Archive for March, 2021

Marriage Allowance claim

Tuesday, March 9th, 2021

HMRC published the following press release on Valentine’s Day 2021.

HMRC is encouraging married couples and people in civil partnerships to sign up for a tax break this year.

Marriage Allowance offers individuals the chance to transfer part of their Personal Allowance to their husband, wife or civil partner, which could reduce their tax by up to £250 a year. For some couples, this could mean a backdated payment of up to four years of claims which could be as much as £1,188.

It is free to apply for Marriage Allowance and HMRC is encouraging customers to claim directly through its online portal to ensure they receive 100% of the tax relief they are eligible for.

For the tax year 2020-21, the Marriage Allowance lets people earning £12,500 or less transfer up to £1,250 of their Personal Allowance to their husband, wife or civil partner – if their income is higher and they are a basic rate taxpayer. This will reduce their tax by up to £250 for the 2020-21 tax year. Claims can also be backdated to April 2016 until 5 April 2021. After 6 April 2021, couples will only be able to claim back to the 2017-18 tax year.

The same criteria apply to married couples and civil partnerships in Scotland, except their partner must pay Income Tax at the starter, basic or intermediate rates between £12,501 and £43,430.

The Personal Allowance rate for the 2021-22 tax year is increasing to £12,570.

To claim, search the GOV.UK website for Marriage Allowance.

Marriage Allowance claims are automatically renewed every year. However, couples should notify HMRC if their circumstances change.

Tax breaks working from home

Tuesday, March 9th, 2021

Employed persons

If your employer requires that you work from home, this will apply to many employees during the various COVID lock-down periods, HMRC will allow you to claim for any extra costs associated with working from home.

To save you calculating what these extra costs might be, HMRC has agreed a claim based on their estimate of the average extra costs you may experience if working from home.

The choices you have are therefore:

  • £6 a week from 6 April 2020 (for previous tax years the rate is £4 a week) – you will not need to keep evidence of your extra costs
  • the exact amount of extra costs you’ve incurred above the weekly amount – you will need evidence such as receipts, bills or contracts

You will get tax relief based on the rate at which you pay tax. For example, if you pay the 20% basic rate of tax and claim tax relief on £6 a week you would get £1.20 per week in tax relief (20% of £6).

Additional costs include things like heating, metered water bills, home contents insurance, business calls or a new broadband connection. They do not include costs that would stay the same whether you were working at home or in an office, such as mortgage interest, rent or council tax.

You cannot claim tax relief if you choose to work from home.

Self-employed persons

If your self-employment takes up more than 25 hours a month you could claim based on the following agreed flat rates per month or as above, you could work out the additional costs and claim those. The HMRC agreed rates for the self-employed are:

 

Hours of business use per month

Flat rate per month

25 to 50

£10

51 to 100

£18

101 and more

£26

Spring Budget 2021 Summary

Thursday, March 4th, 2021

COVID-19 related support measures for UK businesses

The Treasury is to continue the two existing major support schemes in an attempt to hold back a significant increase in unemployment rates as business owners grapple with the effects of COVID-19 disruption. Details are set out below.

Coronavirus Job Retention Scheme

This scheme, nicknamed the Furlough Scheme, was due to end 30 April 2021. It is now being extended to 30 September 2021.

The judgement must be that there will be enough control over COVID by autumn 2021 to stimulate demand and give employers more confidence to retain staff. The Chancellor has obviously crunched the numbers and considers employment support in this way a more attractive strategy than increasing unemployment costs.

In more detail:

  • For employees, there will be no change to the terms – they will continue to receive up to 80% of their salary, for hours not worked, until the scheme ends.
  • Employers will be asked to contribute 10% towards wages for hours not worked from July 2021, rising to 20% in August and September 2021.

Self-Employed Income Support Scheme (SEISS)

There has been much criticism of this scheme as it has not been possible for self-employed businesses that commenced trading during 2019-20 to claim.

To counter this, the following changes to SEISS have been announced.

