| The advisory electricity rate for fully electric cars is 4 pence per mile.
Hybrid cars are treated as either petrol or diesel cars for advisory fuel rates. The advisory fuel rates for petrol, LPG and diesel cars are shown in these tables. From 1 March 2021 You can use the previous rates for up to 1 month from the date the new rates apply.
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| A special relief is available for creators of literary or artistic works under which they can claim to add together their profits for 2 years and be taxable on the average of those profits if certain conditions are met. This helps to even out fluctuating tax charges for creative persons who may pay little tax one year but perhaps higher rates of Income Tax the following year. The averaging process may help to reduce overall liabilities.
You can claim averaging if your profits come from disposing of works or from royalties you get for allowing people to reproduce your works. So, for example, you can claim if you are:
You cannot claim averaging if your profits come from the services you provide. So, for example, you cannot claim if you’re:
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A new Recovery Loan Scheme was launched 6 April 2021, to provide much needed liquidity to businesses affected by COVID lockdown measures. Under the scheme, loans of up to £10m are available. The minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts. Potentially, these loans will be attractive to businesses in retail and hospitality that are gradually being allowed to reopen. As with the Bounce-Back Loans, the government is providing lenders – the high street banks – with a measure of guarantee to underwrite their risks. In a recent press release government confirmed: The scheme, which was announced at budget and runs until 31 December 2021, will be administered by the British Business Bank, with loans available through a diverse network of accredited commercial lenders. 26 lenders have already been accredited for day one of the scheme, with more to come shortly, and the government will provide an 80% guarantee for all loans. Interest rates have been capped at 14.99% and are expected to be much lower than that in the vast majority of cases, and Ministers are urging lenders to ensure they keep rates down to help protect jobs. The Recovery Loan Scheme can be used as an additional loan on top of support received from the emergency schemes – such as the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme – put into place last year. Business owners who are considering a recovery loan should apply the usual considerations. i.e., can they afford the interest and capital repayments. Please call if you would like help considering your options. |
1 April 2021 – Due date for Corporation Tax due for the year ended 30 June 2020.
19 April 2021 – PAYE and NIC deductions due for month ended 5 April 2021. (If you pay your tax electronically the due date is 22 April 2021)
19 April 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2021.
19 April 2021 – CIS tax deducted for the month ended 5 April 2021 is payable by today.
30 April 2021 – 2019-20 tax returns filed after this date will be subject to an additional £10 per day late filing penalty.
1 May 2021 – Due date for Corporation Tax due for the year ended 30 July 2020.
19 May 2021 – PAYE and NIC deductions due for month ended 5 May 2021. (If you pay your tax electronically the due date is 22 May 2021).
19 May 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2021.
19 May 2021 – CIS tax deducted for the month ended 5 May 2021 is payable by today.
31 May 2021 – Ensure all employees have been given their P60s for the 2020-21 tax year.
The government has confirmed its intention that furloughed employees will be paid 80% of their wages for hours not worked under the furlough scheme. Up to 30 June 2021, this payment will be fully-funded by government and capped at £2,500 per month.
From 1 July 2021, employers are required to contribute 10% of the 80% (capped at £312.50 per month) government contributing 70% of the 80% (capped at £2,187.50 per month).
From 1 August 2021, until the scheme is due to end 30 September 2021, employer contributions rise to 20% of the 80% (capped at £625 per month) government contributing 60% of the 80% (capped at £1,875 per month).
Readers are reminded that one of the conditions to apply for this support is that you can demonstrate that your business continues to be adversely affected by COVID disruption.
Throughout this period, employers are fully responsible for payment of any hours worked.
If you became self-employed after 5 April 2019 and you have submitted your 2019-20 tax return before 2 March 2021, you may be eligible for the next two Self-Employed Income Support Scheme (SEISS) grants for the quarter end 30 April 2021 and the final claims period to 30 September 2021.
