Tax Rates and Allowances 2021/22

Tax Rates and Allowances 2021/22

by | Mar 17, 2021 | Agriculture, Audit, Auto Enrolment, Bookkeeping, Brexit, Business Services, Care Homes, Charities, Cloud Accounting, Corporate Finance, Corporate Tax, COVID-19, Cyber Security, Dental, Engineering, Exit Planning, Family Business, GPs, Healthcare, IT, IT and Technology, Legal, Leisure & Hospitality, Making Tax Digital, Manufacturing, Payroll, Pensions, Personal Tax, Pharmacy, Property & Construction, R&D, Retail, SME, Solicitors, Tax, Transport & Logistics, VAT, Wealth Management

Introduction

We have summarised the key rates and allowances which are fundamental to our business and personal lives. We are sure that you will find them a useful point of reference and have set out below a few examples of how they can be used.

Personal tax rates

As the UK tax system becomes more devolved, it is important to keep abreast of the changes taking place in the Scottish and Welsh income tax rates and bands. We have summarised the relevant information together with the rates and allowances which apply to investment income.

Buying property

If you buy property then property taxes payable are different depending on where the property is in the United Kingdom. Stamp Duty Land Tax is payable on property in England and Northern Ireland, whilst Land and Buildings Transaction Tax is payable on property in Scotland and Land Transaction Tax on property in Wales. Our tax rates highlight the main rates so that you can consider the potential cost of buying property.

Business or asset sale

If you sell an asset such as shares or your business, capital gains tax may be due. Our tax rates highlight the main rates and reliefs so that you can consider the tax bill that may arise.

Rates for businesses

If you run a business, obtaining the right allowances on equipment that your business buys can affect the tax that your business has to pay each year. We have summarised the main allowances that are available.

Rates for employees

There are changes to the way company car benefits are calculated this year. Our guide explains how these are computed to help ensure that you are paying the correct amount of tax.

Rates that affect us all

Long term planning for a comfortable retirement can never start too early. Our tax rates explain how much can be contributed to an approved pension scheme each year tax efficiently.

Our tax rates contain the main inheritance tax rates and exemptions but early planning can mitigate these tremendously.


These rates are intended for use as a quick point of reference. Should you require any further information, have a simple question or require detailed advice we are only a phone call away.

Capital Gains Tax
  • CGT is payable by individuals, trustees, and personal representatives (PRs). Companies pay corporation tax on their capital gains.
  • There are annual tax-free allowances (the ‘annual exempt amount’) for individuals, trustees and PRs. Companies do not have an annual exempt amount.
  • For individuals, net gains are added to total taxable income to determine the appropriate rate of tax. The standard rate applies only to the net gains which, when added to total taxable income, do not exceed the basic rate band.
  • Gains which qualify for Investors’ Relief are charged at 10% for the first £10m of qualifying gains.
  • Gains which qualify for Business Asset Disposal Relief are charged at 10% for the first £1 million.

Rates and annual exemption

Individuals 2021/22
  £
Exemption 12,300
Standard rate 10%
Higher rate 20%

The higher rate applies to higher rate and additional rate taxpayers.

Additionally, higher rates of 18% and 28% may apply to the disposal of certain residential property.

Trusts 2021/22
  £
Exemption 6,150
Rate 20%

 

Car Benefits
  • The car benefit is calculated by multiplying the car’s list price, when new, by a percentage linked to the car’s CO2 emissions. Due to a change in the way CO2 emissions are measured different benefit percentages apply to cars registered from 6 April 2020.
  • For diesel cars generally add a 4% supplement (unless the car is registered on or after 1 September 2017 and meets the Euro 6d emissions standard). The overall maximum percentage is capped at 37%.
  • The list price includes accessories.
  • The list price is reduced for capital contributions made by the employee up to £5,000.
  • Special rules may apply to cars provided for disabled employees.
  • For cars registered before 1 January 1998 and cars with no agreed CO2 emissions the charge is based on engine size.

 

2021/22

Cars registered pre 6/4/20

Cars registered after 5/4/20

CO 2 emissions

(g/km)

 % of list price taxed % of list price taxed
0 1 1

1–50 (split by zero-emission miles)

More than 130

70-129

40-69

30-39

Under 30

2

5

8

12

14

1

4

7

11

13
51–54 15 14
55-59 16 15
60-64 17 16
65-69 18 17
70-74 19 18
75-79 20 19
80-84 21 20
85-89 22 21
90-94 23 22
95-99 24 23
100-104 25 24
105-109 26 25
110-114 27 26
115-119 28 27
120-124 29 28
125-129 30 29
130-134 31 30
135-139 32 31
140-144 33 32
145-149 34 33
150-154 35 34
155-159 36 35
160-164 37 n/a
165 and above n/a 37

 

Car Fuel Benefit
  • Car fuel benefit applies if an employee has the benefit of private fuel for a company car.
  • The benefit is calculated by applying the percentage used to calculate the car benefit by a ‘fuel charge multiplier’.
  • The charge is proportionately reduced if provision of private fuel ceases part way through the year. The fuel benefit is reduced to nil only if the employee pays for all private fuel.
Car fuel benefit 2021/22  
Fuel charge multiplier £24,600

 

Cars - Advisory fuel rates for company cars
  • Advisory rates only apply where employers reimburse employees for business travel in a company car or require employees to repay the cost of fuel used for private travel in a company car.
  • If the rate paid per mile of business travel is no higher than the advisory rate for the particular engine size and fuel type of the car, HMRC will accept that there is no taxable profit and no Class 1 NIC liability.

The advisory fuel rates for journeys undertaken on or after 1 March 2021 are:

Engine size Petrol
1400cc or less 10p
1401cc – 2000cc 12p
Over 2000cc 18p

 

Engine size Diesel
1600cc or less 9p
1601cc – 2000cc 11p
Over 2000cc 12p

 

Engine size LPG
1400cc or less 7p
1401cc – 2000cc 8p
Over 2000cc 12p

Hybrid cars are treated as either petrol or diesel cars for this purpose.

The Advisory Electricity Rate for fully electric cars is 4 pence per mile. Electricity is not a fuel for car fuel benefit purposes.

Capital Allowances - Plant and Machinery
 
  • The cost of purchasing capital equipment in a business is not a revenue tax-deductible expense. However, tax relief is available on certain capital expenditure in the form of capital allowances.
  • Plant and machinery allowances may be available on items such as machines, equipment, furniture, certain fixtures in a building (‘integral features’), computers, cars, vans and similar equipment used in a business.
  • There are special rules for cars and certain ‘environmentally friendly’ equipment.
  • Plant and machinery allowances may be available to owners of commercial property which is let out to a business.
  • The Annual Investment Allowance (AIA) gives a 100% write-off on most types of plant and machinery (but not cars) up to an annual limit.
  • Writing down allowances (WDA) are given for expenditure for which AIA is not, or cannot be, claimed.
  • A Structures and Buildings Allowance of 3% may be available for qualifying investments to construct new, or renovate old, non-residential structures and buildings.

AIA

  • Special rules apply to accounting periods straddling the dates shown in the tables below.
  • The AIA may need to be shared between certain businesses under common ownership.

AIA limits – companies

Expenditure incurred:

Annual limit
  £
From 1 January 2019 to 31 December 2021 1,000,000
From 1 January 2022 200,000

AIA limits – sole traders and partnerships

Expenditure incurred:

Annual limit
  £
From 1 January 2019 to 31 December 2021 1,000,000
From 1 January 2022 200,000

Other plant and machinery allowances

  • Expenditure upon which AIA is not given/claimed will obtain relief through the ‘main rate pool’ or the ‘special rate pool’ rather than each item being dealt with separately.
  • The annual rate of WDA is 18% in the ‘main rate pool’ and 6% in the ‘special rate pool’.
  • A 100% first year allowance (FYA) may be available on certain energy efficient plant and cars.
  • Between 1 April 2021 and 31 March 2023, companies investing in qualifying new plant and machinery will benefit from a new FYA. A company will be allowed to claim a super-deduction of 130% on certain new plant and machinery investments that ordinarily qualify for the 18% WDA and a 50% FYA on most new plant and machinery investments that ordinarily qualify for the 6% WDA.

Cars

  • For expenditure incurred on cars, costs are generally allocated to one of the two plant and machinery pools.
  • AIA is not available on any car but a 100% FYA may be available on certain cars. To qualify for FYA, the car must be purchased new.

Cars acquired from April 2021

Emissions (g/km)

Pool

Allowance
0 Main rate 100% FYA
≤ 50 Main rate 18% WDA
>50 Special rate 6% WDA
  • The cost of purchasing capital equipment in a business is not a revenue tax deductible expense. However, tax relief is available on certain capital expenditure in the form of capital allowances.
  • Plant and machinery allowances may be available on items such as machines, equipment, furniture, certain fixtures in a building (‘ integral features ‘), computers, cars, vans and similar equipment used in a business.
  • There are special rules for cars and certain ‘environmentally friendly’ equipment.
  • Plant and machinery allowances may be available to owners of commercial property which is let out to a business.
  • The Annual Investment Allowance (AIA) gives a 100% write-off on most types of plant and machinery (but not cars) up to an annual limit.
  • Writing down allowances (WDA) are given for expenditure for which AIA is not, or cannot be, claimed.
  • A Structures and Buildings Allowance of 3% may be available for qualifying investments to construct new, or renovate old, non-residential structures and buildings.

AIA

  • Special rules apply to accounting periods straddling the dates shown in the tables below.
  • The AIA may need to be shared between certain businesses under common ownership.

