1 April 2021 – Due date for Corporation Tax due for the year ended 30 June 2020.
19 April 2021 – PAYE and NIC deductions due for month ended 5 April 2021. (If you pay your tax electronically the due date is 22 April 2021)
19 April 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2021.
19 April 2021 – CIS tax deducted for the month ended 5 April 2021 is payable by today.
30 April 2021 – 2019-20 tax returns filed after this date will be subject to an additional £10 per day late filing penalty.
1 May 2021 – Due date for Corporation Tax due for the year ended 30 July 2020.
19 May 2021 – PAYE and NIC deductions due for month ended 5 May 2021. (If you pay your tax electronically the due date is 22 May 2021).
19 May 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2021.
19 May 2021 – CIS tax deducted for the month ended 5 May 2021 is payable by today.
31 May 2021 – Ensure all employees have been given their P60s for the 2020-21 tax year.
The new tax year starts 6 April 2021, and without dwelling too much on the historical trickery that has landed us with this odd commencement date, what are the challenges we will need to grapple with in the coming year?
Keeping clear of COVID
Pretty obvious really, no-one would willingly risk a dose of COVID-19 and its variants. Unfortunately, to achieve this, we will likely need to abide by government restrictions for most if not all of 2021-22.
Coping with lockdown
Even if lockdown ceases to have its current impact, particularly on the leisure, entertainment and hospitality trades, it is unlikely that we will be free of social distancing rules and regulations for some time.
Those trades adversely affected by this disruption will need to plan accordingly.
Working from home
Many jobs are now being advertised with two or three days a week working from home rather than the office. Which means:
- Employers will need to rethink their human resource services to support staff achieving the same levels of productivity when working away from their employers’ office.
- Employees will need to achieve a new relationship with work when working from home; be firm in setting the boundaries.
- Does this change offer an opportunity to reduce office space (and overheads) by desk-sharing?
Retaining profits and reserves
Financially, business owners will need to keep an eye on the following indicators if they are to keep heads above water:
- Apart from any capital introduced by business owners, the major source of value in most businesses is profits retained in the business after all taxes have been paid. In the last year, many firms will have used any opening reserves to fund losses during the worst periods of lockdown.
- As a result of the above it is possible that businesses have either reduced or exhausted cash reserves and had to borrow – most using the government-backed loan schemes – to maintain liquidity.
Planning is vital.
If you have not yet created an integrated budget for 2021-22, now would be a good time to make a start.
- Will you encounter any cashflow challenges?
- If yes, how will you plug these cashflow gaps. Do you need to approach your bank now?
- How difficult will it be to re-establish and maintain profitability?
- Are you under or over-staffed?
- Has Brexit affected your supply lines?
Until you sit down and work through your options you are vulnerable. And if the past year has taught us anything, its that we can no longer take anything for granted. We must expect the unexpected.
We can help
Please call if you need help with this planning process. And don’t delay. There is no point in closing the proverbial stable door once your busines recovery options have left the stable.
Employers who have employees paid at the National Living Wage (NLW) or National Minimum Wage (NMW) rates should be applying new rates of pay from 1 April 2021.
In full, the increases from April 1, 2021 are:
- NLW (23 ) has increased 2.2%, from £8.72 to £8.91
- NMW (21-22) has increased 2%, from £8.20 to £8.36
- NMW (18-20) has increased 1.7% from £6.45 to £6.56
- NMW (under 18) has increased 1.5% from £4.55 to £4.62
- Apprentice Rate has increased 3.6% from £4.15 to £4.30
In effect these changes mean that the 23-24 age category for the National Minimum Wage has been abolished, following the lowering of the age of the eligibility for the National Living Wage to 23 years old.
Employers should be aware that there are severe penalties if you fail to pay these NLW and NMW rates.
Currently penalties are:
- Any arrears of pay need to be repaid to employees.
- Penalties of up to 200% of arrears owed to employees may be charged.
- Maximum fines are presently set at £20,000 for each affected worker.
Obviously, it pays to be compliant…
If you became self-employed after 5 April 2019 and you have submitted your 2019-20 tax return before 2 March 2021, you may be eligible for the next two Self-Employed Income Support Scheme (SEISS) grants for the quarter end 30 April 2021 and the final claims period to 30 September 2021.
