30 days to pay capital gains tax

Since April 2020, all UK residential properties disposed of by UK resident taxpayers – that create a taxable gain for Capital Gains Tax (CGT) purposes – will have to be reported to HMRC within 30-days of the disposal. Any CGT payable will have to be paid over to HMRC in the same 30-day window. Generally, this will include sales of second homes and buy-to-let property.

What if I sell a property and don’t make a taxable profit?

The new 30-day disclosure deadline only applies, in practice, to property disposals that create a taxable gain. For example, if you sell a buy-to-let property and make a loss on the sale, you will not have to make a return within the 30-day window.

Does this mean I have to submit a tax return every time I sell a property?

Effectively, yes, it does, although restricted to details of any property disposal that creates a chargeable gain. Penalties may apply if you file outside the 30-day window.

How do I work out how much tax is payable?

As part of the 30-day submission to HMRC, you are required to estimate the amount of CGT payable based on your present understanding of the factors that affect this liability. As your other earnings will determine if the CGT you pay is at 18% or 28% – or a mix of the two – estimating these other earnings and getting the number-crunching right will be no mean feat.

During the 30-day window, you will need to: prepare a formal computation and a calculation of the CGT due, submit both to HMRC and pay any CGT this computation reveals.

At the end of the tax year during which you made the disposal, you will also need to include the computation again as part of your actual return. This annual confirmation of the gain may result in an over or underpayment of tax. The annual return will be based on actual data and not the estimated data used to comply with the 30-day rule.

We can help. Read the section that follows.

Advise us in advance if you intend to sell a chargeable property 

We can only help you meet the 30-day deadline if we have the required information about the disposal on the day you sell. The stepped approach set out below is our suggested timeline for gathering and reporting each gain:

  1. Before the completion date, advise us which property is to be sold and the estimated selling price and sales costs.
  2. We will immediately draw together the data we have about the property and confirm that this is correct. This will not only include the purchase price but also improvements made since you bought the property.
  3. We will use this information to prepare a draft computation (based on our prior knowledge of your tax affairs) and advise you of the possible CGT payable 30-days after the sale completes.
  4. When the sale does complete, we can adjust the numbers for any final changes in the sale particulars and agree the computation with you.
  5. Once agreed, we can file the CGT computation with HMRC and advise you when and where you should pay any tax due.

To meet these relatively new reporting regulations, we will need to move quickly to meet the 30-day deadline. We would request that you contact us immediately if you are planning to sell by calling 01473 744700, or by sending an email to contactus@accountinggem.co.uk.

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Customer Spotlight: Spartan IT Systems

This month, we’re excited to shine a spotlight on: James Spencer, Owner of Spartan IT Systems

Tell us a little about Spartan and what they do?
Spartan IT Systems was started at the very beginning of the pandemic. What began as a need to keep myself working while businesses were no longer hiring IT contractors – turned into an enterprise I have become very passionate about and devoted myself to. We can manage any IT requirement a small or medium business might require. From expanding or maintaining the network infrastructure to desktop and server support. Our services and contracts are designed to remove the element of IT from your day-to-day worries and responsibilities. No more time spent trying to fix the printer or search for a new one – you just give us a call. No more time spent trying to set up a new desk and login information for a new staff member – just email us the details. No more worrying that your company data is backed up and secure in the event of a disaster – we will be watching over it. Almost any IT-related job you can think of, we can support and maintain.

Where are you based?
We are based in Ipswich but provide support to the entirety of Suffolk. Remote support or one-off projects are available further afield, but our locality is greatly responsible for our fast response times.

Tell us a little bit about yourself and your role at Spartan
I have been working in the IT sector professionally for almost 15 years. I grew up to boxes of floppy disks and the sound of dial-up modems – me and technology have grown together ever since. I have worked for multiple IT support companies and contracted for many big businesses such as Greene King and Co-Op. This has allowed me to see the gaps in service and quality many companies receive from their current IT support. As I have a direct say in how Spartan operates, I can ensure these instances are addressed straight away, ensuring the customer is informed, confident, and assured. Your business’s IT infrastructure is our only priority.