AIA limits – companies

Expenditure incurred:

Annual limit
  £
From 1 January 2019 to 31 December 2021 1,000,000
From 1 January 2022 200,000

AIA limits – sole traders and partnerships

Expenditure incurred:

Annual limit
  £
From 1 January 2019 to 31 December 2021 1,000,000
From 1 January 2022 200,000

Other plant and machinery allowances

  • Expenditure upon which AIA is not given/claimed will obtain relief through the ‘ main rate pool ‘ or the ‘ special rate pool ‘ rather than each item being dealt with separately.
  • The annual rate of WDA is 18% in the ‘ main rate pool ‘ and 6% in the ‘ special rate pool ‘.
  • A 100% first-year allowance (FYA) may be available on certain energy-efficient plant and cars.

Cars

  • For expenditure incurred on cars, costs are generally allocated to one of the two plant and machinery pools.
  • AIA is not available on any car but a 100% FYA may be available on certain cars. To qualify for FYA, the car must be purchased new.

Cars acquired from April 2018 to March 2021

Emissions (g/km)

Pool

Allowance
≤50 Main rate 100% FYA
≤ 110 Main rate 18% WDA
>110 Special rate 6% WDA
Child Benefit
Child Benefit is receivable by a person responsible for each child until they reach 16, or 19 if they stay in education or training.If the person (or their spouse or partner) has ‘adjusted net income’ above £50,000 the person with the highest income has to pay some of the Child Benefit as a tax charge.Where adjusted net income is more than £60,000 a year, the tax charge equals the Child Benefit received.
Rates – 2021/22 £ per week
Eldest/Only Child £21.15
Other Children £14.00
 
Employee Statutory Payments

Statutory pay

  • Payments may be required from an employer if an employee is not at work for a variety of reasons.
  • There are detailed conditions for an employee to qualify for any of these statutory payments.
  • Employees are only eligible for a statutory payment if they have sufficient average weekly earnings of at least the lower earnings limit.

Statutory Sick Pay

  • Payments may be required from an employer if an employee is too ill to work.
  • SSP is generally payable for a period up to 28 weeks.

SSP support during coronavirus outbreak

The government has temporarily made SSP more accessible to employees in response to the coronavirus outbreak. During the outbreak SSP is available from the first day of absence, including for those self-isolating or caring for others.

The government is supporting small and medium-sized businesses and employers to cope with the extra costs of paying coronavirus related SSP by refunding eligible SSP costs.

Statutory Maternity Pay

  • Payments may be required from an employer when an employee takes time off to have a baby.
  • SMP is payable for a period up to 39 weeks.

Statutory Paternity Pay

  • Payments may be required from an employer when an employee takes time off during their partner’s Statutory Maternity Pay period.
  • Payment is for a period of either one or two complete weeks.

Shared Parental Pay

  • Payments may be required from an employer when an employee takes time off following the curtailment of the period of SMP by the mother.
  • Payment is for up to a maximum of 37 weeks and is dependent on the mother’s unused SMP period.

Statutory Adoption Pay

  • Payments may be required from an employer when an employee takes time off when they adopt a child.
  • Payment is for a period up to 39 weeks.

Statutory Parental Bereavement Pay

  • Payments may be required from an employer when parents take time off following the death of a child or a stillbirth.
  • Payment is for up to a maximum of two weeks.
2021/22 Statutory pay rates –
average weekly earnings £120 or over		  
Statutory Sick Pay £96.35
Statutory Maternity Pay  
First six weeks 90% of weekly earnings
Next 33 weeks £151.97
Statutory Paternity Pay – two weeks £151.97
Statutory Adoption Pay – 39 weeks  
First six weeks 90% of weekly earnings
Next 33 weeks £151.97
Shared Parental Pay £151.97
Statutory Parental Bereavement Pay – two weeks £151.97

With the exception of Statutory Sick Pay, statutory payments may
be payable at 90% average weekly earnings throughout the payment period
in certain circumstances. This applies where 90% weekly earnings
are less than the standard rate of £151.97.

Corporation Tax Rates
  • Corporation tax rates are set for each Financial Year. A Financial Year runs from 1 April to the following 31 March.
  • If the accounting period of a company straddles the 31 March, the profits are apportioned on a time basis to each Financial Year.
  • The Northern Ireland Executive has committed to setting the rate of corporation tax at 12.5% when the Northern Ireland Executive demonstrates its finances are on a sustainable footing.
Year to 31.3.22 Rate %
All profits 19

 

Income Tax Rates - Across the UK
  • Income tax applies to the amount of income after deduction of personal allowances.
  • Income is taxed in a specific order with savings and dividend income taxed last.
  • Dividend income and savings income falling within the dividend and savings allowances still form part of total income of an individual.
  • There is also a starting rate band (SRB) of £5,000 which is only applicable to savings income. The band is not available if the taxable amount of non-savings income exceeds the SRB.
  • The Scottish Parliament set the rates of income tax and the limits at which these rates apply for Scottish residents on non-savings and non-dividend income.
  • Income tax is devolved to Wales on non-savings and non-dividend income.

Income tax rates

Band of taxable income Rate Rate if dividends
£   % %
0 – 37,700 Basic rate 20 7.5
37,701 – 150,000 Higher rate 40 32.5
Over 150,000 Additional rate 45 38.1
Special rates for savings and dividend income falling into above bands of taxable income
Savings Allowance
Basic rate taxpayers 1,000 0  
Higher rate taxpayers 500 0  
Additional rate taxpayers Nil N/A  
Dividend Allowance
for all taxpayers 2,000   0

 

Income Tax Allowances
A personal allowance gives an individual an annual amount of income free from income tax.Income above the personal allowances is subject to income tax.

The personal allowance will be reduced if an individual’s ‘adjusted net income’ is above £100,000. The allowance is reduced by £1 for every £2 of income above £100,000.

An individual born before 6 April 1935 may be entitled to a married couple’s allowance but this is reduced if ‘adjusted net’ income is above the married couple’s allowance income limit (see table below).

Marriage allowance – 10% of the personal allowance may be transferable between certain spouses where neither pays tax above the basic rate. The Marriage allowance is not available to couples entitled to the Married Couple’s allowance.

Income tax personal allowances £
Personal Allowance 12,570
Marriage Allowance 1,260
Blind person’s allowance 2,520

Married couple’s allowance

Either partner born before 6 April 1935

  
– Maximum reduction in tax bill 912.50
– Minumum reduction in tax bill 353.00

Married couples’s allowance income limit

Reduce married couple’s allowance by £1 for every £2 of ‘adjusted net income’ above this limit

 30,400
 
Income Tax Rate - Scotland
  • Scottish resident taxpayers are liable on non-savings and non-dividend income as set out below.
  • Savings income and dividend income are taxed using UK tax rates and bands.
Band of taxable income Rate
£   %
0 – 2,097 Starter rate 19
2,098 – 12,726 Basic rate 20
12,727 – 31,092 Intermediate rate 21
31,093 – 150,000 Higher rate 41
Over 150,000 Top rate 46

 

Income Tax Rates - Wales
  • Income tax is devolved to Wales.
  • Welsh resident taxpayers continue to pay the same overall income tax rates using the UK rates and bands.
  • The total rate of income tax = UK income tax + Welsh rate of income tax
  • Savings income and dividend income are taxed using UK tax rates and bands.
Band of taxable income UK Rate Welsh Rate Total Rate
£   % % %
0 – 37,700 Basic rate 10 10 20
37,701 – 150,000 Higher rate 30 10 40
Over 150,000 Additional rate 35 10 45

 

Individual Savings Account (ISA)
The income from ISA investments is exempt from income tax. Any capital gains made on investments held in an ISA are exempt from capital gains tax.Savers are able to subscribe any amounts into a cash ISA, a stocks and shares ISA or an innovative finance ISA subject to not exceeding the overall annual investment limit.Investors may transfer their investments from one kind of ISA to another.

The Lifetime ISA is available for those aged between 18 and 40. Save up to £4,000 each year up until the age of 50, and receive a government bonus of 25% (a bonus of up to £1,000 a year). Savers can use some or all of the money to buy their first home, or keep it until they are aged 60 when the account can be accessed tax free. Conditions apply to the account holder and property purchased. Penalties apply if funds are withdrawn in other circumstances.

A Help to Buy ISA provides a tax free savings account for first time buyers wishing to save for a home. The scheme provides a government bonus to each person who has saved into a Help to Buy ISA at the point they use their savings to purchase their first home. For every £200 a first time buyer saves, the government will provide a £50 bonus up to a maximum bonus of £3,000 on £12,000 of savings. The bonus will be paid in the form of a voucher when the first home is purchased. Conditions apply to the account holder and to the property purchased. Help to Buy ISAs closed to new savers on 30 November 2019. Existing holders can continue saving until 30 November 2029 and will have until 1 December 2030 to claim their bonus.

ISA limits 2021/22  
Overall annual investment limit £20,000
Junior ISA annual investment limit £9,000
Help to Buy ISA monthly subscription limit £200
Lifetime ISA annual investment limit £4,000

 

Inheritance Tax (IHT)
  • IHT may be payable when an individual’s estate is worth more than the IHT nil rate band when they die.
  • Lifetime and death transfers between UK domiciled spouses are exempt from IHT.
  • For 2021/22, a further nil rate band of £175,000 may be available in relation to current or former residences.
  • The IHT threshold available on death may be increased for surviving spouses as there may have been a nil rate band not used, or not fully used, on the previous death.
  • There are reliefs for some business and farming assets which reduce their value for IHT purposes.
  • IHT may also be payable on gifts made in an individual’s lifetime but within seven years of death.
  • Some lifetime gifts are exempt.
  • Transfers of assets into trust made in an individual’s lifetime may be subject to an immediate charge but at lifetime rates.
  • There are also charges on some trusts.

