Publications & Financial Updates
Check back here regularly to find out what's going on at our company and in the financial environment.
News Item - October 2021
A brief summary of the Chancellor's Autumn Statement on Wednesday 27th October 2021:
Personal Taxes:
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the basis period rules for the self-employed and partners to be reformed. The first tax year will be 2023/2024 and takes effect from 6th April 2024.
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on the same date Making Tax Digital (MTD) will be commence for Income Tax Self-Assessment. However, general partnerships will not be required to start MTD for ITSA until 6th April 2025.
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top-up payments will in future be paid directly to low-earning individuals saving into a pension scheme using a net pay arrangement. Date to be announced.
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an increase in the deadline for both residents and non-residents to report and pay capital gains tax after selling UK residential property goes up from 30 to 60 days after completion.
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Business rates:
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the Chancellor promises to make the regime "fairer and timelier, with more frequent revaluations every three years". The new cycle will commence in April 2023. However, following much press speculation, Mr Sunak retorted that "reckless, unfunded promises to abolish a tax which raises £25 billion every year are completely irresponsible".
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to soften the blow, he further announced some reliefs and cuts in the tax. Such as a new investment relief to encourage businesses to adopt green technologies.
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a new Business rates Improvement Relief from April 2023, where every business can make property improvements, and for 12 months pay no extra business rates.
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in 2023/2024 the previously planned multiplier would be cancelled, worth £4.6 billion over the next 5 years.
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eligible businesses in the retail, hospitality and leisure sectors can claim a discount on their bills of 50%, up to a maximum of £ 110,000 for one year. Worth £ 1.7 billion.
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the Chancellor claimed that taken all together the cuts will be worth £ 7 billion.
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Other business taxes:
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reform of research and development tax reliefs to favour UK based activity.
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expanded R & D qualifying expenditure will include both data and "cloud" computing costs.
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reform of Tonnage Tax (shipping).
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extension from December 2021 to 2023 for the annual £ 1 million Annual Investment Allowance.
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extension from March 2022 to March 2024 for the tax relief to museums and galleries.
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until April 2023, doubling of the tax relief to theatres, orchestras, museums and galleries, with the normal rate not applicable until April 2024.
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a residential property developers tax at a rate of 4% will be levied on developers with profits over £ 25 million. (To help raise £ 5 billion towards removing unsafe cladding).
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bank surcharge to be kept at 3%. However, "the overall corporation tax on banks will, in 2023, increase from 27% to 28%". The small banks surcharge allowance will increase from £ 25 million to £ 100 million.
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for the future - consultations for an online sales tax; VAT treatment of fund management fees; an Economic Crime (AML) Levy will be established.
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hidden away - the cross border relief rules in chapter 3 of part 5 of the Corporation Tax Act 2010 will be abolished; amended rules applying to losses of companies resident in the EEA that trade in the U.K. through permanent establishments from date of this announcement.
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Corporation Taxation:
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both planned changes and increases to CT previously announced will go ahead.
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good news - the £ 1 million Investment Allowance to be extended until March 2023.
Alcohol Duties:
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wide reforms of alcohol duties.
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the number of main rates will be reduced from 15 down to 6, with taxation levels based upon the strength of the beverage.
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Small Producers Relief to be introduced small brewers producing drinks with less than 8.5% ABV (alcohol by volume).
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a full consultation to be undertaken by the Government on these reforms.
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Minimum Wage and Universal Credit:
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an increase to £ 9.50 per hour in the living wage from April 2022.
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Motoring:
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the HGV Levy to be suspended and Fuel Duty to be frozen for a further year.
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Inflation:
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forecast to reach 4% over the next year (perhaps a bit optimistic?).
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Growth:
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the OBR expects GDP to grow by 6.5% in 2021 and 6% in 2022.
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the damage to the UK economy revised down from 3% to 2%.
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underlying debts forecast to peak in 2024 to 85.7% GDP. 85.2% in 2021.
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Please note that the above report is only our brief interpretation and understanding of the Government's budget proposals for the 2021 Autumn Statement, delivered to Parliament by Rishi Sunak on Wednesday 27th October 2021. These provisions are normally confirmed upon the receipt of Royal Assent later in the year. Jonathan Davis and his associates can not be held responsible for any errors, omissions or changes to the above.
News Item - March 2021
A brief summary of the Chancellor's Spring Statement on Wednesday 3rd March 2021:
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An increase in the rate of Corporation Tax to 25%, for businesses making annual profits over £250,000, from April 2023. However, businesses with profits under £500,000 will continue to be taxed at 19%, but with a taper for those in between. The Diverted Profits Tax rate will rise to 31%, also from April 2023.
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There will be a new capital allowance "super deduction" from April 2021, lasting for the next two years, which cuts companies' tax bills by 125p for every £1 invested in new qualifying plant and machinery. In effect reducing their taxable profits by 130% of the cost.
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Businesses will also be allowed to carry back losses of up to £2m for three years, instead of one. This equates to an additional tax refund of up to £760,000.
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For SME's, the amount of payable R & D tax credit a business can receive in any one year, will be capped at £20,000 plus three times the company's total PAYE and NI liability.
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Business rates - eligible retail, hospitality and leisure properties in England will continue to qualify for 100% business rates relief until 30th June 2021. This will be followed by 66% from 1st July 2021 to 31st March 2022, though capped at £2m per business for properties that were forced to close on 5th January 2021. It is reduced to £105,000 per business for other eligible properties. Certain businesses will be able to treat business rates relief repayments as deductible, for both corporation and income tax purposes.
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VAT - No rate rises were announced. The 5% reduced rate for the hospitality and tourism industries will continue until 30th September 2021, to be replaced by a reduced rate of 12.5% until April 2022. The VAT registration threshold will remain at £85,000 for two years from April 2022.
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Alignment of VAT late payments with other tax regimes, for periods starting on or after 1st April 2022. The VAT penalties will be points based, with a new approach to interest charges and repayment interest.
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Personal tax - No increases in rates for either income tax or NI. However, by "stealth", the Personal tax allowance thresholds for both the basic and higher rate will be frozen at £12,570 and £50,270 respectively until April 2026. Also frozen until April 2026; Inheritance tax thresholds, Pensions Lifetime Allowance and annual exempt amount in Capital Gains tax.
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Self-Assessment - Late returns will also be subjected to a new points based system, with a new regime introducing penalties proportionate to the amount of tax owed and how late the tax due. Applies to taxpayers with business or property income over £100,000 per year, from accounting periods beginning on or after 6th April 2023.
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Stamp Duty - The SDLT holiday was extended from 31st March to 30 June 2021. The nil rate band will drop from £500,000 to £250,000 until 30th September 2021.
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Miscellaneous - Fuel and alcohol duties were frozen for a year. Eight new freeports were announced (these will be special economic areas with more generous tax regimes). Both the Furlough and Self-Employed Income Support Schemes were extended, with the latter now able to access the upcoming fourth and fifth SEISS grants - though the Chancellor added "providing they filed a tax return by midnight last night" ! Other specially tailored funding and loan schemes will also be made available for businesses.
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Please note that the above report is only our brief interpretation and understanding of the Government's budget proposals for the 2021 Spring Statement, delivered to Parliament by Rishi Sunak on Wednesday 3rd March 2021. These provisions are normally confirmed upon the receipt of Royal Assent later in the year. Jonathan Davis and his associates can not be held responsible for any errors, omissions or changes to the above.