What does an average day look like for you?
An average day for me at present can vary depending on the latest government announcements on lock-downs. However, by and large, it will consist of a morning spent remotely checking backups/servers and compiling reports, including any remote desktop support required (installing printers, resolving PC issues, etc). In the afternoon, I tend to focus on all the physical jobs – site security camera installs, building or repairing hardware, quotation visits, network expansions. As our services are so inclusive, no two days are the same.

Any spare time I have that isn’t spent responding to emails is used to learn about smart and automated homes. From my blinds and curtains closing automatically when the sun sets, office and conservatory lights turning on and off based on motion and the time of day, the robovac scheduling to vacuum during the night, and being able to turn off every light in the house when I go to sleep by saying three words. The irony being that I don’t believe all the time I have saved from automating my household covers the time I have spent researching and learning about it. But at the very least, I can save many others their time.

What motivates you to wake up and go to work?
My motivation is simple – I get to do something I am interested in and passionate about, which I am very thankful for. Every day is a learning experience which means I am never drawn down by the monotony of repetitive tasks. While some may count sheep to drift off, I will be mentally mapping out a project I am either working on or plan to start. I will wake up to my alarm in the morning and before I have even left the bedroom, I have drawn together all the mentally scattered pieces of my plan from the night before, ready for action.

What has been your favourite project so far?
I often confuse favourite with frustrating when it comes to IT. One of the main joys of this job is resolving a particularly difficult issue. A customer will often apologise for approaching me with a task that isn’t straight forward, but unaware that I will be just as satisfied as them, if not more so, when I provide a resolution. 

With this in mind – I think my favourite project so far was installing multiple security cameras on a barn situated 100 yards from the property. The challenge here was to get internet access to an outbuilding located so far from the main property and router. After a bit of experimentation and research, we overcame that hurdle. Getting that follow-up thank you email from the customer saying everything is working better than they imagined makes my day.

I would say as much as the projects themselves are the customers and companies, I get to meet. From Catteries, Kennels, and stables where I am surrounded by animals, to soap manufacturers and stately homes where I see places normally closed off from the public.

What’s the biggest challenge your customers face and how do you help them fix it?
I think the main challenge for my customers is understanding their own infrastructure and IT resources. When a computer crashes with a blue screen and a jargon error message whenever you turn it on – the customer doesn’t have the time or knowledge to know how to fix it. If their internet speed has suddenly ground to a halt, the customer might not know where to start to speed it up again. Many times, there are services and resources they have access to but never utilize to their full potential. Like subscribing to an Office 356 platform and not using the free cloud storage, or not using the built-in wi-fi performance enhancements of a router to stabilize connections. 

Understanding all this and trying to operate a business can understandably be too much for many individuals. We help by not only being there to resolve any issues but also to suggest performance and efficiency solutions. All with updates, reports, and full visibility, so the business is in complete control.

What’s something most people don’t know about you?
I believe that many people have a certain stereotype in mind when they think of the IT guy, and I completely agree with that stereotype. By and large, we are generally reclusive and not very socially adaptive, an unfortunate cost of spending years in front of computer screens. 

I was fortunate to grow up around a family of pub owners. I spent a lot of my early years working in various pubs, restaurants, and catering industries. This gave me an early education in interacting and relating to people from all warps of life. As I grew with the rise of technology, those lessons stayed with me. They allowed me to provide a service based on years of experience and allow me to sympathise and communicate with a customer effectively.

Website: https://spartanitsystems.co.uk/
Email: Support@SpartanITSystems.co.uk
Telephone: 0785 4479 528

Would you like to be featured in our next spotlight? Feel free to get in touch with Blue Rhino Marketing or send an email to contact@brmarketing.co.uk.

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Filing deadlines and tax saving tips for 2020-21

Benefits and the tax consequences

At the end of each tax year, you will usually need to submit a P11D form to the tax office for each employee you have provided with expenses or benefits, for example, a company car.