IHT rates and nil rate band 2021/22 and 2020/21

IHT nil rate £325,000
Lifetime rate 20%
Death rate 40%
Death rate if sufficient charitable legacies made 36%

IHT reliefs for lifetime gifts

Annual exemption £3,000
Small gifts £250
Marriage  
– parent £5,000
– grandparent £2,500
– other £1,000

IHT – reduced charge on gifts within seven years of death

Years before death % of death charge
0-3 100
3-4 80
4-5 60
5-6 40
6-7 20
Land and Buildings Transaction Tax
Land and Buildings Transaction Tax (LBTT) is payable on land and property transactions in Scotland.

LBTT (Residential property)

Consideration (£) Rate
0 – 145,000 0%
145,001 – 250,000 2%
250,001 – 325,000 5%
325,001 – 750,000 10%
750,001 and above 12%

The rates apply to the portion of the total value which falls within each band.

Residential rates may be increased by 4% where further residential properties, costing over £40,000, are acquired.

First-time Buyer relief raises the zero rate tax threshold for first-time buyers from £145,000 to £175,000.

LBTT (Non-residential)

Consideration (£) Rate
0 – 150,000 0%
150,001 – 250,000 1%
Over 250,000 5%

The rates apply to the portion of the total value which falls within each band.

Land and Buildings Transaction Tax (LBTT) is payable on land and property transactions in Scotland.
Land Transaction Tax
Land Transaction Tax (LTT) is payable on land and property transactions in Wales.

LTT (Residential property)

Rates applying to 30 June 2021

Consideration (£) Rate
0 – 250,000 0%
250,001 – 400,000 5%
400,001 – 750,000 7.5%
750,001 – 1,500,000 10%
1,500,000 and above 12%

Rates applying from 1 July 2021

Consideration (£) Rate
0 – 180,000 0%
180,001 – 250,000 3.5%
250,001 – 400,000 5%
400,001 – 750,000 7.5%
750,001 – 1,500,000 10%
1,500,000 and above 12%

The rates apply to the portion of the total value which falls within each band.

Residential rates may be increased by 4% where further residential properties costing over £40,000 or over are acquired.

Higher residential tax rates

Higher residential rates may apply when you already own one or more residential properties.

Consideration (£) Rate
0 – 180,000 4%
180,001 – 250,000 7.5%
250,001 – 400,000 9%
400,001 – 750,000 11.5%
750,001 – 1,500,000 14%
1,500,000 and above 16%

The rates apply to the portion of the total value which falls within each band.

LTT (Non-residential)

Consideration (£) Rate
0 – 225,000 0%
225,001 – 250,000 1%
250,001 – 1,000,000 5%
Over 1,000,000 6%

The rates apply to the portion of the total value which falls within each band.

Land Transaction Tax (LTT) is payable on land and property transactions in Wales.
Mileage Allowance Payments (MAPS) for Employees
  • MAPs represent the maximum tax free mileage allowances an employee can receive from their employer for using their own vehicle for business journeys.
  • An employer is allowed to pay an employee a certain amount of MAPs each year without having to report payments to HMRC.
  • If the employee receives less than the statutory rate, tax relief can be claimed on the difference.

MAP rates per business mile 2021/22 and 2020/21

Cars and vans Rate per mile
Up to 10,000 miles 45p
Over 10,000 miles 25p
Bicycles 20p
Motorcycles 24p
Minimum Wage
  • National Minimum Wage rates apply to employees up to the age of 22.
  • National Living Wage (NLW) rates apply to employees 23 and over.
  • The Apprentice rate applies to apprentices under 19, or 19 and over in the first year of apprenticeship.
  • Penalties apply to employers who fail to pay minimum wages.
Age NLW 21-22 18-20 16-17 Apprentice
From 1 April 2021 £8.91 £8.36 £6.56 £4.62 £4.30

 

National Insurance Contributions (NICS) - Rates and Allowances
  • Employees start paying Class 1 NIC from age 16 (if sufficient earnings).
  • Employers pay Class 1 NIC in accordance with the table below.
  • Employer NIC for employees under the age of 21 and apprentices under the age of 25 is reduced from the normal rate of 13.8% to 0% up to the Upper Secondary Threshold of £967 per week. Also applies to veterans in the first 12 months of employment.
  • Employees’ Class 1 NIC stop when they reach their State Pension age. The employer’s contribution continues.

Employees – Class 1 – 2021/22

Earnings per week %
Up to £184 Nil
£184.01 – £967 12
Over £967 2

Entitlement to state pension and other contribution-based benefits is retained for earnings between £120 and £184 per week.

Employers – Class 1 – 2021/22

Earnings per week %
Up to £170 Nil
Over £170 13.8

Other National Insurance payable by employers

Class 1A – 13.8% on broadly all taxable benefits provided to employees and on certain taxable termination and sporting testimonial payments in excess of £30,000

Class 1B – 13.8% on taxable PAYE Settlement Agreements

Self-employed – Class 2 and 4

  • A self-employed person starts paying Class 2 and Class 4 NIC from 16 or over (if sufficient profits)
  • Class 2 NIC stop when a person reaches State Pension age
  • Class 4 NIC stop from the start of the tax year after the one in which the person reaches State Pension age.

Self-employed – Class 2 – 2021/22

Flat rate per week £3.05
Small Profits Threshold £6,515 per year

No Class 2 is due if the amount of trading profits assessable to income tax and Class 4 NIC is below this figure. However, a person might decide to carry on paying Class 2 voluntarily to accrue entitlement to the State Pension and entitlement to other benefits.  

Class 4 – 2021/22

Annual profits %
Up to £9,568 Nil
£9,568.01 – £50,270 9
Over £50,270 2

Class 3

  • A person needs 35 years (30 years if State Pension age is before 6 April 2016) of NIC to get a full State Pension.
  • Class 3 voluntary contributions can be paid to fill or avoid gaps in a NI record.

Class 3 – 2021/22

Flat rate per week £15.40

  • Employees start paying Class 1 NIC from age 16 (if sufficient earnings).
  • Employers pay Class 1 NIC in accordance with the table below.
  • Employer NIC for employees under the age of 21 and apprentices under the age of 25 is reduced from the normal rate of 13.8% to 0% up to the Upper Secondary Threshold of £962.
  • Employees’ Class 1 NIC stop when they reach their State Pension age. The employer’s contribution continues.

 

Pensions Automatic Enrolment
Auto enrolment places duties on employers to automatically enrol ‘workers’ into a work based pension scheme. Employers are required to automatically enrol all ‘eligible jobholders’ into a qualifying pension scheme and pay pension contributions on their behalf.
Employer minimum contribution Total minimum contribution
3% 8%

Where the employer does not make the total minimum contribution the employee is obliged to pay the balance.

  2021/22
Automatic enrolment earnings trigger £10,000
Qualifying earnings band – lower limit £6,240
Qualifying earnings band – upper limit £50,270
 
Pensions - Tax Relief on Pensions Contribution
  • Tax relief available for personal contributions is the higher of £3,600 (gross) or 100% of relevant earnings.
  • Any contributions in excess of £40,000, whether personal or by the employer, may be subject to income tax on the individual.
  • The limit may be reduced to £4,000 once money purchase pensions are accessed.
  • Where the £40,000 limit is not fully used it may be possible to carry the unused amount forward for three years.
  • The annual allowance is tapered for those with adjusted income over £240,000. For every £2 of income over £240,000 an individual’s annual allowance will be reduced by £1, down to a minimum of £4,000.
  • Employers will obtain tax relief on employer contributions if they are paid and made ‘wholly and exclusively’ for the purposes of the business. The tax relief for large contributions may be spread over several years.
 
Property Allowance
  • A property allowance is available to individuals.
  • The property allowance will not apply to partnership income or to income on which rent a room relief is given.
Income up to £1,000 Property income assessable NIL
Income over £1,000 Election to deduct £1,000 rather than the actual expenses
Self Assessments - Key Dates
31 January 2021 – First payment on account due for 2020/21 tax year.31 July 2021 – Second payment on account for 2020/21 tax year.5 October 2021 – Deadline for notifying HMRC of new sources of income (including the Child Benefit charge) if no tax return has been issued for 2020/21 tax year.

31 October 2021 – Deadline for submission of 2020/21 non-electronic returns.

30 December 2021 – Deadline for submission of 2020/21 electronic tax returns if ‘coding out’ of any underpayment is required.

31 January 2022 – Deadline for filing electronic tax returns for 2020/21. Balancing payment due for 2020/21 tax year. First payment on account due for 2021/22 tax year.

Stamp Duty

When you buy shares, you usually pay a tax or duty of 0.5% on the transaction. If you buy shares electronically Stamp Duty Reserve Tax (SDRT) is payable. For shares purchased using a stock transfer form, you will pay Stamp Duty if the transaction is over £1,000.

Stamp Duty Land Tax (SDLT)
  • SDLT is payable on land and property transactions in England and Northern Ireland.
  • Property transactions in Scotland are subject to Land and Buildings Transaction Tax (LBTT).
  • Property transactions in Wales are subject to Land Transaction Tax (LTT).

Residential property

The rates apply to the portion of the total value which falls within each band. The following rates apply to 30 June 2021:

Consideration (£) Rate
0 – 500,000 0%
500,001 – 925,000 5%
925,001 – 1,500,000 10%
1,500,001 and above 12%

The following rates apply from 1 July to 30 September 2021:

Consideration (£) Rate
0 – 250,000 0%
250,001 – 925,000 5%
925,001 – 1,500,000 10%
1,500,001 and above 12%

The following rates apply from 1 October 2021:

Consideration (£) Rate
0 – 125,000 0%
125,001 – 250,000 2%
250,001 – 925,000 5%
925,001 – 1,500,000 10%
1,500,001 and above 12%

These rates may be increased by 3% where further residential properties, costing over £40,000, are acquired.

First-time Buyer relief

From 1 July 2021 First-time buyers may be eligible for first-time buyer relief on purchases of residential property up to £500,000. The rates apply to the portion of the total value which falls within each band.

