Spelling (with crew: Son Mike and Son-In-Law Rob)
Variable 3 or less, increasing 4 at times.
Smooth or slight.
Actual Weather on the day:
Clear skies & sunshine, 21 degrees, water temperature 17 degrees. Calm waters in-shore but very lumpy in the middle.
Tuesday 3rd August
Left Surrey in two cars, Esther with Sarah B, Sarah C & Jenny and Amanda with Becca and Rona. Arrived in Dover and checked in to Travel Lodge in time for a team dinner. Early to bed with alarms set for 5am.
Wednesday 4th August
Met in hotel reception to head to the marina.
Amanda & Esther dealt with parking permits, the rest of the team met our observer, Lorraine.
Headed onto the quayside to board Anastasia
So many bags! Passed up to the crew and then climbed on for the safety briefing as the boat left the marina. Two border force jetskis were blocking the exit so lots of horn blasting to get past!
Saw Sammy the seal bobbing around just outside the harbour walls.
Sea was calm and so it was a gentle trip around to Shakespears Beach where Rona dives beautifully off the side of the boat and swims to shore.
The boat’s horn blasts (but Rona doesn’t hear it) lots of waving and shouting to signal that it’s time for her to swim! Rona powers towards the boat and begins her hour with the sun rising in the sky and the nervous chattering of the team. Music is turned on, 10 hour Spotify playlist on shuffle!
Solid swim, luckily without any dramas. Rona is breathing bilaterally so every sixth stroke we can cheer, wave and encourage her on. Lots of thumbs up and clapping.
It’s such a clear day that we can see France but it’s a very long way off!
Lorraine finds the laminated time sheets, which show 45, 30, 15 and 5 minutes to go. Rona has asked just to be shown the 5 minutes sheet, which we do with an abundance of cheering and waving, to which she smiles and acknowledges with a wave.
This is Lorraine’s first time observing a relay team and so for the first changeover the pilot’s son Mike takes charge.
Esther is up second and he talks Lorraine through the process of waiting until there’s a minute to go, undo the safety chains, and send the swimmer carefully down the ladder to the platform at water level. With a few seconds left he signals Esther to jump in and calls Rona to the boat. Esther swims around the back of Rona, careful not to touch her. Mike had said to wait until it’s okay to swim so there’s a few strokes of breaststroke until he gives the all clear and she changes to front crawl.
Conditions are good for Esther’s swim, however a goggle malfunction means that from about the 15 minute marker water is inside them and the boat is now just a white blob with nobody visible on board! The goggle straps continue to roll up Esther’s hat and with 5 minutes to go she removes them altogether as is worried that she won’t be able to see the call to come in.
Swimming without goggles is fine, we’ve done it plenty of times before, the difficulty is what to do with the goggles, tuck into the costume, set them free in the sea or hold on to them? Decided to hold but took some wriggling around to get the lenses into a position where they weren’t filling with water and adding drag!
The call to come in is a welcome relief to the goggle drama.
Back on the boat it takes a couple of minutes of sitting to calm down and release the adrenaline. Amanda thrusts drinks at Esther and demands quick dressing!
Becca enters the water with her lovely long stroke and rhythmic leg beat, Esther & Amanda decide it’s like the glockenspiel instrument, very soothing.
The white cliffs of Dover are still visible but fading slowly. It’s surprising how busy the channel is, there are ferries all the time and lots of tankers. Also during Becca’s swim there was a Border Force boat towing a rib, apparently a regular sighting on these trips.
The seaweed is increasing and a huge floating mass of weed and debris floats past on the opposite side of the boat. The sun is glistening on the water, it’s really calm and beautiful. The WhatsApp group is pinging wildly as our supporters wake up and wish us all the best.
Becca is called into the boat and Jenny takes over with her elegant stroke, we all notice how much her technique has improved in the last year. She looks efficient and streamlined in the water.
There are lots of jellyfish visible but Jenny manages to avoid them, it’s like a computer game, but without the electronic music!
The swell is starting to build, photos and videos don’t do it justice but we can tell from training that Jenny is having to work hard during her swim.