The total taxable benefits you provide to all employees will also create a Class 1A employer’s NIC charge. This will need to be reported to HMRC by filing a further return, P11D(b). 

Note: If HMRC has asked you to submit a P11D(b), but you have no taxable benefits to report, you can tell them you do not owe Class 1A NIC by completing a formal declaration via your online government gateway account.

What are the filing deadlines for 2020-21?

What you need to do Deadline
Submit your P11D forms online to HMRC 6 July 2021
Give your employees a copy of the information on your forms 6 July 2021
Tell HMRC the total amount of Class 1A National Insurance you owe on form P11D(b) 6 July 2021
Pay any Class 1A National Insurance owed on expenses or benefits Must reach HMRC by 22 July 2021 (19 July 2021 if you pay by cheque)

Note: You will be charged a penalty of £100 per 50 employees for each month or part month your P11D(b) is late. You will also be charged penalties and interest if you are late paying HMRC.

Talk to us before you file your P11D returns

There may be tax-saving opportunities you could discuss with employees that would save them income tax and you the additional NIC charge. We have outlined two ideas for company car drivers you could consider below.

Avoiding the car fuel benefit charge

Employees not only pay additional tax for the use of a company car, but they also pay a hefty additional tax charge if their employer pays for private fuel. The car fuel benefit charge can be avoided if the employee records actual private mileage and repays their employer based on an agreed rate per mile.

Were company car drivers furloughed during 2020-21?

If any of your employees that had the use of a company car were furloughed during 2020-21, and the car was not made available for private use during this period, you can advise HMRC of the “not available” period when you complete their P11D. This will reduce any benefit charges for 2020-21.

Let us help you crunch the numbers

Please call An Accounting Gem on 01473 744700 if you would like to discuss options to reduce BiK tax charges for your employees or prepare and file the necessary returns. And do not forget, if you can reduce income tax charges for employees, you will not only boost their morale, but you will also lower the amount of Class 1A NIC that you will have to pay as their employer. Alternatively, visit our website www.aag-accountants.co.uk or send an email to contactus@accountinggem.co.uk.

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What are the new National Minimum Wage rates?

The Government has approved the Low Pay Commission’s recommendations for the new National Minimum Wage to be increased 2.2% from £8.72 to £8.91. The new wage rates take effect on the 1st April 2021 and if you’re aged 23 years and over, you will soon be entitled to the National Living Wage of £8.91 per hour, the previous age threshold was 25 years and older.

By law, employers must pay the National Minimum Wage (NMW) as a minimum. The rate will be dependent on the age of the employee, or if they’re an apprentice.

  • The apprentice rate applies to people who are under 19 years of age and those aged 19 or over when undertaking the first year of their apprenticeship
  • An employee is entitled to National Minimum Wage if they are under or over the age of 23

As of 1st April 2021 the following rates will apply:

Category of worker Hourly rate
Aged 23 and above (national living wage rate) £8.91
Aged 21 to 22 inclusive £8.36
Aged 18 to 20 inclusive £6.56
Aged under 18 (but above compulsory school leaving age) £4.62
Apprentices aged under 19 £4.30
Apprentices aged 19 and over, but in the first year of their apprenticeship £4.30

If you’d like to discuss new National Minimum Wage rates and they mean for your business, call An Accounting Gem today on 01473 744 700, send an email to contactus@accountinggem.co.uk, or visit our website at aag-accountants.co.uk. and we’ll be able to assist in any way that we can.

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Will HMRC contact me about SEISS payments?

If you commenced self-employment after 5th April 2019

If you started your self-employment after 5th April 2019, you were initially denied support under the Self-Employed Income Support Scheme (SEISS) and the first three quarterly payouts to 31st January 2021. 

Thanks to a change in the recent Budget, you may be eligible – for the first time – for grants that will be made available for the quarter-end 30th April 2021 and a final period to 30th September 2021.

HMRC are adding a further security check

To counter fraudulent use of the SEISS scheme, HMRC has decided to contact taxpayers who became self-employed during 2019-20 and who submitted a self-assessment return for that period.