Consideration (£) Rate
0 – 300,000 0%
300,001 – 500,000 5%
for purchases over 500,000 normal rates apply

Non-residential SDLT rates

Consideration (£) Rate
0 – 150,000 0%
150,001 – 250,000 2%
Over 250,000 5%

Payable on consideration which falls in each band.

  • SDLT is payable on land and property transactions in England and Northern Ireland.
  • Property transactions in Scotland are subject to Land and Buildings Transaction Tax (LBTT).
  • Property transactions in Wales are subject to Land Transaction Tax (LTT).

 

State Pensions
  • The basic State Pension is a regular payment from the government that an individual may be entitled to when they reach State Pension age.
  • The basic State Pension depends on the number of years an individual has paid National Insurance or has National Insurance credits, eg while unemployed or claiming certain benefits.
  • To receive the basic State Pension an individual must have paid or been credited with National Insurance contributions (NIC).
  • In 2016 the State Pension was reformed into a single-tier new State Pension. In order to benefit from the full amount the individual will need 35 years, rather than the previous 30 years of NIC or credits for the full amount, with pro-rating where 35 years is not achieved. You will usually need 10 qualifying years to get any State Pension. The amount an individual receives can be higher or lower depending on their National Insurance record. It will only be higher if you have over a certain amount of Additional State Pension.
  • Currently an individual may also be entitled to the Additional State Pension. How much an individual gets depends on the number of qualifying years of NIC, the amount of earnings and whether the individual has been contracted out of the scheme.
Weekly State Pension 2021/22  
Basic – single person £137.60
New State Pension £179.60
Tax reliefs for Individuals

Enterprise Investment Scheme (EIS)

The Enterprise Investment Scheme (EIS) provides tax relief for individuals prepared to invest in new and growing companies. Investors can obtain generous income tax and capital gains tax (CGT) breaks for their investment and companies can use the relief to attract additional investment to develop their business. Individuals are entitled to relief on investments in certain unquoted trading companies through EIS. A junior version of EIS the SEIS is also available.

Maximum investment per annum £1,000,000
Additional investment limit where investing in knowledge-intensive companies £1,000,000
Income tax relief 30%
CGT treatment on disposal if held for 3 years Exempt

Capital gains from the disposal of other assets may be deferred by making an EIS investment.

Trade Allowances
  • A Trade Allowance is available to individuals.
  • There is an equivalent rule for certain miscellaneous income. This will apply to the extent that the £1,000 trading allowance is not used against trading income.
  • The trade allowance is not available against partnership income.
Income up to £1,000 Profits assessable NIL
Income over £1,000 Election to deduct £1,000 allowance rather than the actual expenses
VAT
  • Registered businesses charge VAT on their sales. This is known as output VAT and the sales are referred to as outputs.
  • Similarly VAT is charged on most goods and services purchased by the business. This is known as input VAT.
  • There are three rates: standard which applies to most goods and services, reduced rate for some goods and services such as home energy and zero rate goods and services, for example, most food and children’s clothes.
  • Some supplies are exempt from VAT for example postage stamps, financial and insurance transactions.
  • A business is required to register for VAT if the value of taxable supplies exceeds the annual registration limit.
  • The government has frozen the VAT registration and deregistration limits until 1 April 2022.
VAT – rates and limits  
Standard rate 20%
Reduced rate 5%*
Annual Registration Limit
– from 1.4.21 – 31.3.22		 £85,000
Annual Deregistration Limit
– from 1.4.21 – 31.3.22		 £83,000
VAT Fuel Scale Charges

Businesses must use these new VAT fuel scale charges from the start of their next prescribed accounting period beginning on or after 1 May 2020.

CO2
band		 Gross monthly
£		 VAT
£		 Net
£
120 or less 48 8.00 40.00
125 72 12.00 60.00
130 76 12.67 63.33
135 81 13.50 67.50
140 87 14.50 72.50
145 91 15.17 75.83
150 96 16.00 80.00
155 101 16.83 84.17
160 106 17.67 88.33
165 111 18.50 92.50
170 115 19.17 95.83
175 120 20.00 100.00
180 125 20.83 104.17
185 130 21.67 108.33
190 135 22.50 112.50
195 140 23.33 116.67
200 144 24.00 120.00
205 149 24.83 124.17
210 154 25.67 128.33
215 159 26.50 132.50
220 164 27.33 136.67
225 or more 168 28.00 140.00
CO 2
band		 Gross 3 month period £ VAT
£		 Net
£
120 or less 144 24.00 120.00
125 218 36.33 181.67
130 231 38.50 192.50
135 246 41.00 205.00
140 261 43.50 217.50
145 275 45.83 229.17
150 290 48.33 241.67
155 305 50.83 254.17
160 319 53.17 265.83
165 334 55.67 278.33
170 348 58.00 290.00
175 362 60.33 301.67
180 377 62.83 314.17
185 392 65.33 326.67
190 406 67.67 338.33
195 421 70.17 350.83
200 436 72.67 363.33
205 450 75.00 375.00
210 464 77.33 386.67
215 479 79.83 399.17
220 493 82.17 410.83
225 or more 508 84.67 423.33
CO 2
band		 Annual gross
£		 VAT
£		 Net
£
120 or less 581 96.83 484.17
125 870 145.00 725.00
130 930 155.00 775.00
135 986 164.33 821.67
140 1,047 174.50 872.50
145 1,103 183.83 919.17
150 1,163 193.83 969.17
155 1,219 203.17 1,015.83
160 1,279 213.17 1,065.83
165 1,335 222.50 1,112.50
170 1,396 232.67 1,163.33
175 1,452 242.00 1,210.00
180 1,512 252.00 1,260.00
185 1,568 261.33 1,306.67
190 1,628 271.33 1,356.67
195 1,684 280.67 1,403.33
200 1,745 290.83 1,454.17
205 1,801 300.17 1,500.83
210 1,861 310.17 1,550.83
215 1,917 319.50 1,597.50
220 1,977 329.50 1,647.50
225 or more 2,033 338.83 1,694.17

Where the CO2 emission figure is not a multiple of five, the figure is rounded down to the next multiple of five to determine the level of the charge.

For a bi-fuel vehicle which has two CO2 emissions figures, the lower of the two figures should be used.

For cars which are too old to have a CO2 emissions figure, you should identify the CO2 band based on engine size. If its cylinder capacity is:

  • If its cylinder capacity is 1,400cc or less, use CO2 band 140
  • If its cylinder capacity exceeds 1,400cc but does not exceed 2,000cc, use CO2 band 175;
  • If its cylinder capacity exceeds 2,000cc, use CO2 band 225 or above.
Vehicle Excise Duty (VED) - Passenger Cars
For vehicles first registered on or after 1 April 2017, the VED or ‘Road Tax’ rate for the first 12 months is based on CO2 emissions shown on the V5 (Registration Document).Subsequent years are charged at the standard rate. Cars with a list price of over £40,000 when new pay an additional rate of £325 per year on top of the standard rate, for 5 years.New diesel vehicles that do not meet the Euro 6d emissions standard are charged a supplement on their First Year Rate to the effect of moving up by one VED band.

VED bands and rates for cars first registered on or after 1 April 2017

CO2 emissions (g/km) Standard rate First year rate
0 £0 £0
1-50 £155 £10
51-75 £155 £25
76-90 £155 £115
91-100 £155 £140
101-110 £155 £160
111-130 £155 £180
131-150 £155 £220
151-170 £155 £555
171-190 £155 £895
191-225 £155 £1,335
226-255 £155 £1,895
Over 255 £155 £2,245

VED bands and rates for cars registered on or after 1 March 2001 but before 1 April 2017

VED band CO 2 emissions (g/km) Standard rate
A Up to 100 £0
B 101-110 £20
C 111-120 £30
D 121-130 £130
E 131-140 £155
F 141-150 £170
G 151-165 £210
H 166-175 £250
I 176-185 £275
J 186-200 £315
K 201-225* £340
L 226-255 £585
M Over 255 £600

*Including cars emitting over 225g/km registered before 23 March 2006.

 

For vehicles first registered on or after 1 April 2017, the VED or ‘Road Tax’ rate for the first 12 months is based on CO 2 emissions shown on the V5 (Registration Document).Subsequent years are charged at the standard rate. Cars with a list price of over £40,000 when new pay an additional rate of £325 per year on top of the standard rate, for 5 years.New diesel vehicles that do not meet the Euro 6d emissions standard are charged a supplement on their First Year Rate to the effect of moving up by one VED band.

VED bands and rates for cars first registered on or after 1 April 2017

CO 2 emissions (g/km) Standard rate First year rate
0 £0 £0
1-50 £150 £10
51-75 £150 £25
76-90 £150 £110
91-100 £150 £135
101-110 £150 £155
111-130 £150 £175
131-150 £150 £215
151-170 £150 £540
171-190 £150 £870
191-225 £150 £1,305
226-255 £150 £1,850
Over 255 £150 £2,175

VED bands and rates for cars registered on or after 1 March 2001 but before 1 April 2017

VED band CO 2 emissions (g/km) Standard rate
A Up to 100 £0
B 101-110 £20
C 111-120 £30
D 121-130 £125
E 131-140 £150
F 141-150 £165
G 151-165 £205
H 166-175 £240
I 176-185 £265
J 186-200 £305
K 201-225* £330
L 226-255 £565
M Over 255 £580

*Including cars emitting over 225g/km registered before 23 March 2006.

Van Benefits
  • Van benefit is chargeable if the van is available for an employee’s private use.
  • A fuel benefit may also be chargeable if an employee has the benefit of private fuel paid for in respect of a company van.
  • The charges do not apply to vans if a ‘restricted private use condition’ is met throughout the year.
  • From 6 April 2021 a 0% benefit charge may apply to vans which cannot emit CO2 when driven.
Van benefits 2021/22
Van benefit £3,500
Fuel benefit £669

Disclaimer

This article is published for the information of clients. It provides only an overview of the regulations in force at the date of publication and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this publication can be accepted by the authors or the firm.

