As the Self-employment Income Support Scheme (SEISS) comes to a close, HMRC will continue to check claims rigorously. Continue reading “Self-employment Income Support Scheme, HMRC and your claim”
Quarterly news
Beware Covid-19 scams and the links presented
Scam texts, emails and phone calls saying they’re from HMRC are on the rise. And it can be increasingly difficult to tell the real from the fake. Continue reading “Beware Covid-19 scams and the links presented”
New claim needed for employees working from home
During the pandemic, employees required to work from home have been able to claim tax relief for additional costs, if these are not reimbursed by their employer. Continue reading “New claim needed for employees working from home”
Holiday leave and Covid-19
As the economy starts to reopen, how flexible do employers have to be when it comes to time off for staff? Continue reading “Holiday leave and Covid-19”
Tax and the side hustle
A pup from a favourite black labradoodle. Speciality cakes on a Facebook page. Perhaps you had space to branch out during lockdown: perhaps you need to advise a family member. What’s the position with tax? Continue reading “Tax and the side hustle”
Business as usual with pensions auto-enrolment
Pandemic or no pandemic, employer obligations remain. With the auto-enrolment (AE) compliance cycle still fairly new, what should you be doing now? Continue reading “Business as usual with pensions auto-enrolment”
Capital taxes
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.
Introduction to 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.