What will the letter say?

The letter will tell you to expect a telephone call on the number provided on your tax return. If our contact details were added to your return, HMRC will ask us to pass on your contact number. 

On this occasion, we cannot deal directly with HMRC. They will need to speak with you to obtain proof of identity and evidence of trade in the form of bank statements.

Why a letter and then a phone call?

Here’s what HMRC said:

We are aware of increased scam activity related to HMRC’s coronavirus support schemes. The purpose of the letter is to explain to you that this is a genuine call and to give customers details on how to recognise it as such.

Are you worried about HMRC calling you?

HMRC’s reason for this added layer of security seems to be to exclude fraudsters from making claims. But if you have any concerns regarding this process, please call an Accounting Gem today on 01473 744 700. Alternatively, you can email contactus@accountinggem.co.uk or visit our website at aag-accountants.co.uk

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Can I claim the fourth and fifth SEISS payouts during 2021?

If you commenced self-employment after 5th April 2019

If you started your self-employment after 5th April 2019, you were denied support under this scheme from the first three quarterly payouts to 31st January 2021.

The good news is that due to lobbying by tax professionals and self-employed support groups, the SEISS is being opened to traders who commenced after 5th April 2019. However, there is an additional hurdle to jump before you can make a claim; your tax return for 2019-20 needs to have been filed by midnight 2nd March 2021. 

Additionally, your business must be adversely affected by the Coronavirus pandemic. All of your profits from self-employment must be less than £50,000 and at least 50% of your income. 

If you commenced self-employment on or before 5th April 2019

If you qualified for the first three grants, you should be eligible for the further grants due this year unless your circumstances have changed, for example, if you are no longer adversely affected by COVID disruption.

For those of you who may be claiming for the first time, you will need to claim using your online tax account. HMRC should advise you when the claims process is open for business.

If claiming the fourth grant – 1st February 2021 to 30th April 2021

The fourth SEISS grant covers February 2021 to April 2021. It’s worth three months’ average profits capped at £7,500 and can be claimed from late April.

If claiming the fifth and final grant – 1st May 2021 to 30th September 2021

The fifth and final grant will cover the period from May 2021 to September 2021. The SEISS grant will be dependant on the impact that Covid-19 disruption has had on profits. 

  • If your turnover has fallen by 30% or more (because of Covid-19), you’ll be able to claim a grant equal to 80% of your average profits for three months, capped at £7,500. 
  • However, if your turnover has dropped by less than 30%, you will be entitled to a reduced grant of 30% of three months’ average profits, capped at £2,850. 

The final grant will be available from late July of this year.

There is a potential misfit in this fifth grant. Although it covers a five-month period (May – September 2021), the actual payout for this period is based on three months. What about the other two months?

We can help

You’ll only be able to claim the grant if you have been adversely affected by the pandemic, and grants received under the scheme are taxable and must be considered in working out your profits. If you’re unsure how to proceed, call An Accounting Gem today on 01473 744 700 or visit our website at aag-accountants.co.uk, and we’ll be able to assist in any way that we can.

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How do I move my business forward after lockdown?

From June 21st, 2021, the government has now declared its intention to have all UK businesses back up and running and free of lockdown restrictions. 

As with all of these announcements, it’s worth noting this date depends on the continuation of the reduction in COVID-19 infection rates. If the measures put in place and the vaccine cannot control the virus’s spread, a return to lockdown seems likely.

But with the information we have so far, you may be wondering about the challenges your business may face as we emerge from the enforced hibernation of nearly a solid year?

How have you and your business done during lockdown?

Companies have almost nearly all fallen into one of the below two categories:

  1. Unable to trade.
  2. Limited ability to trade.

For example, the entertainment and hospitality sector has been hit badly – the financial costs have been dire. Companies have little choice but to go into liquidation or have used savings to fund their losses. Those that remain in this group have a hard road ahead.

Some companies have managed to maintain some semblance of trade and may have even sustained profitability – likely at a reduced level – but are still solvent and in control of cash flow.