Budget 2021

Budget 2021

by | Mar 4, 2021 | Agriculture, Audit, Auto Enrolment, Bookkeeping, Brexit, Business Services, Care Homes, Charities, Cloud Accounting, Corporate Finance, Corporate Tax, COVID-19, Cyber Security, Dental, Engineering, Exit Planning, Family Business, GPs, Healthcare, IT, IT and Technology, Legal, Leisure & Hospitality, Making Tax Digital, Manufacturing, Payroll, Pensions, Personal Tax, Pharmacy, Press Release, Property & Construction, R&D, Retail, SME, Solicitors, Tax, Transport & Logistics, VAT, Wealth Management

Budget 2021

The Chancellor Rishi Sunak presented his second Budget on Wednesday 3 March 2021. In his speech, he stated his Budget ‘meets the moment with a three-part plan to protect the jobs and livelihoods of the British people’.

Main Budget proposals

Tax measures include:

  • a super-deduction for companies investing in new plant and machinery
  • a time extension of the temporary increase to the SDLT nil rate band for residential property in England and Northern Ireland
  • an extension to the temporary 5% reduced rate of VAT for certain supplies
  • a temporary increase in the carry-back period for business losses
  • an increased rate of corporation tax from 2023.

Other measures include:

  • a new mortgage guarantee scheme
  • extension to the Job Retention Scheme
  • a Self-Employment Income Support Scheme fourth and fifth grant
  • an extension to the business rates holiday in England.

Previously announced measures include:

  • a cap on the amount of R&D tax credit paid to a loss-making small or medium-sized enterprise
  • new rules apply to off-payroll working payments made for services provided on or after 6 April 2021.

Some Budget proposals may be subject to amendment in the 2021 Finance Act. You should contact us before taking any action as a result of the contents of this summary.

Coronavirus loan schemes

In 2020, the government introduced a number of government-guaranteed coronavirus loan schemes. In December 2020 the Chancellor extended, until the end of March 2021, access to the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme.

Budget 2021 announced a new loan scheme to be introduced to replace those coming to an end.

From 6 April 2021 the Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to give them confidence in continuing to provide finance to UK businesses. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.

Restart Grants

In addition Restart Grants will be provided in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses. This will provide the cash certainty needed to plan ahead and safely relaunch trading over the coming months.

Self-Employment Income Support Scheme (SEISS)

Budget 2021 has confirmed details of a fourth grant. This will be 80% of three months’ average trading profits to be claimed from late April 2021. Payment will be in a single instalment capped at £7,500 in total and will cover the period February to April 2021. The scheme has been extended to those who have filed a 2019/20 self assessment tax return prior to 3 March 2021. This means that the newly self-employed from April 2019 now qualify subject to satisfying the other conditions.

A fifth and final grant was announced and can be claimed from late July 2021 to cover the period May to September 2021. This grant will be determined by a turnover test. Where the self-employed business turnover has fallen by 30% the grant will be worth 80% of three months’ average trading profits capped at £7,500. People whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850.

Business rates

Business rates have been devolved to Scotland, Northern Ireland and Wales. All four nations have introduced 100% business rates relief mainly aimed at retail, leisure and hospitality businesses. Such businesses have not had to pay business rates from 1 April 2020 to 31 March 2021.

In a Scottish Budget update statement on 16 February, the Scottish Government proposed an extension to the relief for the retail, hospitality, leisure and aviation sectors until 31 March 2022.

The Chancellor has now announced a continuation of 100% business rates relief for eligible retail, hospitality and leisure properties in England to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties. Nurseries will also qualify for relief in the same way as other eligible properties.

Following the Chancellor’s announcement, the Welsh Finance Minister has extended the rates holiday for the retail, leisure and hospitality sectors in Wales for a further 12 months.

Rates review

The government announced at Budget 2020 that it would conduct a fundamental review of the business rates system in England. The government’s objectives for the review are reducing the overall burden on business, improving the current business rates system and considering more fundamental changes in the medium-to-long term.

The government has recently announced the final report will be published in Autumn 2021 with an interim report published on 23 March.

Reduced VAT rate for hospitality sector

In July 2020, the government introduced a temporary 5% reduced rate of VAT for certain supplies of hospitality, hotel and holiday accommodation and admissions to certain attractions. In September 2020 the Chancellor extended the reduced rate to 31 March 2021. The government has now announced an extension of the reduced rate until 30 September 2021. To help businesses manage the transition back to the standard 20% rate, a 12.5% rate will apply for the subsequent six months until 31 March 2022.

Corporation tax rates

The main rate of corporation tax is currently 19% and it will remain at that rate until 1 April 2023 when the rate will increase to 25% for companies with profits over £250,000. The 19% rate will become a small profits rate payable by companies with profits of £50,000 or less. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective corporation tax rate.

Comment

The main rate of corporation tax has been 19% since 1 April 2017. The rate for the Financial Year beginning on 1 April 2020 was due to fall to 17% but the Chancellor reversed this decision in Budget 2020.

Tax losses

A temporary extension of the period over which businesses may carry trading losses back for relief against profits of earlier years to get a repayment of tax paid will have effect for company accounting periods ending in the period 1 April 2020 to 31 March 2022 and for tax years 2020/21 and 2021/22 for unincorporated businesses.

Trade loss 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.

For companies, after carry back to the preceding year, a maximum of £2 million of unused losses will be available for carry back against profits of the same trade to the earlier two years. This £2 million limit applies separately to the unused losses of each 12 month period within the duration of the extension.

For individuals a separate £2 million cap will apply to the extended carry back of losses made in each of the tax years 2020/21 and 2021/22.

The £2 million limit applies separately to the unused losses of each tax year within the duration of the extension. Income Tax payers will not be subject to a partnership-level limit.

Super-deduction

Between 1 April 2021 and 31 March 2023, companies investing in qualifying new plant and machinery will benefit from new first year capital allowances.

Under this measure a company will be allowed to claim:

  • a super-deduction providing allowances of 130% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances
  • a first year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances.

This relief is not available for unincorporated businesses.

First year allowances for business cars from April 2021

Budget 2020 announced the extension of 100% first year allowances for zero-emission cars, zero-emission goods vehicles and equipment for gas refuelling stations by four years from April 2021.

CO2 emission thresholds will also be amended from April 2021. These determine the rate of capital allowances available through which the capital expenditure for business cars can be written down. The thresholds will be reduced from 50g/km to 0g/km for the purpose of the first year allowances for low CO2 emission cars and from 110g/km to 50g/km for the purpose of writing down allowances (WDAs) for business cars.

Comment

The reduction in thresholds will mean that only business cars acquired with CO2 emissions of 0g/km will be eligible for first year allowances. Ultra-low emission vehicles which currently qualify for first year allowances if 50g/km or less will no longer qualify. They will be eligible for WDAs at the main rate (18%). Cars with CO2 emissions exceeding 50g/km will be eligible for WDAs at the special rate (6%).

Freeports

In 2020 the government consulted on proposals to create up to ten Freeports across the UK. The government is now proposing a range of measures covering customs, tax reliefs, planning, regeneration funding and innovation to create Freeports as national hubs for global trade and investment across the UK.

A UK Freeport will be a geographical area with a diameter up to 45km which is closely linked to a sea port, airport or rail port. East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth and South Devon, Solent, Teesside and Thames have been successful in the Freeports bidding process for England.

The government is working with devolved administrations to establish Freeports in each of the nations.

Customs benefits

Within the Freeport there will be a primary customs site and perhaps custom subzones. A customs site or subzone provides customs and tariff benefits such as:

  • duty deferral while goods remain on site
  • duty inversion if the finished goods exiting the Freeport attract a lower tariff than their component parts
  • subject to the UK’s trade agreements, customs duty exemption on goods that are imported into a Freeport, processed into finished goods and subsequently re-exported
  • simplified import procedures.

Tax benefits

Freeports may also have one or more tax sites within which tax reliefs will apply. The aim is for a single site and up to three tax sites may be allowed but the total area of the site(s) must not exceed 600 hectares. The tax site will likely be located on primarily underdeveloped land to generate new, additional productive activity in Freeport locations.

The intention is to offer:

  • Stamp Duty Land Tax relief on land purchases within Freeport tax sites in England where that property is to be used for qualifying commercial activity
  • a 10% rate of Structures and Buildings Allowance rather than the 3% rate that applies for businesses constructing or renovating structures and buildings for non-residential use
  • enhanced tax relief for qualifying new plant and machinery assets for the full cost of the qualifying investment in the same tax period the cost was incurred
  • 100% relief from business rates on certain business premises within Freeport tax sites in England.

Very broadly, the reliefs will apply for expenditure from various dates in 2021 to 30 September 2026.

In addition, a 0% rate of employer NICs on the salaries of any eligible employee working in the Freeport tax site is proposed. The relief is intended to be available for up to 9 years from April 2022.

Research and Development (R&D) tax relief

A cap on the amount of R&D tax credit which can be paid to a loss-making small or medium-sized enterprise (SME) will be introduced for accounting periods which commence on or after 1 April 2021.

Prior to the introduction of the cap, loss-making SMEs incurring qualifying expenditure on R&D activities are allowed to make a claim to surrender the unrelieved loss for a payable tax credit of up to 14.5%. For accounting periods commencing on or after 1 April 2021, payable tax credits are restricted to £20,000 plus three times the company’s relevant expenditure on workers.

Relevant expenditure on workers is the company’s PAYE and NICs for the period and importantly this is the company’s whole PAYE and NIC liability. In addition, if the company is supplied with workers by a connected company the relevant workers’ expenditure is extended to include a proportion of those worker costs.

Some companies which create or manage intellectual property and spend less than 15% with connected persons on R&D qualifying expenditure will be exempt from this cap.