HMRC has announced that they are adding a new layer of security to these SEISS claims and will be calling taxpayers to verify their identity. The announcement on the GOV.UK website says:
From March to April 2021 HMRC will write to customers who became self-employed in 2019-20 and submitted a self-assessment return for that period.
As a result of the Chancellor’s announcement that the fourth Self Employment Income Support Scheme (SEISS) grant will take into account the 2019-20 tax returns, these customers may be eligible for support under SEISS.
The letter will tell customers to expect a telephone call on the number they provided on their tax return.
If the customer provided an agent’s number on their return, we will ask the agent to pass on the customer’s number as we need to speak to the customer directly.
When we call, we’ll ask for proof of identity and evidence of trade in the form of bank statements.
We are aware of increased scam activity related to HMRC’s coronavirus support schemes. The purpose of this letter is to explain to customers that this is a genuine call, and to give customers details on how to recognise it as such.
Many businesses across the UK are likely to make losses in the 2020-21 tax year due to the havoc resulting from COVID disruption. Which was why the announcement in the recent Budget that losses can be carried back for an extended period was most welcome.
The policy objective aims to provide a cashflow benefit to affected businesses by providing additional relief for trading losses, thereby generating repayments for tax paid for two additional years.
Legislation will be introduced in Finance Bill 2021 to extend the period for which trading losses can be carried back against previous profits. This extension will apply to trading losses made by companies in accounting periods ending between 1 April 2020 and 31 March 2022 and to trading losses made by unincorporated businesses in tax years 2020-21 and 2021-22.
To facilitate this change, trade losses carry back will be extended from the current one year entitlement to a period of three years, with losses being carried back against later years first.
Since 15 March 2021, smaller businesses can apply for grants of up to £2,000 to help them adapt to new customs and tax rules when trading with the EU.
The £20 million SME Brexit Support Fund enables traders to access practical support, including training for new customs, rules of origin and VAT processes.
Small and medium sized businesses that trade solely with the EU – and are therefore new to importing and exporting processes – are encouraged to apply for the grants.
The fund, announced in February by the Chancellor of the Duchy of Lancaster, Michael Gove, is the latest round of government support for UK trade.
To be eligible, businesses must import or export goods between Great Britain and the EU or move goods between Great Britain and Northern Ireland.
This follows the government setting out a new timetable for introducing import border control processes to enable UK businesses to focus on their recovery. Full import border control processes will now be introduced on 1 January 2022, six months later than originally planned.
More has been disclosed, leaked, of this year’s Budget announcements than in previous years. But we now have the details and there is a lot to consider. The following Budget summary is split into four sections:
1. COVID-19 related support measures for UK businesses
2. Support for the UK housing market
3. Taxation changes
4. Other announcements
Please call if you need to discuss how these changes may affect your business or tax affairs in the coming months.
COVID-19 related support measures for UK businesses
The Treasury is to continue the two existing major support schemes in an attempt to hold back a significant increase in unemployment rates as business owners grapple with the effects of COVID-19 disruption. Details are set out below.
Coronavirus Job Retention Scheme
This scheme, nicknamed the Furlough Scheme, was due to end 30 April 2021. It is now being extended to 30 September 2021.
The judgement must be that there will be enough control over COVID by autumn 2021 to stimulate demand and give employers more confidence to retain staff. The Chancellor has obviously crunched the numbers and considers employment support in this way a more attractive strategy than increasing unemployment costs.
In more detail:
• For employees, there will be no change to the terms – they will continue to receive up to 80% of their salary, for hours not worked, until the scheme ends.
• Employers will be asked to contribute 10% towards wages for hours not worked from July 2021, rising to 20% in August and September 2021.
Self-Employed Income Support Scheme (SEISS)
There has been much criticism of this scheme as it has not been possible for self-employed businesses that commenced trading during 2019-20 to claim.
To counter this, the following changes to SEISS have been announced.
1. All qualifying self-employed businesses can continue to claim SEISS grants if they continue to be adversely affected by COVID lockdown measures. The present scheme was due to end 30 April 2021. This has now been extended to 30 September 2021.