The boat is rocking and rolling and Rona now feels poorly, she takes to the front of the boat where she dozes in the sunshine.
Following a swimmer changeover the team is split between those at the back of the boat supporting the person who has just got out of the water and the others are sat up front encouraging the swimmer in the water.
The boat is alongside the swimmer at all times and the engine ticks over gently, now and then the pilot uses a little thrust and the swimmer finds themselves at the back of the boat looking up at Lorraine. A dozen strokes later the swimmer is peaking around the bow of the boat feeling super fast, only for the thrust to take you to the back again. It’s a constant hour of cat and mouse!
Amanda spends most of her time at the back doing amazingly in her role as coach / mother-hen. She has the swimmers bag in front of her and is rummaging for clothes, whilst also thrusting food and drink at them. Refuelling is so important but not sure any of us got that part right, mostly we didn’t eat enough, despite bringing ALL the food with us!
Time is up for Jenny as Sarah C takes over, there’s a few strokes of breast stroke as she catches her breath and then into her beautiful front crawl. Sarah has been really nervous about her speed compared to the others but her hour in the sea proves these fears to be unfounded.
Unfortunately there is a LOT of seaweed during Sarah’s swim, at one stage those on the boat can see her heading for a massive patch with no way of avoiding it. Our cheers and waving becomes manic, it’s probably obvious to her that something nasty is on it’s way, but she powers through, barely missing a stroke.
Her next challenge is a jellyfish, which stings her thigh, leaving a nasty mark and a bit of pain. The ammonia pen was worth buying after all!
Until now all swimmers have been on the port side of the boat, which is where Eddie prefers them as it’s next to the pilot’s window, however there is the choice to swim on the other side if we want. Sarah B is left-handed and therefore spends her hour on the starboard side, breathing towards the boat every second stroke.
Sarah has a textbook stroke which is long and elegant, it might look to some that she’s not trying but the efficiency of her pull through the water means that she speeds away and continues a consistently quick pace for the duration of her hour.
Sarah goes into the zone and at one point Lorraine is worried that she’s too far from the boat. She asks Esther to encourage her back. Lots of waving and shouting does the trick.
Of all the swimmers Sarah B seems to be able to chat whilst swimming, there’s lots of comments from her about weed, jellyfish, asking how long is left etc although she never misses a stroke!
The swell is picking up now and Sarah C is now feeling very poorly with some sickness over the side of the boat. Becca also has a headache and joins Rona to nap up front.
We try to demonstrate to the WhatsApp group how challenging conditions are but don’t mention the casualties as we don’t want to worry family and friends.
It’s time for Sarah to come in. The rib boat being towed behind means that there’s a long line in the water and Sarah has been advised to duck under it carefully to avoid rope burns.
That’s a complete team rotation done and so it’s Rona’s turn to get back in, returning to port side once again.
She has spent almost five hours laying down feeling really bad so we all appreciate how hard this is going to be. It seems that the water is refreshing though and from the boat we’re impressed that Rona’s second swim is as strong as the first, with lots of smiles reassuring us that she’s doing okay.
Time for Esther once more and by now the waves are lumpy and the boat is rolling. Luckily we’ve done lots of training in washing machine conditions and so whilst hard work the waves aren’t too scary.
The sun is now high in the sky and is behind the boat so from the water Esther can just see the silhouettes of her teammates. There’s lots of cheering and encouragement from the front of the boat, which feels odd as Esther hasn’t changed anything about her stroke but then she impales a huge jellyfish with her right hand and everything becomes clear! The jellyfish leaves a sting down two fingers and onto her wrist but it feels like a stinging nettle injury, so not unbearable.
It’s Becca’s turn to return to the sea and despite mentioning a slight headache she seems fine.
Less than ten minutes into her hour Becca switches to a single breaststroke, a sign that something is wrong. She is then horribly sick into the water. All aboard gasp and feel immediately sorry for poor Becca. Amanda reminds us not to show our horror and instead we plaster smiles to our faces and shout words of support and encouragement. Later Becca mentions her confusion at our smiling throughout her misfortune!