  1. All qualifying self-employed businesses can continue to claim SEISS grants if they continue to be adversely affected by COVID lockdown measures. The present scheme was due to end 30 April 202 This has now been extended to 30 September 2021.
  2. Businesses previously excluded from claims because they commenced during the 2019-20 tax year will now be eligible to claim the fourth and fifth SEISS grants as long as their tax return for 2019-20 was filed by midnight 2 March 2021.
  3. For the fifth grant claims can be made from July 2021. Self-employed persons whose turnover has fallen by more than 30% will continue to qualify for the 80% grant. Those with decreases in turnover of less than 30% will be restricted to a 30% claim.

Restart grants

£5bn of funding is being allocated for these grants. They will support businesses obliged to close during much of lockdown. The grants will consist of:

  • A one-off grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England.
  • Non-essential retail that have tended to open first, can apply for a one-off £6,000 grant.

Business rates holiday continued

This year, government will continue with the 100% business rates holiday for the first three months of the 2021-22 financial year, in other words, through to the end of June 2021 for the retail, leisure and hospitality sectors.

For the remaining nine months of the year, to 31 March 2022, business rates will still be discounted by two thirds, up to a value of £2 million for closed businesses, with a lower cap for those who have been able to stay open.

Exemption for COVID related home office expenses

The temporary Income Tax exemption and Class 1 National Insurance Contributions disregard for employer reimbursed expenses that cover the cost of relevant home office equipment is extended and will have effect until 5 April 2022.

Exemption for reimbursement of antigen test costs

The government will legislate in Finance Bill 2021 to introduce a retrospective Income Tax exemption for payments that an employer makes to an employee to reimburse for the cost of a relevant coronavirus antigen test for the tax year 2020-21.

A new Recovery Loan Scheme

The Recovery Loan Scheme ensures businesses of any size can continue to access loans and other kinds of finance between £25,000 and up to £10 million per business once the existing COVID-19 loan schemes close. This will provide further support as businesses recover and grow following the disruption of the pandemic and the end of the transition period.

Once received, the finance can be used for any legitimate business purpose, including growth and investment.

The government guarantees 80% of the finance to the lender to ensure they continue to have the confidence to lend to businesses.

The scheme launches on 6 April 2021 and is open until 31 December 2021, subject to review. Loans will be available through a network of accredited lenders.

Reduced rate of VAT

The temporary reduced rate of 5% for hospitality, holiday accommodation and attractions will be extended until 30 September 2021. This is a welcome bonus for this sector badly affected by COVID lockdown restrictions.

This will be followed by the introduction of a new reduced rate of 12.5% from 1 October 2021 that will be in effect until 31 March 2022 at which point it will revert to the 20% standard rate.

Other support measures

Other measures outlined in the Budget include:

  • Extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000.
  • £7 million for a new “flexi-job” apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector.
  • Additional £126 million for 40,000 more traineeships in England, funding high quality work placements and training for 16-24 year olds in 2021-22 academic year.

 

Support for the UK housing market

Support will include a mortgage guarantee scheme that will help home buyers purchase properties up to £600,000, and an extension to the existing stamp duty holiday that was due to end 31 March 2021.

The detail:

Mortgage guarantee scheme

The government will underwrite 95% of the risk of default. It will apply to home acquisitions up to £600,000 and set deposits required to 5%.

Stamp duty holiday

The present £500,000 threshold for paying Stamp Duty Land Tax (SDLT) was increased on a temporary basis and was due to end 31 March 2021.

The nil rate band will continue to be £500,000 for the period 8 July 2020 to 30 June 2021. From 1 July 2021 until 30 September 2021, the nil rate band will be £250,000. The nil rate band will return to the standard amount of £125,000 from 1 October 2021. This applies to England and Northern Ireland only. The devolved administrations have not announced any further extension beyond 31 March 2021 when this summary was written on Budget Day.