2. Businesses previously excluded from claims because they commenced during the 2019-20 tax year will now be eligible to claim the fourth and fifth SEISS grants as long as their tax return for 2019-20 was filed by midnight 2 March 2021.
3. For the fifth grant claims can be made from July 2021. Self-employed persons whose turnover has fallen by more than 30% will continue to qualify for the 80% grant. Those with decreases in turnover of less than 30% will be restricted to a 30% claim.
Restart grants
£5bn of funding is being allocated for these grants. They will support businesses obliged to close during much of lockdown. The grants will consist of:
• A one-off grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England.
• Non-essential retail that have tended to open first, can apply for a one-off £6,000 grant.
Business rates holiday continued
This year, government will continue with the 100% business rates holiday for the first three months of the 2021-22 financial year, in other words, through to the end of June 2021 for the retail, leisure and hospitality sectors.
For the remaining nine months of the year, to 31 March 2022, business rates will still be discounted by two thirds, up to a value of £2 million for closed businesses, with a lower cap for those who have been able to stay open.
Exemption for COVID-19 related home office expenses
The temporary Income Tax exemption and Class 1 National Insurance Contributions disregard for employer reimbursed expenses that cover the cost of relevant home office equipment is extended and will have effect until 5 April 2022.
Exemption for reimbursement of antigen test costs
The government will legislate in Finance Bill 2021 to introduce a retrospective Income Tax exemption for payments that an employer makes to an employee to reimburse for the cost of a relevant coronavirus antigen test for the tax year 2020-21.
A new Recovery Loan Scheme
The Recovery Loan Scheme ensures businesses of any size can continue to access loans and other kinds of finance between £25,000 and up to £10 million per business once the existing COVID-19 loan schemes close. This will provide further support as businesses recover and grow following the disruption of the pandemic and the end of the transition period.
Once received, the finance can be used for any legitimate business purpose, including growth and investment.
The government guarantees 80% of the finance to the lender to ensure they continue to have the confidence to lend to businesses.
The scheme launches on 6 April 2021 and is open until 31 December 2021, subject to review. Loans will be available through a network of accredited lenders.
Reduced rate of VAT
The temporary reduced rate of 5% for hospitality, holiday accommodation and attractions will be extended until 30 September 2021. This is a welcome bonus for this sector badly affected by COVID lockdown restrictions.
This will be followed by the introduction of a new reduced rate of 12.5% from 1 October 2021 that will be in effect until 31 March 2022 at which point it will revert to the 20% standard rate.
Other support measures
Other measures outlined in the Budget include:
• Extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000.
• £7 million for a new “flexi-job” apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector.
• Additional £126 million for 40,000 more traineeships in England, funding high quality work placements and training for 16-24 year olds in 2021-22 academic year.
Support for the UK housing market
Support will include a mortgage guarantee scheme that will help home buyers purchase properties up to £600,000, and an extension to the existing stamp duty holiday that was due to end 31 March 2021.
The detail:
Mortgage guarantee scheme
The government will underwrite 95% of the risk of default. It will apply to home acquisitions up to £600,000 and set deposits required to 5%.
Stamp duty holiday
The present £500,000 threshold for paying Stamp Duty Land Tax (SDLT) was increased on a temporary basis and was due to end 31 March 2021.
The nil rate band will continue to be £500,000 for the period 8 July 2020 to 30 June 2021. From 1 July 2021 until 30 September 2021, the nil rate band will be £250,000. The nil rate band will return to the standard amount of £125,000 from 1 October 2021. This applies to England and Northern Ireland only. The devolved administrations have not announced any further extension beyond 31 March 2021 when this summary was written on Budget Day.
Non-resident SDLT
A 2% SDLT surcharge, above existing rates, for non-UK residents purchasing residential property in England and Northern Ireland is to be introduced from 1 April 2021.