Capital gains tax (CGT) rates

No changes to the current rates of CGT have been announced at Budget 2021. This means that the rate remains at 10%, to the extent that any income tax basic rate band is available, and 20% thereafter. Higher rates of 18% and 28% apply for certain gains; mainly chargeable gains on residential properties with the exception of any element that qualifies for Private Residence Relief.

There are two specific types of disposal which potentially qualify for a 10% rate up to a lifetime limit for each individual:

  • Business Asset Disposal Relief (BADR) (formerly known as Entrepreneurs’ Relief). This is targeted at directors and employees of companies who own at least 5% of the ordinary share capital in the company, provided other minimum criteria are also met, and the owners of unincorporated businesses.
  • Investors’ Relief. The main beneficiaries of this relief are external investors in unquoted trading companies who have newly-subscribed shares.

The lifetime limit for BADR was reduced from £10 million to £1 million for BADR qualifying disposals made on or after 11 March 2020. Investors’ Relief continues to have a lifetime limit of £10 million.

CGT annual exemption

The CGT annual exemption will be maintained at the current 2020/21 level of £12,300 for 2021/22 and up to and including 2025/26.

Inheritance tax (IHT) nil rate bands

The nil rate band has been frozen at £325,000 since 2009 and this will now continue up to 5 April 2026. An additional nil rate band, called the ‘residence nil rate band’ (RNRB) which has been increased in stages and is now £175,000 for deaths in 2020/21 will also be frozen at the current level until 5 April 2026. A taper reduces the amount of the RNRB by £1 for every £2 that the ‘net’ value of the death estate is more than £2 million. Net value is after deducting permitted liabilities but before exemptions and reliefs. This taper will also be maintained at the current level.

Business assets and Gift Hold-Over Relief

Gift Hold-Over Relief operates by deferring the chargeable gain on the disposal when a person gives away business assets. The gain then comes into charge when the recipient disposes of the gifted asset. The recipient is treated as though they acquired the asset for the same cost as the person who gave them the asset.

A change to the relief ensures that Gift Hold-Over Relief is not available where a non-UK resident person disposes of an asset to a foreign-controlled company, controlled either by themselves or another non-UK resident with whom they are connected. This measure will affect disposals made on or after 6 April 2021.

The Coronavirus Job Retention Scheme (JRS)

The current JRS allows an employer to place an employee on furlough and apply for a grant to cover wage costs for the time an employee is on furlough. The employer:

  • can claim 80% of ‘usual salary’ for hours not worked, up to a maximum of £2,500 per employee (pro-rated for hours not worked) per month
  • needs to fund employer National Insurance contributions (NICs) and the minimum employer automatic enrolment pension contributions.

In December 2020, the Chancellor extended the scheme until the end of April 2021.

Further extension of JRS

In Budget 2021 the Chancellor has further extended the scheme to 30 September 2021.

The level of grant available to employers under the scheme will stay the same until 30 June 2021.

From 1 July 2021, the level of grant will be reduced and employers will be asked to contribute towards the cost of furloughed employees’ wages. To be eligible for the grant an employer must continue to pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough.

The reduction in the level of the grant means that the percentage recovery of furloughed wages will be as follows:

  • for July 2021 70% of furloughed wages up to a maximum of £2187.50 and
  • for August and September 2021 60% of furloughed wages up to a maximum of £1,875.00.

Employers will need to continue to fund employer NICs and mandatory minimum automatic enrolment pension contributions.

Comment

The Chancellor has also extended eligibility for the scheme. For periods starting on or after 1 May 2021, employers can claim for employees who were employed on 2 March 2021, as long as a PAYE Real Time Information (RTI) submission was made between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee.

Apprenticeships and traineeships

High quality traineeships for young people

The government will provide an additional £126 million in England for high quality work placements and training for 16-24 year olds in the 2021/22 academic year. Employers who provide trainees with work experience will continue to be funded at a rate of £1,000 per trainee.

Payments for employers who hire new apprentices

The government will extend and increase the payments made to employers in England who hire new apprentices. Employers who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire (or £2,000 for those aged 24 and under) under the previous scheme.

This is in addition to the existing £1,000 payment the government provides for all new 16-18 year-old apprentices and those aged under 25 with an Education, Health and Care Plan, where that applies.

Supporting apprenticeships across different employers

The government will introduce a £7 million fund from July 2021 to help employers in England set up and expand portable apprenticeships. This will enable people who need to work across multiple projects with different employers to benefit from the high quality long-term training that an apprenticeship provides.

Off-payroll working in the private sector

New tax rules are soon to come into force for individuals who provide their personal services via an ‘intermediary’ to a medium or large business. The new rules apply to payments made for services provided on or after 6 April 2021.

The off-payroll working rules apply where an individual (the worker) provides their services through an intermediary (typically a personal service company) to another person or entity (the client). The client will be required to make a determination of a worker’s status and communicate that determination. In addition, the fee-payer (usually the organisation paying the worker’s personal service company) will need to make deductions for income tax and NICs and pay any employer NICs.

The legislation uses an existing statutory definition within the Companies Act of a ‘small company’ to exempt small businesses from the new rules. A small company is one which meets two of these criteria:

  • a turnover of £10.2 million or less
  • having £5.1 million on the balance sheet or less
  • having 50 or fewer employees.

If the business receiving the work of the individual is not a company, it is only the turnover test that will apply.

Comment

The Status Determination Statement (SDS) is a key part of the status determination procedure. The client must provide the SDS to the worker and should include not only the decision of the client but also the reasons underpinning it. The client must take ‘reasonable care’ in coming to its conclusion. If it doesn’t, the statement is not a valid SDS

In the Budget the government announced minor technical changes to improve the operation of the rules, in response to feedback from stakeholders, which will be legislated for in Finance Bill 2021. The government will make changes to the rules regarding provision of information by parties in the labour supply chain.

Comment

These changes will make it easier for parties in a contractual chain to share information relating to the off-payroll working rules by allowing an intermediary, as well as a worker, to confirm if the rules need to be considered by the client organisation.

National Living Wage (NLW) and National Minimum Wage (NMW)

The National Living Wage will increase by 2.2% and will be extended to 23 and 24 year olds for the first time. For workers aged under 23, the government has announced smaller increases in NMW in recognition of the risks to youth employment which the current economic situation poses.

From 1 April 2021, the new hourly rates of NLW and NMW are:

  • £8.91 for those 23 years old and over
  • £8.36 for 21-22 year olds
  • £6.56 for 18-20 year olds
  • £4.62 for under 18s
  • £4.30 apprentice rate for apprentices under 19, and those 19 and over in their first year of apprenticeship.

Comment

The extension of the NLW to 23 and 24 year olds may catch out some employers. Employees in this category, if they are on the NMW rate, are currently being paid £8.20 an hour.

Enterprise Management Incentives (EMI) scheme

At Budget 2020, the government announced a review of the EMI scheme to ensure it provides support for high-growth companies to recruit and retain the best talent so they can scale up effectively, and examine whether more companies should be able to access the scheme.

As part of this review the government is publishing a consultation alongside the Budget.

Van benefit charge nil-rating for zero-emission vans

From 6 April 2021, a nil rate of tax applies to zero-emission vans within the van benefit charge. In 2020/21 such vans have a van benefit charge at 80% of the standard flat rate of £3,490.

Comment

A zero-emission van is a van which cannot in any circumstances emit CO2 emissions when driven. Governments have provided varying amounts of discounts from the van benefit charge for zero-emissions vans since 2010. We are now back to the policy which applied from 2010 to 2015 when there was no charge.

Temporary changes to legislation resulting from coronavirus

Easement for employer-provided cycles exemption

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.

Employer-reimbursed coronavirus tests

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. Legislation will extend this exemption for the tax year 2021/22.

The change will have effect on and after Royal Assent of Finance Bill 2021. The corresponding NICs disregard is already in force and this will also be extended for the tax year 2021/22.

Extension of income tax exemption for COVID-19 related home office expenses

The government will, by secondary legislation, extend the temporary income tax exemption and Class 1 NICs disregard for employer reimbursed expenses that cover the cost of relevant home office equipment. The extended exemption will have effect until 5 April 2022.

The personal allowance

The personal allowance is currently £12,500. Budget 2018 announced that the allowance would remain at the same level until 2020/21 and the statutory provision to increase the allowance annually by CPI was to be overridden. The Chancellor has confirmed that the personal allowance will increase by CPI (0.5%) for 2021/22 to £12,570.

There is a reduction in the personal allowance for those with ‘adjusted net income’ over £100,000. The reduction is £1 for every £2 of income above £100,000. So for the current tax year there is no personal allowance where adjusted net income exceeds £125,000. For 2021/22 there will be no personal allowance where adjusted net income exceeds £125,140.

The Chancellor announced that the personal allowance will be frozen at £12,570 for the tax years 2022/23 to 2025/26.

The marriage allowance

The marriage allowance permits certain couples, where neither pays tax at more than the basic rate, to transfer 10% of their personal allowance to their spouse or civil partner.

Comment

The marriage allowance reduces the recipient’s tax bill by up to approximately £250 a year. The marriage allowance was first introduced for 2015/16 and there are couples who are entitled to claim but have not yet done so. It is possible to claim for all years back to 2016/17 where the entitlement conditions are met. The total tax saving for all years up until 2020/21 could be over £1,000. A claim for 2016/17 will need to be made by 5 April 2021.

Tax bands and rates

The basic rate of tax is 20%. In 2020/21 the band of income taxable at this rate is £37,500 so that the threshold at which the 40% band applies is £50,000 for those who are entitled to the full personal allowance.

The Chancellor announced that for 2021/22 the basic rate band will be £37,700 so that the threshold at which the 40% band applies will be £50,270 for those who are entitled to the full personal allowance. The Chancellor announced that the basic rate band will be frozen at £37,700 for the tax years 2022/23 to 2025/26. The National Insurance contributions Upper Earnings Limit and Upper Profits Limit will remain aligned to the higher rate threshold at £50,270 for these years.