 

Non-resident SDLT

A 2% SDLT surcharge, above existing rates, for non-UK residents purchasing residential property in England and Northern Ireland is to be introduced from 1 April 2021.

 

Taxation changes

Many of the tax changes announced are for a fixed period, generally, from April 2021 to April 2026. This does provide welcome certainty for businesses. Announcements made include:

Income Tax 2021-22 to 2025-26

The basic rate threshold is increasing to £37,700 for 2021-22 (2020-21: £37,500) and then frozen until April 2026. For the same period, the personal tax allowance is set at £12,570 (2020-21: £12,500) and will apply to all regions of the UK.

Taxpayers who will benefit from annual increases in their earnings up to April 2026 may find themselves paying tax at the higher rates if these increases breach the £37,700 annual basic rate limit.

Regional variations to Income Tax rates apply in Scotland and may apply in Wales.

National Insurance

NIC Upper Earnings limits and Upper Profits limits will also remain at a fixed amount until April 2026 and will be based on the Income Tax higher rate threshold of £50,270.

Starting rate for savings

The band of savings income that is subject to the 0% starting rate will remain at £5,000 for 2021-22.

Lifetime Allowance for pension pots

From April 2021 to April 2026 the pensions lifetime allowance will be frozen at £1,073,100.

Cycle to work scheme change

The government will legislate in Finance Bill 2021 to introduce a time-limited easement to the employer-provided cycle exemption to disapply the condition which states that employer-provided cycles must be used mainly for journeys to, from, or during work. The easement will be available to employees who have joined a scheme and have been provided with a cycle or cycling equipment on or before 20 December 2020.

The change will have effect on and after Royal Assent of Finance Bill 2021 and be in place until 5 April 2022, after which the normal rules of the exemption will apply.

Van benefits for zero carbon emissions

The government will legislate in Finance Bill 2021 to reduce the van benefit charge to zero for vans that produce zero carbon emissions. The change will have effect on and after 6 April 2021.

Capital Gains Tax

Any attempt to align CGT rates with Income Tax rates seems to be off the table for the time being. Apart from anti-avoidance changes, the only announcement on this tax that has general relevance is capping the annual exempt amount. This will be fixed at £12,300 from April 2021 to April 2026 for individuals, personal representatives and some types of trusts for disabled people; and £6,150 for trustees of most settlements.

Corporation Tax

As expected, there will be increases in Corporation Tax, but not yet and only for larger companies. Company owners will be relieved that there are no imminent increases in CT rates until April 2023.

From 1 April 2023, there will be two rates of CT.

  • Taxable profits up £50,000 will continue to be taxed at 19% under the new Small Business Profits Rate
  • Taxable profits in excess of £250,000 will be taxed at 25%
  • Profits between £50,000 and £250,000 will be subject to a marginal tapering relief. This would be reduced for the number of associated companies and for short accounting periods.

Carry back of trading losses

The present provisions that restrict the carry back of tax losses is being relaxed, temporarily, extending the period over which incorporated and unincorporated businesses may carry-back trading losses from one year to three years.

This extension will apply to a maximum £2,000,000 of unused trading losses made in each of the tax years 2020-21 and 2021-22 by unincorporated businesses. The £2,000,000 maximum applies separately to unused trading losses made by incorporated companies, after carry-back to the preceding year, in relevant accounting periods ending between 1 April 2020 and 31 March 2021 and a separate maximum of £2,000,000 for periods ending between 1 April 2021 and 31 March 2022.

The £2,000,000 cap will be subject to a group-level limit, requiring groups with companies that have capacity to carry back losses in excess of £200,000 to apportion the cap between its companies. Further detail on the group limit will be published in due course.

R&D tax credit cap to be introduced

For accounting periods beginning on or after 1 April 2021, the amount of SME payable R&D tax credit that a company can receive in any one year will be capped at £20,000 plus three times the company’s total PAYE and National Insurance Contributions liability, in order to deter abuse.