Twice more Becca is sick into the water and all on the boat fight back the tears as we feel totally helpless. The pilot is aware of Becca’s sickness and agrees that we can offer her a drink to rinse her mouth. Amanda removes her shoes and climbs down the ladder, we call Becca over, who initially refuses, perhaps she thinks her swim is being abandoned? We make it clear that she’s allowed to take a sip and that the relay is not in jeopardy. A quick mouth rinse and Becca resumes her front crawl once again. Whilst a little slower than her first swim we are amazed in her strength to continue when she must be feeling absolutely terrible. Such a warrior!
Jenny’s hour can’t come quick enough, we all want Becca out of the sea and taken care of. The waves are still pounding and Lorraine suggests that Jenny switches to starboard to get some shelter from the boat.
Sarah C is still being sick, Rona is lying asleep on the front, Amanda and Lorraine are taking care of Becca, so Esther & Sarah B sit up front to cheer Jenny from the side.
Despite all that’s going on everytime Jenny makes eye contact there’s a massive smile and she appears to be having a great swim. Later Jenny tells us that her second hour flew past.
The sun is behind her as she swims making for some great pictures and videos to look back on later.
Time for Sarah C once again and as before she remains on the starboard side.
Sarah went into her hour feeling very rough indeed but you would never have thought so judging by her second swim. She stays close to the boat, a little too close at one point when we lose sight of her under the bow.
Esther is cheering her on from the side rail (as there are very few places left on the boat without casualties!) From this angle the eye to eye contact is VERY intense. Esther cheers Sarah on with every breath towards the boat, hoping that it might help just a little bit.
The pilot is checking Becca as he’s concerned for her well being, she is slumped over a bucket on the floor at the back of the boat, fully dressed with dry robe but still cold, not like Becca at all. He tells Amanda that Becca needs to be sitting upright and suggests we move her to the front of the boat. She’s propped up at the bow and forced to nibble a ginger biscuit, it seems to help.
Lorraine says that the pilot is very worried about Becca and doesn’t think she’ll be able to swim again. This means that if we don’t finish in the next three hours (Sarah B, Rona, Esther) then the event will be abandoned. So much pressure.
He tells Sarah B that if she gives it everything she’s got we could still make it.
Time for Sarah B to give it all she’s got. Still on the starboard side and with the sun glistening on the slightly calmer sea, Sarah powers into her hour.
Each hour Lorraine has been making a note of our stroke speed, she shouts to Esther that before her swim Lorraine told Sarah she needed to increase by two extra strokes per minute, Lorraine is very pleased that Sarah has actually increased by three, proving that she’s giving it her everything.
Esther sits at the front to cheer Sarah on but she rarely looks up, instead clearly focussed on her stroke. Lorraine comes forward and tells Esther & Amanda that we’re 800m from the shore, a quick look around and France does seem very close all of a sudden!
The pilot takes Rona downstairs to talk her through the landing process and Mike is released onto the rib boat to warm it up.
Sarah B sees the rib being used and starts imagining all sorts of worst case scenarios. She is pleading with her eyes for us to give the 5 minute shout but there’s still 9 minutes on the clock so we can’t say anything just yet.
Excitement on board is building as landing the relay is suddenly a reality but Sarah B is unaware of any of this.
There’s a bit of disappointment that we can’t all swim to shore together, Eddie had said this would be possible if we landed on the beach but the tides mean that we’re at the cap and therefore a rock landing is too dangerous for multiple people.
Sarah is called towards the boat, which she does with huge relief and immediately bursts into tears (from the immense effort and turmoil of emotions).
Rona dives off the back, salmon like, and sprints towards the coast. Amanda has to tell her to calm her windmill arms, later likened to a wind up bath toy, as it’s too far to sprint.
Anastasia bobs out at sea and Mike follows Rona to shore on the rib boat. All on board chatter nervously. We try to take photos but she’s too far away.
Mike stops Rona before she’s at the rocks and we all wonder what’s wrong, later we’re told he was warning her of the rocks close to the surface as we’re landing at the part called Dragon’s Teeth. The rib bobs a few metres out and Rona does the last bit by herself.