In both categories, limited ability to trade and unable to trade, business owners have probably availed themselves of government grants. They may have taken out Bounce-Back or similar loans with their bank.

Each group faces different challenges as we approach June 21st and head back to ‘normality.’ Below, we’ve sketched out some possible challenges and how An Accounting Gem can help you get your business back on track.

Unable to trade during lockdown

If you fall into this group and cannot see a way forwards, please call An Accounting Gem as a matter of urgency, and we’ll help you look at different options. In the worst-case scenario, even the liquidation process needs to be appropriately planned. An Accounting Gem could be able to help you keep some of the personal investments you’ve made in the business. In some cases, we could see a way forward for the company that you’ve not seen as yet, and be able to assist you in continuing trading.

If you have some of your reserves and savings left, planning your business’s reopening will be imperative. Of critical importance will be your cash flow, and you manage it. Companies that sell goods on credit but must buy from suppliers on less attractive payment terms could find that there are periods where cash reserves run out. Producing and looking at realistic estimates of expenditure and income for, say, the next year will highlight these dips in cash flow and allow you to plug the gaps from other sources or overdraft funding.

Limited trade during lockdown

The restricted trade period would have probably reduced your cash reserves, especially if this has involved funding losses. Ironically, suppose the end of lockdown increases the demand for your products or services. In that case, the increase in turnover will not immediately impact your cash flow if you’re offering less generous payment terms of suppliers and more generous payment terms to your customers. It’s worth remembering too, you’ll have some taxes and fixed costs that need to be accounted for.

Dealing with a reduction in trade is challenging, but planning for an expansion of activity can be just as tricky. We can help you create realistic budgets, all integrated into your accounting software, thus providing an invaluable business tool.

Planning is key

We should all step into this changing marketplace well aware of the pitfalls and opportunities that wait for us. We should have financial considerations and a robust plan of action.

Whatever the current circumstances of your business, contact An Accounting Gem to help maximise the possible boost to trade following lockdown easing.

Come June, you should be more than ready to meet the challenges it will present. We will be working hard with many of our clients to ensure they have the best possible resources to meet these obstacles.

Call us today on 01473 744 700, visit our website aag-accountants.co.uk or email contactus@accountinggem.co.uk. We’re to help every step of the way.

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How will budget changes affect me?

The Chancellor, Rishi Sunak, presented his 2021 Budget on 3rd March 2021. The extent to which the measures will affect you will depend on your personal circumstances. We’ve divided this report for your convenience into a total of three sections:

  1. Impact on individuals
  2. Impact on the self-employed
  3. Impact on small company owners

Impact on individuals

Personal allowance and income tax thresholds frozen

The personal allowance has been increased in line with inflation to £12,570 for 2021/22. However, it will remain at this level for the next five years, until April 2026. The basic rate band will also stay at £37,700 for the next five years, freezing the starting point for paying a higher rate at £50,270 until April 2026. 

Suppose your income increases during this period. For example, your pay rises in line with inflation. In that case, you may find that you move into the higher rate band, paying tax on some of your income at 40% where previously you were a basic rate taxpayer.

The basic tax rate will remain at 20%, the higher rate at 40%, and the additional rate at 45%.

Covid support continues

The Coronavirus Job Retention Scheme has been extended until 30th September 2021. This means that if you have been furloughed or flexibly furloughed, you will continue to be paid 80% of your regular wages for your unworked hours, subject to the cap of £2,500 per month.

If your company has been affected by Coronavirus and you’re self-employed, you will be able to claim two further grants under the Self-Employment Income Support Scheme.

Pension lifetime allowance frozen

The pension lifetime allowance will not be increased in line with inflation over the next five years. Instead, it will remain at its current level of £1,073,100 for 2021/22 to 2025/26. This may affect you if you already have pension savings at or near this level. If this is the case, you should review your pension pot’s amount before making further tax-relieved contributions. Pension savings more than the lifetime allowance are taxed at 25% if the excess is taken as a pension and 55% if taken as a lump sum.