HMRC has announced that they are adding a new layer of security to these SEISS claims and will be calling taxpayers to verify their identity. The announcement on the GOV.UK website says:
From March to April 2021 HMRC will write to customers who became self-employed in 2019-20 and submitted a self-assessment return for that period.
As a result of the Chancellor’s announcement that the fourth Self Employment Income Support Scheme (SEISS) grant will take into account the 2019-20 tax returns, these customers may be eligible for support under SEISS.
The letter will tell customers to expect a telephone call on the number they provided on their tax return.
If the customer provided an agent’s number on their return, we will ask the agent to pass on the customer’s number as we need to speak to the customer directly.
When we call, we’ll ask for proof of identity and evidence of trade in the form of bank statements.
We are aware of increased scam activity related to HMRC’s coronavirus support schemes. The purpose of this letter is to explain to customers that this is a genuine call, and to give customers details on how to recognise it as such.
Many businesses across the UK are likely to make losses in the 2020-21 tax year due to the havoc resulting from COVID disruption.
Which was why the announcement in the recent Budget that losses can be carried back for an extended period was most welcome.
The policy objective aims to provide a cashflow benefit to affected businesses by providing additional relief for trading losses, thereby generating repayments for tax paid for two additional years.
Legislation will be introduced in Finance Bill 2021 to extend the period for which trading losses can be carried back against previous profits. This extension will apply to trading losses made by companies in accounting periods ending between 1 April 2020 and 31 March 2022 and to trading losses made by unincorporated businesses in tax years 2020-21 and 2021-22.
To facilitate this change, trade losses carry back will be extended from the current one year entitlement to a period of three years, with losses being carried back against later years first.
The government has confirmed its intention that furloughed employees will be paid 80% of their wages for hours not worked under the furlough scheme.
Up to 30 June 2021, this payment will be fully-funded by government and capped at £2,500 per month.
From 1 July 2021, employers are required to contribute 10% of the 80% (capped at £312.50 per month) government contributing 70% of the 80% (capped at £2,187.50 per month).
From 1 August 2021, until the scheme is due to end 30 September 2021, employer contributions rise to 20% of the 80% (capped at £625 per month) government contributing 60% of the 80% (capped at £1,875 per month).
Readers are reminded that one of the conditions to apply for this support is that you can demonstrate that your business continues to be adversely affected by COVID disruption.
Throughout this period, employers are fully responsible for payment of any hours worked.
Since 15 March 2021, smaller businesses can apply for grants of up to £2,000 to help them adapt to new customs and tax rules when trading with the EU.
The £20 million SME Brexit Support Fund enables traders to access practical support, including training for new customs, rules of origin and VAT processes.
Small and medium sized businesses that trade solely with the EU – and are therefore new to importing and exporting processes – are encouraged to apply for the grants.
The fund, announced in February by the Chancellor of the Duchy of Lancaster, Michael Gove, is the latest round of government support for UK trade.
To be eligible, businesses must import or export goods between Great Britain and the EU or move goods between Great Britain and Northern Ireland.
This follows the government setting out a new timetable for introducing import border control processes to enable UK businesses to focus on their recovery. Full import border control processes will now be introduced on 1 January 2022, six months later than originally planned.
Perhaps the most innovative give-away in the recent budget was “Super-deductions for investment expenditure”.
What does this mean?
Companies that invest in qualifying plant and machinery in the period from 1 April 2021 to 31 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. This means that 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%.
What this change does not mean is the notion that you can deduct 130% of the cost of a qualifying purchase from your tax bill. The deduction is made from your company’s taxable profits.
For example, if your company invests say £5,000 in qualifying plant it will be able to write off £6,500 (£5,000 x 130%) against its taxable profits. As long as your company has taxable profits in excess of £6,500, it will save £1,235 (£6,500 x 19%) in corporation tax. Which means:
Your tax saving is 24.7% (£1,235/£5,000) of your investment cost, and
The net cost of your investment is £3,765 (£5,000 – £1,235).