Individuals pay tax at 45% on their income over £150,000.

Scottish residents

The tax on income (other than savings and dividend income) is different, for taxpayers who are resident in Scotland, from taxpayers resident elsewhere in the UK. The Scottish income tax rates and bands apply to income such as employment income, self-employed trade profits and property income.

In 2020/21 there are five income tax rates which range between 19% and 46%. Scottish taxpayers are entitled to the same personal allowance as individuals in the rest of the UK. The two higher rates are 41% and 46% rather than the 40% and 45% rates that apply to such income for other UK residents. For 2020/21, the 41% band applies to income over £43,430 for those who are entitled to the full personal allowance. The 46% rate applies to income over £150,000.

In the Scottish Budget on 28 January 2021, the Scottish Government proposed that the Scottish income tax rates will be frozen for 2021/22. The thresholds for the tax bands will be increased by 0.5% except for the 46% rate threshold which remains at £150,000. So the 41% band will apply to income over £43,662 for those who are entitled to the full personal allowance.

Welsh residents

From April 2019, the Welsh Government has had the right to vary the rates of income tax payable by Welsh taxpayers. The UK government has reduced each of the three rates of income tax paid by Welsh taxpayers by 10 pence. For 2020/21 the Welsh Government has set the Welsh rate of income tax at 10 pence which has been added to the reduced rates. This means the tax payable by Welsh taxpayers is the same as that payable by English and Northern Irish taxpayers.

The Welsh Government has announced that the income tax rate will remain at 10 pence for 2021/22.

Tax on savings income

Savings income is income such as bank and building society interest.

The Savings Allowance applies to savings income and the available allowance in a tax year depends on the individual’s marginal rate of income tax. Broadly, individuals taxed at up to the basic rate of tax have an allowance of £1,000. For higher rate taxpayers the allowance is £500. No allowance is due to additional rate taxpayers.

Some individuals qualify for a 0% starting rate of tax on savings income up to £5,000. However, the rate is not available if taxable non-savings income (broadly earnings, pensions, trading profits and property income, less allocated allowances and reliefs) exceeds £5,000.

Tax on dividends

The first £2,000 of dividends is chargeable to tax at 0% (the Dividend Allowance). Dividends received above the allowance are taxed at the following rates:

  • 7.5% for basic rate taxpayers
  • 32.5% for higher rate taxpayers
  • 38.1% for additional rate taxpayers.

Dividends within the allowance still count towards an individual’s basic or higher rate band and so may affect the rate of tax paid on dividends above the Dividend Allowance.

To determine which tax band dividends fall into, dividends are treated as the last type of income to be taxed.

Universal Credit

Universal Credit is a single payment that is made up of different amounts depending on an individual’s circumstances. There is no entitlement if an individual’s capital is worth more than £16,000. Shortly after the 2020 Budget the Chancellor announced an increase in the Universal Credit standard allowance by £20 per week for one year.

The government is extending the temporary £20 per week increase for a further six months.

Working Tax Credit

The government is making a one-off payment of £500 to eligible Working Tax Credit claimants to provide extra support over the next six months.

Mortgage guarantee scheme

The government will introduce a new mortgage guarantee scheme in April 2021. This scheme will provide a guarantee to lenders across the UK who offer mortgages to people with a deposit of 5% on homes with a value of up to £600,000.

Under the scheme, all buyers will have the opportunity to fix their initial mortgage interest rate for at least five years should they wish to. The scheme, which will be available for new mortgages up to 31 December 2022, is designed to increase the availability of mortgages on new or existing properties for those with small deposits.

Green National Savings and Investment (NS&I) product

The government will offer a green retail savings product through NS&I in the summer of 2021. This product will be closely linked to the UK’s sovereign green bond framework and will give all UK savers the opportunity to take part in the collective effort to tackle climate change. The green gilt framework, to be published in June, will detail the types of expenditure that will be financed to meet the government’s green objectives.

Venture Capital Schemes: extension of the Social Investment Tax Relief

The government will continue to support social enterprises that are seeking growth investment by extending the operation of Social Investment Tax Relief to April 2023. This will continue the availability of income tax relief and capital gains tax hold-over relief for investors in qualifying social enterprises.

Pensions Lifetime Allowance

The lifetime limit sets the maximum figure for tax-relieved savings that an individual can build up over their lifetime.

Legislation will be introduced to remove the annual link to the CPI increase for the next five years. This will maintain the standard Lifetime Allowance at £1,073,100 for tax years 2021/22 to 2025/26.

Land and buildings transaction taxes

Land and buildings transaction taxes are devolved to Scotland (Land and Buildings Transaction Tax) and Wales (Land Transaction Tax). Stamp Duty Land Tax (SDLT) applies to transactions in England and Northern Ireland. All these taxes have had a temporary increase in the nil rate threshold for residential properties. The thresholds were set to return to the previous thresholds from 1 April 2021.

Budget announcement

The government will extend the temporary increase to the SDLT nil rate band for residential property in England and Northern Ireland 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.

Wales – Land Transaction Tax

Following the Chancellor’s announcement, the Welsh Finance Minister has confirmed that the Land Transaction Tax temporary reduction period will be extended by a further three months so that it will end on 30 June 2021.

In December 2020, the Welsh Government changed the rates charged on higher rates residential property transactions and non-residential transactions including the rent element of non-residential and mixed leases. The changes to the higher residential rates have the effect of increasing the tax rates applied to the bands by 1%. For non-residential transactions, changes have been made to the bands so as to increase the nil rate thresholds. These changes came into effect on 22 December 2020.

SDLT surcharge

New SDLT rates are proposed for purchasers of residential property in England and Northern Ireland who are not resident in the UK. The new rates will be 2% higher than those that apply to purchases made by UK residents, and will apply to purchases of both freehold and leasehold property as well as increasing SDLT payable on rents on the grant of a new lease. The surcharge will apply to land transactions with an effective date of 1 April 2021 or later. Transitional rules may apply to some contracts exchanged before 11 March 2020 but completed or are substantially performed on or after 1 April 2021, or some contracts substantially performed on or before 31 March 2021 but not completed until 1 April 2021 or later.

Plastic Packaging Tax

Draft legislation has been issued to establish a Plastic Packaging Tax. This is a new tax that applies to plastic packaging produced in, or imported into the UK that does not contain at least 30% recycled plastic. Plastic packaging is packaging that is predominantly plastic by weight.

The tax rate will be £200 per tonne of non-compliant plastic packaging. There will be an exemption for businesses that manufacture or import less than 10 tonnes of plastic packaging per year. The tax will take effect from April 2022.

Van Vehicle Excise Duty (VED)

Van VED is currently levied at £250 per year for most light goods vehicles (under 3.5 tonnes) which have been registered since 1 March 2001. A consultation paper explored creating a graduated first year rate for new light goods vehicles and motorhomes from April 2021. The government has recently decided not to proceed with the change in light of the pandemic. Motorhomes will continue to be placed in the Private/Light Goods class.

Reform of penalties for late submission and late payment of tax

The government will 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 new late payment regime will introduce penalties proportionate to the amount of tax owed and how late the tax due is. These reforms will come into effect: for VAT taxpayers, from periods starting on or after 1 April 2022; for taxpayers in ITSA with business or property income over £10,000 per year, from accounting periods beginning on or after 6 April 2023; and for all other taxpayers in ITSA, from accounting periods beginning on or after 6 April 2024.

Contactless payment card limit

Following a public consultation by the Financial Conduct Authority, the government has approved an increase to the legal contactless payment limits previously set by the European Commission. This will allow banks to support single contactless payments up to £100, and cumulative contactless payments up to £300, without the need for customers to input their chip and pin. The government hopes the banking industry will implement the new limits later this year.

Disclaimer

This publication is published for the information of clients. It provides only an overview of the regulations in force at the date of publication and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this publication can be accepted by the authors or the firm.

For more information

For more information on anything discussed in this article or if you would like some tax planning advice please contact your usual Hawsons contact. Alternatively, please contact your nearest office to arrange your free initial meeting.

Free initial consultation

Get in touch
Newsletter sign-up
Stephen Charles Tax Adviser Sheffield

Stephen Charles

Tax Partner, Sheffield

0114 266 7141

[email protected]

Craig Walker Tax Adviser Sheffield

Craig Walker

Tax Director, Sheffield

0114 266 7141

[email protected]

Jenny Brown Tax Adviser Sheffield

Jenny Brown

Senior Tax Manager, Sheffield

0114 266 7141

[email protected]

More similar content

Staff shortages in the care home sector

Staff shortages in the care home sector

by | Oct 12, 2021 | ,

Clearly, the pandemic has hit many sectors hard but the care home sector is currently suffering from severe staffing pressures. New mandatory vaccines being imposed for all staff (unless medically exempt) and changes to immigration rules following Brexit have added...

Charity Skydive with Hawsons

Charity Skydive with Hawsons

by | Sep 27, 2021 | ,

Hawsons continue to support and fundraise for local charities as Aimee Smith and Dalia Qarawi threw themselves out of their comfort zones for the Paediatrics Department at Northampton General Hospital. The charity skydive took place on 19 September 2021 at the Hinton...

Basic Cash Flow Management Tips

Basic Cash Flow Management Tips

by | Jul 8, 2020 | Business Services, Scott Sanderson, SME

Basic Cash Flow Management Tips 

 

This article serves as an introduction to the fundamentals of cash flow management. If you need help with anything concerning cash flow or anything else, then please do get in touch.

 

What is cash flow?

 

Cash flow is typically defined as the amount of money moving in and out of your business. Of course, the preference is for your business to have a positive cash flow. This means that the cash inflows are in excess of the outflows enabling you to settle your debts as they fall due. If you have a negative cash flow it can sometimes require you to source alternative methods of finance such as bank loans to cover a shortfall. However, this approach is not normally sustainable in the long term.