SDLT threshold to remain at £500,000 until 30th June 2021

The SDLT threshold has been increased to £500,000 temporarily and will remain in place until 30th June 2021. It will then fall to £250,000 until 30th September 2021, returning to the standard amount of £125,000 from 1st October 2021.

Martin Swann and Barry Scott of Try Financial in Ipswich said the following;

“We welcome very much the extension of the current holiday to 30th June. It gives a very good chance to deals already in the pipeline, along with some new ones, to receive the full benefit from the move made by the Chancellor. The increase of the nil rate band up to £250,000 until 30th September, while not expected perhaps, is also very welcome.

The news on tax is both good for residential purchasers and buy to let investors alike. It looks like it’s going to be a busy summer! Even the increase in Corporation Tax from April 2023 will not hit as many buy to let investors with limited companies, given that the threshold for the Small Profits Rate is set to stay the same at £50,000.

Do we think the market will be much quieter after the SDLT holiday ends? While we think there will be a period of adjustment with prices levelling off as activity may slow, the medium and long-term outlook has, for some considerable time, featured too many people chasing too few dwellings. The country has never hit its 250,000 new homes target, and until the laws of supply and demand say otherwise, prices will, along with the attractiveness of property in general, we think, continue to grow.”

If you are looking to move to a new house or buy an investment property, there is still time to benefit from the higher threshold. These comments refer to rates in England and Northern Ireland. The devolved administrations of Wales and Scotland may set alternative rates.

Try Financial Ltd. trading as Try Financial is an owner-managed business that offers independent mortgage and protection advice to consumers, property investors and business owners.  If you need help in assessing your next steps, please contact Try Financial today on 01473 462288, visit tryfinancial.co.uk or send an email to enquries@tryfinancial.co.uk

Inheritance tax nil rate band will stay at £325,000

The inheritance tax nil rate band will remain at its current level of £325,000 until April 2026. The residence nil rate band, available where your primary home is left to a direct descendant, also remains at its current level of £175,000 until April 2026. This should be considered when undertaking inheritance tax planning.

Impact on the self-employed

Two further grants available under the SEISS

If you are self-employed and you continue to be adversely affected by the Covid-19 pandemic, you will be able to claim two further grants under the Self-Employment Income Support Scheme (SEISS). The fourth grant under the scheme covers February to April 2021. It is worth three months’ average profits capped at £7,500. It can be claimed from late April.

The fifth and final grant covers the period from May to September 2021. The total amount of the grant will depend on the impact that Covid-19 has had on your profits. If your turnover has fallen by 30% or more because of Covid-19, you will be able to claim a grant equal to 80% of your average profits for three months, capped at £7,500. However, if your turnover has dropped by less than 30%, you will be entitled to a reduced grant of 30% of three months’ average profits, capped at £2,880. The final grant can be claimed from late July. With this in mind make sure you file your accounts early, please let us have your paperwork after the 5th April 2021.

Remember, the grant can only be claimed if you have been adversely affected by the pandemic. Grants received under the scheme are taxable and must be considered in working out your profits.

Help for the newly self-employed

Support under the SEISS was not available to traders who commenced self-employment in 2019/20 – to qualify, a tax return had to be filed for 2018/19. However, as the deadline for filing the 2019/20 tax return has now passed, you may be eligible for the additional grants if your 2019/20 tax return was filed by midnight on 2nd March 2021. To qualify, your business must be adversely affected by the pandemic, and your profits from self-employment must be at least 50% of your income and less than £50,000. 

The carry-back period for losses extended

The period for which losses may be carried back is temporarily extended from one year to three years. For unincorporated businesses, the extended carry-back will apply to losses made in 2020/21 and 2021/22. Losses must be set against a later period before an earlier period.

If you have suffered losses due to Covid-19, carrying back losses for up to three years may generate a most welcome tax repayment.

Impact on small companies

Tax-efficient extraction of profits

For 2021/22, the primary threshold for Class 1 National Insurance purposes increases to £9,568, the second threshold to £8,840, and the personal allowance to £12,570.