Enterprise Management Incentives

As announced on 21 July 2020, the government will legislate in Finance Bill 2021 to extend the time-limited exception that ensures that employees who are furloughed or working reduced hours because of coronavirus (COVID-19) continue to meet the working time requirements for EMI schemes.

The change will apply to existing participants of EMI schemes and it also allows employers to issue new EMI options to employees who do not meet the working time requirement as a result of COVID-19. This measure will have effect until 5 April 2022.

Major new investment reliefs

A new “super-deduction” and a 50% first year allowance are to be introduced that will allow businesses to increase the tax relief they can claim for qualifying investments in plant and other equipment. It will apply to expenditure between 1 April 2021 and 31 March 2023.

The super-deduction will mean that assets will qualify for tax relief based on 130% of the actual cost of expenditure incurred.

Assets that qualify for the special rate relief will qualify for the 50% first year allowance.

The existing Annual Investment Allowance £1m limit will continue to be available until 31 December 2021.

Freeports

In an attempt to reposition the UK as a global player a raft of tax incentives are to be provided to the eight freeport locations in England announced in the Budget. They will include enhanced structures and buildings allowances.

Inheritance Tax

No changes in the present rates and allowances that are all frozen at current levels until April 2026.

This means the nil-rate band will be £325,000 and the residence nil-rate band at £175,000 for this period.

VAT

There be no changes to the standard 20% rate.

The £85,000 registration limit and the £83,000 deregistration limit will be frozen until 31 March 2024.

 

Other announcements

Universal Credits

The recent increase in benefits of £20 per week is to be extended for a further six months.

Working Tax Credit claimants will receive equivalent support via a £500 one off payment.

Duties

There will be no increases in duty on alcoholic drinks or fuel.

Vehicle excise duties will see a small increase in line with the Retail Prices Index (RPI).

Air Passenger Duty long haul rates will also increase in line with RPI as will gaming duty and Landfill Tax.

ISA investment limits for 2021-22

The limits set for 2021-22 are:

  • Adult ISAs the limit remains at £20,000
  • Junior ISA limit remains at £9,000
  • Child Trust Funds remain unchanged at £9,000

National Living Wage increase

The NLW will increase to £8.91 per hour from 1 April 2021.

Visa reforms

There will also be new reforms to the immigration system that will help ambitious UK businesses entice top talent. These reforms will include a new unsponsored points-based visa to attract highly skilled migrants and a new, improved visa process for scale-ups and entrepreneurs.

Help to Grow schemes

Two new Help to Grow schemes are set to launch by the autumn to help support 130,000 small and medium sized businesses. The Help to Grow: Management scheme will help small and medium sized businesses get world-class management training with the government contributing 90% of the cost.

In addition, the Help to Grow: Digital scheme will help small businesses develop digital skills by giving them free expert training and a 50% discount on new productivity-enhancing software, worth up to £5,000 each.

Single contactless payments

Our final comment on the Budget seems to anticipate a coming consumer spending bonanza. The legal limit for single, contactless payments is increasing from £45 to £100.

Gender gap closing in UK board rooms

Wednesday, March 3rd, 2021

More than a third (34.3%) of FTSE 350 board positions are now held by women, with the number of women on boards increasing by 50% over the last 5 years, data released today (Wednesday 24 February) shows, representing a dramatic shift in representation at the very highest levels of British business.

The data has been published in the final report from the government-backed Hampton-Alexander Review, which was launched in 2016 to encourage UK-listed companies to appoint more women to their boards and into senior leadership positions.

While men still dominate in the upper ranks of the UK’s top firms, in 5 years the Review has seen remarkable progress among FTSE companies. In total, 220 of the FTSE 350 companies now meet the Hampton-Alexander target of having at least 33% of their board positions held by women – with the figure having quadrupled from just 53 in 2015, and there are no longer any all-male boards in the FTSE 350.

The figures also show an increase in women in wider senior leadership roles, demonstrating that Hampton-Alexander’s top-down approach – with boardrooms setting the standards for women’s representation across the company – is providing pathways to success for women and ultimately supporting British business to strengthen leadership with new ideas and diverse perspectives that come from more women in senior positions.