We see her climb a rock then fall down, then she’s up again and the boat horn is sounded followed immediately by our cheers!
Lorraine announces an unconfirmed success of 12 hours 13 minutes. That’ll do nicely!
Rona swims back to the rib boat and Mike returns her to Anastasia. She wobbles up the ladder and empties her swimming costume of French pebbles for us to keep as memorabilia of the day, crazy lady!
Eddie says it will take 2.5 hours to get back to England, but that time flies past. The champagne cork is popped and the bubbles flow. We are chattering wildly and giddy with excitement. Becca has perked up a bit but Sarah C is still feeling very rough.
The sun is setting and as we approach the white cliffs of Dover we have a lovely view of the castle up on the hill.
The lighthouse warns of the harbour wall approaching and a green light signals our entry into the marina. Sarah’s phone rings and her husband tells us to look to our right, on the harbour wall are Sarah’s family and friends with placards and cheering wildly.
Anastasia moors where she started and we unload our bags, still heavy with the food we didn’t eat. A bottle of wine and biscuits are presented to the crew and to Lorraine. She says that we are a team she will never forget for our spirit and all the dramas of the day.
We head back to the Travel Lodge in time for dinner and last orders at the bar, but nobody has the energy for booze. We want hot food and our beds.
Thursday 5th August
The arrangement is to meet at 8.30am for breakfast. Esther is downstairs first and waits a long time alone until realising that her phone is still on French time and that she’s an hour early!
The team joins for food and drink, a quick song of Happy Birthday to Esther, some lovely presents and then it’s time to check out and head for home.
What an emotional, challenging, enjoyable event. We made a terrific team and feel honoured to have supported each other to complete the challenge together.
We did it. We swam the English Channel!
A MASSIVE THANK YOU!
Thank you so much to everyone who sponsored us.
Our chosen charity for this event is Bowel Cancer UK, who support and research to save lives. All donations will go to this amazing charity to educate the public and professionals about the disease and campaign for early diagnosis and access to best treatment and care. We need people to stop dying of bowel cancer.
All donations make a difference and our fundraising page will remain open for a few more weeks. If you were inspired by our achievements and would like to give some money then we’d be very grateful.
If you work within the retail sector then you will need to review your till software to check your compliance, in line with MTD for VAT.
As you may be aware businesses are required to have digital links in place to support their VAT returns, there was a soft-landing period but this has now ended.
Details of your sales must be kept, maintained and preserved digitally. The regulations refer to this information as your ‘electronic account’. Whilst those in retail do not need to create a sales invoice for every customer purchase made, you do need to keep a digital record of your daily gross takings (DGT).
The most common way of keeping a digital record is to use of a point of sale system, such as a till, where the VAT liability of the goods being sold is decided at the point when the customer buys them.
Most tills are able to produce a report at the end of the day (often called a z-reading) which give a daily gross takings figure and shows the split between zero and standard-rated sales.
Confirm if your till software provides a report of daily gross takings
Get into the habit of downloading this report regularly
Forward it to a4c to be incorporated within Xero, to comply with the Making Tax Digital laws when filing your VAT returns.
If you are unsure how to do this then please speak to your till software provider.
Of course, if you have any questions regarding MTD, then don’t hesitate to get in contact with the a4c Team on 01737 652 852.
Budget Report 2021
The 2021 Budget Report was delivered on Wednesday 3rd March by Rishi Sunak. What was announced and how might his new tax measures affect you?
The Coronavirus Job Retention Scheme (furlough scheme) will be extended until the end of September 2021.
From an employee’s perspective, nothing will change but employers’ contributions will increase.
From July, employers will only be able to claim for 70% of furlough pay and must make up the 10% difference so that furloughed employees continue to receive the 80% minimum.
From August, this employer contribution increases to 20% of furlough pay with a 60% grant from the Government.
The fourth tranche of the Self-Employment Income Support Scheme will go ahead and there will be a fifth on similar terms.