If you extract profits by taking a mix of salary and dividends, the optimal salary level for 2021/22 (assuming you have not used your allowance elsewhere) will be equal to the primary threshold of £9,568 (equivalent to £797 a month) if you are not entitled to the employment allowance. This will be the case if you are a personal company with only one employee who is also a director. At this level, you will have a little bit of employer’s National Insurance to pay. Still, the associated corporation tax deduction will outweigh this.

If you can claim the employment allowance, for example, if your company is a family company with at least two employees, the optimal salary for 2021/22 is equal to the personal allowance of £12,570.

Any further profits can be extracted as dividends but remember you can only pay dividends if you have sufficient retained profits to pay them from. Dividend tax rates remain at 7.5%, 32.5% and 38.1% for 2021/22.

Three-year carry back for losses

Companies, like unincorporated businesses, can benefit from a measure allowing losses to be carried back for three years rather than for one year. For companies, this applies to losses incurred in accounting periods ending between 1st April 2020 and 31st March 2021 and to losses for accounting periods ending between 1st April 2021 and 30th March 2022. Losses carried back must be used against a later period before an earlier period.

This measure may provide you with earlier relief for losses suffered because of the Covid-19 pandemic and generate a useful tax repayment at a time where cash flow is tight. 

Super-deduction for investment expenditure

If your business invested in plant and machinery from 1st April 2021 to 31st March 2023 will benefit from enhanced capital allowances. Investments in assets that qualify for the main rate of capital allowances of 18% will benefit from a 130% first-year allowance. For every £100 that you spend, you can deduct £130 in computing your taxable profits. This is equivalent to a tax saving of 24.7%. Investments in assets qualifying for special rate capital allowances benefit from a 50% first-year allowance (although claiming the annual investment allowance instead where this is available will be more beneficial).

If you are looking to invest in plant and machinery, it can be advantageous to do so within this window to benefit from the super-deduction. However, it is not available where contracts were agreed before Budget day.

Future increases in corporation tax

To help meet some of the pandemic costs, companies with profits of £250,000 or more will now pay corporation tax at a 25% rate from 1st April 2023. A lower rate of 19% will apply to companies with profits of £50,000 or less. Companies with profits of between £50,000 and £250,000 will pay corporation tax at 25% but will be able to claim marginal relief. The thresholds will be proportionately reduced to take account of associated companies and short accounting periods.

Extension of the Coronavirus job Retention Scheme

If you have furloughed or flexibly furloughed employees, you will be able to continue to claim grant support under the Coronavirus Job Retention Scheme until the end of September. 

Until the end of June 2021, you’ll be able to claim 80% of your employee’s normal pay for their unworked hours, subject to the cap of £2,500. However, while your employees must continue to receive 80% of their normal pay for their furloughed hours, you can only claim 70% from the Government in July and 60% in August and September. You must pay the remaining 10% in July and the remaining 20% in August and September. As of now, you must meet the employer’s National Insurance and employer pension contributions on all payments to employees.

The scheme now ends on 30th September 2021.

If you need help or advice on any of the new announcements and want to discuss how best to move your business forward, call An Accounting Gem today on 01473 744 700, take a look at our website aag-accountants.co.uk or email contactus@accountinggem.co.uk. We’re to help every step of the way.

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How I can I avoid late penalty charges for self-assessment taxes?

Still owe NIC and tax due to be paid 31st January 2021?

Many self-assessment taxpayers will have tax and NIC unpaid for 2019-20 and possibly payments on account for 2020-21. The payments were all due to be settled by 31st January 2021. The rest of this blog sets out how you can avoid future late payment penalties if you cannot pay these liabilities before the end of March 2021.

What are the statutory late payment penalties?

Any self-assessment liabilities due 31st January 2021 and unpaid 30 days later (by midnight 3rd March 2021) would typically attract a late payment penalty amounting to 5% of any outstanding tax.