Data

Oct 2015

Jan 2021

Number of women on boards in FTSE 350

682

1,026

Representation of women on boards in FTSE 350 (as a %)

21.9%

34.3%

Number of all-male boards in FTSE 350

15

0

Number of companies with 33% women on boards in FTSE 350

53

220

Number of boards with only one woman (One & Done)

116

16

Representation of women in leadership roles in FTSE 350 (as a %)

24.5% (in 2017,
when data collection began)

29.4%

The FTSE 250 reached the Hampton-Alexander Review’s final target of women making up 33% of boards in December 2020, following the FTSE 100 and FTSE 350, which achieved the milestone in February and September 2020 respectively, highlighting the success of the government’s voluntary, business-led approach in addressing the exclusion of women from the top of FTSE companies.

Challenges as we emerge from lockdown

Monday, March 1st, 2021

There is no guarantee that the heady mix of vaccination and easing of lockdown will contain the spread of COVID-19. However, based on government predictions, they are willing to start the process of easing lockdown restrictions.

The relaxation of restrictions will depend on four tests. They are:

  1. The vaccine deployment programme continues successfully.
  2. Evidence shows vaccines are sufficiently effective in reducing hospitalisations and deaths in those vaccinated.
  3. Infection rates do not risk a surge in hospitalisations which would put unsustainable pressure on the NHS.
  4. Assessment of the risks is not fundamentally changed by new Variants of Concern.

The stepped approach published is:

Step 1: 8 March

  • Schools and colleges are open for all students. Practical Higher Education Courses.
  • Recreation or exercise outdoors with household or one other person. No household mixing indoors.
  • Wraparound childcare.
  • Stay at home.
  • Funerals (30), wakes and weddings (6)

29 March

  • Rule of 6 or two households outdoors. No household mixing indoors.
  • Outdoor sport and leisure facilities.
  • Organised outdoor sport allowed (children and adults).
  • Minimise travel. No holidays.
  • Outdoor parent & child groups (up to 15 parents).

Step 2
At least five weeks after Step 1, no earlier than 12 April.

  • Indoor leisure (including gyms) open for use individually or within household groups.
  • Rule of 6 or two households outdoors. No household mixing indoors.
  • Outdoor attractions such as zoos, theme parks and drive-in cinemas.
  • Libraries and community centres.
  • Personal care premises.
  • All retail.
  • Outdoor hospitality.
  • All children’s activities, indoor parent & child groups (up to 15 parents).
  • Domestic overnight stays (household only).
  • Self-contained accommodation (household only).
  • Funerals (30), wakes, weddings and receptions (15).
  • Minimise travel. No international holidays.
  • Event pilots begin.

Step 3
At least five weeks after Step 2, no earlier than 17 May.

  • Indoor entertainment and attractions.
  • 30 persons limit outdoors. Rule of 6 or two households (subject to review).
  • Domestic overnight stays.
  • Organised indoor adult sport.
  • Most significant life events (30).
  • Remaining outdoor entertainment (including performances).
  • Remaining accommodation.
  • Some large events (expect for pilots) – capacity limits apply.
    • Indoor events: 1,000 or 50%.
    • Outdoor other events: 4,000 or 50%.
    • Outdoor seated events: 10,000 or 25%.
  • International travel – subject to review.

Step 4
At least five weeks after Step 3, no earlier than 21 June. By Step 4, the Government hopes to be able to introduce the following (subject to review):

  • No legal limits on social contact
  • Nightclubs.
  • Larger events.
  • No legal limit on life events.

Based on these published intentions it would be wise for UK’s raft of small businesses that have been adversely affected by lockdown to plan for resumption of trade. Depending on how badly their finances have been affected by the events of the last year they will need plans in place to finance expansion. It is likely that once consumers can scent the freedom to step out and spend there will be a significant push to economic activity.