Those who have submitted their 2019/20 tax returns will now be able to make a claim, which should catch anyone newly self-employed who missed out last time.
As before HMRC will be in touch with you directly when the claim scheme opens.
Working Tax Credit claimants will also be given more support for the next six months, with a one-off payment of £500.
The temporary £20 per week increase in Universal Credit will be extended by six months.
A new Restart Grant of up to £6,000 per premises for non-essential retail businesses in April and up to £18,000 for firms that open up later.
A new Business Loan Scheme for all business offering 80% government guaranteed loans between £5,000 and £10 million.
Corporation Tax will return to a two-tier system from April 2023 when:
the rate of corporation tax will rise to 25% for companies with profits exceeding £250,000
companies with profits up to £50,000 will continue to pay 19%
companies with profits between £50,001 and £250,000 will pay tax at 25% reduced by marginal rate relief rate so that the main rate won’t apply until their profits excess the higher amount
Businesses will be allowed to carry back trading losses to set against tax paid on profits of the previous three years.
From April 2021, the new super-deduction (we assume this is an enhanced capital allowance) will cut companies’ tax bills by 25p for every pound they invest in new equipment. Further details expected at the end of March.
VAT will remain at 5% until 6 September and then an interim rate of 12.5% until 31 March 2022 for hospitality and tourism businesses.
VAT registration threshold will remain at £85,000.
Consultations on R&D Relief and the Enterprise Investment Scheme will look at ways of improving their tax incentives.
The temporary increase to the stamp duty land tax nil rate band for dwelling of £500,000 will be extended until the end of June 2021. It will then fall to £250,000 until the end of September when it will return to its normal level.
Personal allowances for 2021/22 will increase as planned to £12,750 but will then stay the same until April 2026.
The higher rate tax threshold will rise to £50,270 for 2021/22 but will also remain the same until April 2026.
Some businesses will be given incentive payments of £3,000 for all new apprentice hires of any ages
Starting from 4 March first-time buyers will be allowed to take 95% mortgages (i.e. only a 5% deposit will be required) backed by a partial government guarantee.
Or to discuss how the Budget Report 2021 will impact you and your business give us a call on 01737 652 852.
This week Esther attended a Brexit webinar which covered the key changes you will need to consider if you trade with customers in the EU.
This is a brief summary with links provided for you to obtain further information, if required.
The Key Brexit Changes
Exporting – customs declarations
Work Permits – country dependant
Data Sharing – ecommerce
Northern Ireland Protocol
1. Exporting Goods
Whilst at first glance it would appear that we have a tariff-free agreement in place with the EU (with some exceptions such as plant and meat exports) this is not necessarily the case. Instead you need to consider the Rules of Origin.
Rules of Origin
Where goods originate in the UK the export can be tariff-free, however where the goods originate elsewhere there could be tariffs applied, even if they come to the UK for modification before being sold to customers in the EU.
For example, cane sugar is imported to the UK from the Caribbean, where it is then refined in the UK to make the end product (sugar) which is packaged and sold to supermarkets across the world. As the sugar cane does not originate in the UK, tariffs will apply when the sugar is sold to supermarkets in the EU and customs declarations will be required.
The rules of origin apply in both directions, therefore impact goods you export and goods you import.
Businesses will be able to self-certify the rules of origin for their exports, however qualifying evidence will need to be submitted. You have a 12-month grace period to gather this evidence.
Exporting to Northern Ireland is tariff-free but businesses need to register for the Trader Support Service on Gov.Uk.
Exporting Goods via the Post Office or a Postal Service
Businesses who use a parcel provider to send their goods to customers in the EU will need to consider the value of what is being sent. The rules now match those already in place for goods sent to the US and other overseas locations, outside the EU
· Under £900
Where the value of the goods being posted is less than £900 you need to complete a customs form online
· Over £900
Where the value of goods being posted is greater than £900 you need to carry out a full customs declaration using your EORI number
All VAT registered businesses should have automatically been provided with an EORI number but if you haven’t received this you can apply online, it takes around 5 days to be confirmed – Gov.uk/eori
You may need more than one EORI number:
If you move goods to or from the EU your EORI number will start with GB
If you move goods to or from Northern Ireland you will need an additional EORI number that starts with XI
Expect to see an increase in your postal charges as the shipping providers will need to increase fees to cover additional administration costs.