If the tax remains unpaid for six months (at midnight 1st August 2021) or one year (at midnight 1st February 2022), further 5% penalties will also be applied. Additionally, interest will accrue on amounts outstanding from 1st February 2021. The current rate is 2.6%.

What support is HMRC now offering?

Normally, a 5% late payment penalty is charged on any unpaid tax outstanding on 3rd March of any year. But in 2021, because of the impact of the COVID-19 pandemic, HMRC gives taxpayers extra time to pay anything outstanding or set up a payment plan. Taxpayers can still set up a monthly payment plan online at GOV.UK. The online facility will allow you to spread the cost by making agreed monthly payments until January 2022.

To avoid any late payment penalties, you’ll need to do this by midnight, 1st April 2021.

How to set up a late payment plan

You can set up a payment plan online by logging in via your Government Gateway account. The link that advises you what to do is https://www.tax.service.gov.uk/pay-what-you-owe-in-instalments, or you can call HMRC’s Payment Support Service: 0300 200 3835, Monday to Friday 8am to 6pm.

This instalment payment option is only available to taxpayers with less than £30,000 of taxes outstanding for payment.

Act now

If you still have self-assessment taxes unpaid and want to avoid the impending 5% late payment penalty, contact HMRC to organise a late payment plan before midnight 1st April 2021.

If you need to discuss the best way to approach HMRC, please call An Accounting Gem today on 01473 744 700, visit our website aag-accountants.co.uk or email contactus@accountinggem.co.uk.

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Will the CIS Reverse Charge affect me?

A reminder that from 1st March 2021, the long-awaited VAT changes for CIS registered contractors, who register for VAT, will apply.

What will happen on 1st March 2021?

At the moment, when you receive an invoice from a subcontractor for construction services and the subcontractor is registered for VAT, you will pay the VAT inclusive amount to them and claim back when submitting your VAT return. 

You can read our previous blog post by clicking here to find out more. But in the meantime, below, you will find a full list of services that will and will not be affected by the pending changes.

The domestic reverse charge will be applied if you are the supplier of any of the below services:

  • altering, constructing, extending, repairing, dismantling buildings or demolishing structures (whether permanent or not), this includes any off-shore installation services
  • altering, constructing, extending, repairing, demolishing of any works planned to form or forming, part of the land, including (in particular) roadworks, walls, electronic communications equipment, power lines, railways, inland waterways, docks, harbours, and aircraft runways
  • water mains, wells, sewers, pipelines, reservoirs, installations for purposes of land drainage, coast protection, or defence and industrial plants
  • installing air-conditioning, ventilation, power supply, heating, lighting, sanitation, water supply, drainage, or fire protection systems in any structure or building
  • internal cleaning of structures and buildings, restoration, alteration, repair, or extension
  • decorating or painting internally or any external surfaces of any structure or building
  • any service that forms any or is part of the completition or preparation of any services described above – which includes the laying of foundations, erection of scaffolding, site restoration, site clearance, earth-moving, excavation, the provision of roadways and other access works, tunnelling, boring, and landscaping

Below, the list of services that are not subject to the upcoming reverse charge:

  • extracting, or drilling for natural gas or oils
  • mineral extraction (using surface or underground work) and construction of underground works, tunnelling, or boring
  • engineering components or equipment, manufacturing building, materials, machinery or plant, or delivering these to site
  • manufacturing components for air-conditioning, ventilation, lighting, heating, power supply, fire protection systems, drainage, sanitation, water supply or delivering these to site
  • the professional work of surveyors, architects, or interior or exterior decoration, and landscape consultants
  • making, installing, and repairing artworks such as murals, sculptures, and other purely artistic items
  • signwriting and erecting, installing, or repairing advertisement and signboards
  • installing blinds, shutters, and seating
  • installing security systems, including closed-circuit television, public address systems, and burglar alarms

An Accounting Gem can help with the upcoming changes in legislation. Call today on 01473 744700, email contactus@accountinggem.co.uk, or visit our website www.aag-accountants.co.uk. We’re here to help you every step of the way.

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