As you would expect, there will be circumstances – grey areas – where the legislation that maps out the do’s and don’ts to claiming this relief will deny you the 130% deduction. In their notes describing the proposed changes HMRC said:
“Certain expenditures will be excluded…, there will be exclusions for used and second-hand assets and expenditures on contracts entered into prior to 3 March 2021 even if expenditures are incurred after 1 April 2021. Plant and machinery expenditure which is incurred under a Hire Purchase or similar contract must also meet additional conditions to qualify for the super-deduction…”
However, this is a significant incentive to invest if your company is likely to be profitable from 1 April 2021. To ensure that any significant investment you make will qualify, please call so we can consider the likelihood of a successful claim.
The government has announced new measures to support a safe and successful reopening of the high streets and seaside resorts ahead of the summer season.
A new £56 million Welcome Back Fund will help councils boost tourism, improve green spaces and provide more outdoor seating areas, markets and food stall pop-ups – giving people safer options to reunite with friends and relatives.
Part of this funding will be allocated specifically to support coastal areas, with funding going to all coastal resorts across England to safely welcome holiday makers in the coming months. The funding can also be used by councils to:
- Boost the look and feel of their high streets by investing in street planting, parks, green spaces and seating areas to make high streets as beautiful and welcoming as possible
- Run publicity campaigns and prepare to hold events like street markets and festivals to support local businesses
- Install signage and floor markings to encourage social distancing and safety
- Improve high streets and town centres by planting flowers or removing graffiti
To make sure that businesses can make the most of the summer, businesses such as pubs and restaurants, including where these premises are in listed buildings, will be allowed to use their land more flexibly to set up marquees and provide more outdoor space for diners as restrictions ease, allowing them to serve more customers and recover from the effects of the pandemic. They can be kept up for the whole summer rather than the 28 days currently permitted.
In another major boost for the high street, the government has published its response to the Parking Code Framework which will curb unfair tickets and tackle cowboy parking firms through a new, simplified appeals process.
Caps on private parking fines for millions of motorists are also set to be introduced. This will give drivers more confidence in heading into town knowing they won’t be unfairly penalised by rogue operators.
An outline of the Finance Bill 2021 has been published and provides the legal framework for changes announced in the recent Budget. We have reproduced below the published text. This is subject to scrutiny by parliament and may change before the Bill receives Royal Assent.
The Bill will ensure a number of tax changes set out by the Chancellor at last week’s Budget will take effect from the start of the next tax year beginning in April 2021, including:
- the extension of the stamp duty holiday
- extending the VAT cut for tourism and hospitality to September
As the country begins to recover from the effects of the pandemic, the Bill also legislates to help strengthen the public finances in the medium term through:
- Increasing the rate of Corporation Tax to 25% on profits over £250,000 from April 2023, balancing the need to raise revenue with the objective of having an internationally competitive tax system. Over 90 per cent of businesses will pay less than the 25%.
- Maintaining Income Tax Personal Allowance and Higher Rate Threshold at 2021 levels. This is a progressive measure: the richest households will contribute the most.
- keeping the Capital Gains Tax Annual Exempt Amount (AEA), the inheritance tax nil-rate band and the pensions Lifetime Allowance at their current levels
The Bill also helps deliver a fairer and more sustainable tax system too through legislating to:
- Implement a Plastic Packaging Tax which encourages the use of recycled plastic instead of new plastic within packaging. The rate of the tax is £200 per tonne of plastic packaging which contains less than 30% recycled plastic content.
- Reform the penalty regime for VAT and Income Tax Self-Assessment (ITSA) to make it fairer and more consistent. The new late submission regime will be points-based, and a financial penalty will only be issued when the relevant threshold is reached.
The Bill helps drive an investment-led recovery through:
- the ‘super deduction’ – from 1 April 2021 until 31 March 2023. The independent OBR have forecast that, at its peak, the super-deduction will raise the level of business investment by 10%, or roughly £20bn a year.
- supporting the introduction of Freeports through allowing the government to designate ‘tax sites’ in Freeports in Great Britain, where businesses will be able to benefit from a number of tax reliefs.
The Bill will now follow the normal passage through parliament.