2. Business Trips to the EU
Unlimited free movement within the EU for UK citizens has now ended. In its place we are restricted to 90 days travel within a 180 day period, without the need for a visa. This applies to business travel and holidaymakers.
There are only certain work-related tasks you are allowed to perform without the need for a visa, a few examples include:
Conducting meetings and consultations
Research and design
Attending trade exhibitions
Tour guides, where the tour starts in the UK.
Direct sales activity to the public
Musicians on tour
Where the activity is excluded from the visa-free travel you will need a work permit. This is required for each country you’re travelling to.
You will also need to check that the qualifications which permit you to work are recognised in the country you are working in.
From 2022 all travellers to the EU will need to complete an EU version of the ESTA form and pay a fee (approx. £6). ESTA stands for Electronic System for Travel Authorization.
3. Data Sharing
Nothing much changes in this area for now. The General Data Protection Regulation (GDPR) rules will remain, as they have been written in to UK law.
E-commerce & online advertising
If you do business with countries in the EU you will need to ensure that you comply with the rules of each country you’re selling to. This could potentially mean a lot of work to ensure you meet the online sales rules for each place your website is used to sell your products!
4. Northern Ireland Protocol
The Northern Ireland Protocol avoids a hard border on the island of Ireland, in line with the requirements of the Good Friday Agreement. Instead the EU border is effectively in the Irish sea.
This means that Northern Ireland remains part of the EU single market and therefore goods from Britain need to be treated as exports to the EU with the necessary customs declarations fulfilled, however as Northern Ireland remains part of the UK, trade with customers here remains tariff-free.
It’s a complicated aspect of the Brexit arrangement you should review this protocol carefully if you have customers in Northern Ireland.
Beyond the politics of Brexit there are a lot of people within the government and at HMRC who want this to be an opportunity for businesses.
There is a wealth of information on the Gov.UK website (Gov.uk/transition), however lots of the rules are not yet set in stone and agreements are still being discussed, therefore there’s going to be a period of time in 2020 where you need to keep checking the rules.
As an alternative source of information, you could visit the Brexit Support Hub, hosted by Enterprise Nation. Here you will find lots of advice, along with advisors available to help by phone and email.
In the coming weeks the team at a4c are booked onto a number of courses which relate to VAT and accounting treatments following Brexit. We will be sending out further information in this area once we’ve digested it ourselves.
Watch this space…
As you may be aware Limited Companies are only permitted to pay dividends out of distributable profits.
Due to the Coronavirus Pandemic, you may have had profits available when the dividends were declared but due to the various lockdowns there is no longer the profit to cover the transaction(s). What happens next?
Dividends paid where there are insufficient profits are classed as unlawful distributions. When a director shareholder receives a dividend which is unlawful, they must repay the dividend to the company.
In the current circumstances, you may be strapped for cash and simply unable to repay it and therefore the dividend has effectively become a loan to the director from the company.
Corporation Tax Charge on director loans
Be aware that unless the loan is repaid within nine months of the company year end there will be a 32.5% tax charge under s.455 Companies Act 2010 (CA). This tax is due and payable when corporation tax for the period would normally be paid.
Another snag is the possibility of a benefit in kind charge in respect of beneficial loan interest on the director shareholder, where the loan is in excess of £10,000. In this instance, the loan value is added to the payroll and tax and NI will be due via a P11d reporting requirement, payable in July.
The ideal situation would be for you to get back on your feet and repay the loan before the s.455 charge kicks in. This gives you at least nine months from the company year end to find the funds.
You can do so by voting a dividend from post-lockdown profits to credit the loan account.
The alternative is to declare a bonus, however, this would be taxed as employment income attracting a higher NI charge (both for the director and the company) and losing the advantage of the dividend allowance.
If you are worried about your finances and would like to book a health check call with Esther then please get in touch (firstname.lastname@example.org).