 

How to calculate your cash flow?

 

To calculate your net cash flow you will first need to select a time period – typically a month. You total your cash receipts and deduct cash payments over that period. This is your cash flow. However, it is important to also calculate this on a quarterly and annual basis which will help you to identify any cyclical patterns emerging. For example, are there months where your cash flow is stretched due to seasonality of income? Spotting these trends can enable you to take appropriate actions.

A few tips to manage your cash flow

 

  1. Keep your records accurate and up to date

 

It is important to make sure that you constantly update your record of accounts. If you start to fall behind updating your finances, then your calculated cash flow may be incorrect which could lead to poor decision making based on misinformation.

 

  1. Do not be too lenient with customers

 

It is important to strike a balance between being strict and a pushover when invoicing clients. It is important that your business has an invoicing strategy in place to achieve this. You should give customers a sufficient and realistic timescale to pay whilst not agreeing to lengthy terms that effectively see you acting as an overdraft for your customers.

 

  1. Keep your accounting simple

 

If you are not completely confident with numbers, you should use quality cloud accounting software such as Quickbooks, Sage, and Xero. This will make it much easier to keep your accounts accurate and up to date. For more information about cloud accounting please visit our cloud accounting webpage here. Alternatively, you could hire a professional to do your bookkeeping for you to free up your time. Visit our bookkeeping services webpage to find out more information.

 

  1. Keep your business and your personal finances separate

 

Mixing personal and business finances can leave you confused and unsure about how your business is performing. Keeping your business and personal finances separate will provide more clarity on performance whilst avoiding any tax complications from mixing personal and business expenditures.

 

  1. Build a cash reserve

 

Building a cash reserve is always worthwhile. This will help when the unexpected happens (such as the Covid-19 pandemic).  Having a buffer will help your business to survive any unforeseen downturns. Furthermore, it can enable you to be more reactive when growth opportunities present themselves.

 

  1. Cut costs

 

Look through your records and regularly review bills, payroll, rent, subscriptions, and utilities, etc. Are you spending too much money on these? Are there any subscriptions that you do not really need that you could cancel? These are the kind of questions you need to be asking yourself. Where can you save money that will not affect the performance of your business?

 

  1. Contingency planning

 

Does your business have fixed assets such as equipment, buildings, furniture, etc? Consider what you have that you could sell to generate funds quickly should you ever need it.

 

  1. Consider leasing equipment instead of buying it

 

Unless your business can easily afford it you may want to consider leasing equipment, computers, and vehicles. This helps smooth the cash flow impact of larger capital purchases.

 

  1. Stay on top of your invoices

 

Whenever you have completed a job always aim to send the invoice out in a timely fashion. Make sure you know the correct contact details when sending an invoice as you do not want it being passed around departments. It is very important to make your invoices easy to understand so it will not confuse your clients. E-mailing invoices is often now the preferred method for many businesses.

 

  1. Offer an incentive for early payments

 

If you are struggling to get clients to pay on time you could offer an incentive to persuade them to pay early. This can be anything from offering a discount or including something additional for free. Obviously, it is very important to ensure this is affordable for your business before offering it.

 

  1. Business credit cards can help cushion cash flow

 

Credit cards with rewards attached can be helpful so you can use these towards future purchases. They can also provide a cushion for your business during tough times.

 

Conclusion

 

We hope you have found some of these basic tips of use, if you do need any help on this or anything else then please do get in touch with us – first free initial meeting.

 

Scott Sanderson

Scott Sanderson Partner

Scott Sanderson began his career with Hawsons and trained as a Chartered Accountant, becoming a partner in 2015, specialising in the healthcare sector and small businesses. For more details and advice, please contact Scott on [email protected] or 0114 266 7141.[/author_info]

Free initial consultation

Get in touch
Newsletter sign-up
Scott Sanderson is a healthcare partner at Hawsons

Scott Sanderson

Partner, Sheffield

0114 266 7141

[email protected]

The Government has announced a scheme worth £1.25bn to help start-ups

The Government has announced a scheme worth £1.25bn to help start-ups

by | Apr 20, 2020 | Business Services, COVID-19, Scott Sanderson, SME

Government announce scheme worth £1.25bn to help start-ups

This new scheme is for start-up businesses that do not qualify for any of the other COVID-19 business support schemes. Chancellor Rishi Sunak said this would help start-ups through this difficult period plus it would boost the growth of UK’s economy once the coronavirus pandemic crisis has subsided. Many start-up businesses lose money in their first few years of trading meaning they cannot apply for Coronavirus Business Interruption Loan Scheme. The Government want to make sure that the coronavirus pandemic does not sink the UK’s fast growing innovative businesses – which are deemed riskier investments that do not lend easily to bank funding criteria.

Are there strings attached?

Yes – there are strings attached, firstly, to be eligible for government investment your company must have raised private funds of at least £250,000 in the last five years. Secondly, any investment made by the government must be matched by private investors.

It should also be noted that if the government is not repaid then they will take an ownership stake in your company. The entrepreneur community has generally accepted this scheme and this is welcomed support. However, there are concerns over the complexity of the scheme which could catch out businesses looking for quick investment – something that is apparent in many other support schemes outlined to date.

Coronavirus Business Interruption Loan Scheme

Pressure is now being put on the government to increase the loan guarantee from 80% to 100% on the Coronavirus Business Interruption Loan Scheme. The main reason for this is that just over £1bn of government-backed loans have been approved out £330bn total support package. Many firms have said that banks have not approved their loan due to banks being left to cover 20% of the losses if the loan cannot be repaid, with the banks wanting sufficient recourse and/or headroom in the event of the business failing. It is hoped that the increase in government guarantee increasing to 100% will remove some of the barriers being faced by businesses during the application process.

How can we help

At Hawsons we have a dedicated team of accountants at our offices in Sheffield, Doncaster, and Northampton. Our expert accountants can advise you which coronavirus support schemes would be best for your business.

Book your free initial meeting here.

Free initial consultation

Get in touch
Newsletter sign-up
Scott Sanderson is a healthcare partner at Hawsons

Scott Sanderson

Partner, Sheffield

0114 266 7141

[email protected]

Coronavirus Job Retention Scheme Update

Coronavirus Job Retention Scheme Update

by | Apr 16, 2020 | Business Services, COVID-19, Simon Bladen, SME

How to apply for a furlough grant

The application webpage for the government job retention scheme is expected to go live on 20 April with grants being subsequently paid from 30 April. Authorised agents who act for PAYE purposes should be able to make claims on behalf of clients. However, the Tax faculty has recently sought further information regarding the type of authorisation required: 64-8, FBI2 and online agent authorisation. But any unauthorised or file only agents will not be able to claim on behalf of clients.  

How do I submit my claim?

The government will require the employer’s “ePAYE” reference. You can then use the “PAYE Online for Employers” portal to make your claim. These login details should have been sent to you when you first started using PAYE.

To check that you can access this portal please click here

It does not take long to apply for this service, but you will need authorisation codes which often take around 10 days to arrive. You will not be able to access the scheme without these details.

This information may change as the scheme is developed and we will let you know as soon as we know any new information.

Furlough scheme cut-off extended to 19 March

The government’s decision to extend the date of eligibility to 19 March 2020 means that thousands more employers will be able to receive financial support through this scheme. You can now claim on this scheme for furloughed employees who were on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC via an RTI submission on or before that date.

More information can found here.

How can we help?

At Hawsons we have a dedicated team of accountants at our offices in Sheffield, Doncaster, and Northampton. Hawsons is one of the longest standing firms of independent chartered accountants in England and recently celebrated 165 years or providing expert advice to businesses of all types and sizes.

If you would like to book your free initial meeting, please click here

If you want to find out more about Hawsons visit our website here. 

Free initial consultation

Get in touch
Newsletter sign-up
Simon Bladen Partner

Simon Bladen

Partner, Sheffield

0114 266 7141

[email protected]

Tough times ahead for UK economy says Chancellor

Tough times ahead for UK economy says Chancellor

by | Apr 15, 2020 | Business Services, Scott Sanderson, SME

Tough times ahead for UK Economy

The Office for Budget Responsibility (OBR) have said that the economy could decrease by as much as 35% by June. It is important to say that this is only one possible scenario. The figures from the OBR show the scale of the impact that COVID-19 is having on the UK economy, other countries are also having similar implications.

Chancellor Rishi Sunak has said that the government is unable to protect everyone during this crisis. “We came into this crisis with a fundamentally sound economy, powered by the hard work and ingenuity of the British people and British businesses.” However, statistics have shown that unemployment rate could increase to 10% and the government’s deficit could hit £273billion. This economic impact will only be temporary shift and much of the crash will be undone as built-up demand is expected to be unleashed when lockdown is lifted.

These predictions are based on a three-month lockdown followed by a period of three months of partial restrictions the OBR have said. Based upon this the economy would shrink by 12% this year, but growth is expected to return pre-crisis trends by the end of the year.

Even though the government’s borrowing is expected to rise to £273bn the OBR have said that this financial aid could help prevent any long term damage for employees and businesses. Which is crucial to get the economy back up and running again once lockdown is lifted, as unemployment is predicted to rise to 3.4 million by the end of June and increase of 2.1 million.

Please view our COVID-19 webpage to see if you or business is eligible for government financial help

How can we help

At Hawsons we have a dedicated team of accountants at our offices in Sheffield, Doncaster, and Northampton. Hawsons has over 165 years of expertise in accounting, and is one of the longest standing firms of independent chartered accountants in England.

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial consultation

Get in touch
Newsletter sign-up
Scott Sanderson is a healthcare partner at Hawsons

Scott Sanderson

Partner, Sheffield

0114 266 7141

[email protected]