Taxation changes
Many of the tax changes announced are for a fixed period, generally, from April 2021 to April 2026. This does provide welcome certainty for businesses. Announcements made include:
Income Tax 2021-22 to 2025-26
The basic rate threshold is increasing to £37,700 for 2021-22 (2020-21: £37,500) and then frozen until April 2026. For the same period, the personal tax allowance is set at £12,570 (2020-21: £12,500) and will apply to all regions of the UK.
Taxpayers who will benefit from annual increases in their earnings up to April 2026 may find themselves paying tax at the higher rates if these increases breach the £37,700 annual basic rate limit.
Regional variations to Income Tax rates apply in Scotland and may apply in Wales.
National Insurance
NIC Upper Earnings limits and Upper Profits limits will also remain at a fixed amount until April 2026 and will be based on the Income Tax higher rate threshold of £50,270.
Starting rate for savings
The band of savings income that is subject to the 0% starting rate will remain at £5,000 for 2021-22.
Lifetime Allowance for pension pots
From April 2021 to April 2026 the pensions lifetime allowance will be frozen at £1,073,100.
Cycle to work scheme change
The government will legislate in Finance Bill 2021 to introduce a time-limited easement to the employer-provided cycle exemption to disapply the condition which states that employer-provided cycles must be used mainly for journeys to, from, or during work. The easement will be available to employees who have joined a scheme and have been provided with a cycle or cycling equipment on or before 20 December 2020.
The change will have effect on and after Royal Assent of Finance Bill 2021 and be in place until 5 April 2022, after which the normal rules of the exemption will apply.
Van benefits for zero carbon emissions
The government will legislate in Finance Bill 2021 to reduce the van benefit charge to zero for vans that produce zero carbon emissions. The change will have effect on and after 6 April 2021.
Capital Gains Tax
Any attempt to align CGT rates with Income Tax rates seems to be off the table for the time being. Apart from anti-avoidance changes, the only announcement on this tax that has general relevance is capping the annual exempt amount. This will be fixed at £12,300 from April 2021 to April 2026 for individuals, personal representatives and some types of trusts for disabled people; and £6,150 for trustees of most settlements.
Corporation Tax
As expected, there will be increases in Corporation Tax, but not yet and only for larger companies. Company owners will be relieved that there are no imminent increases in CT rates until April 2023.
From 1 April 2023, there will be two rates of CT.
• Taxable profits up £50,000 will continue to be taxed at 19% under the new Small Business Profits Rate
• Taxable profits in excess of £250,000 will be taxed at 25%
• Profits between £50,000 and £250,000 will be subject to a marginal tapering relief. This would be reduced for the number of associated companies and for short accounting periods.
Carry back of trading losses
The present provisions that restrict the carry back of tax losses is being relaxed, temporarily, extending the period over which incorporated and unincorporated businesses may carry-back trading losses from one year to three years.
This extension will apply to a maximum £2,000,000 of unused trading losses made in each of the tax years 2020-21 and 2021-22 by unincorporated businesses. The £2,000,000 maximum applies separately to unused trading losses made by incorporated companies, after carry-back to the preceding year, in relevant accounting periods ending between 1 April 2020 and 31 March 2021 and a separate maximum of £2,000,000 for periods ending between 1 April 2021 and 31 March 2022.
The £2,000,000 cap will be subject to a group-level limit, requiring groups with companies that have capacity to carry back losses in excess of £200,000 to apportion the cap between its companies. Further detail on the group limit will be published in due course.
R&D tax credit cap to be introduced
For accounting periods beginning on or after 1 April 2021, the amount of SME payable R&D tax credit that a company can receive in any one year will be capped at £20,000 plus three times the company’s total PAYE and National Insurance Contributions liability, in order to deter abuse.
Enterprise Management Incentives
As announced on 21 July 2020, the government will legislate in Finance Bill 2021 to extend the time-limited exception that ensures that employees who are furloughed or working reduced hours because of coronavirus (COVID-19) continue to meet the working time requirements for EMI schemes.
The change will apply to existing participants of EMI schemes and it also allows employers to issue new EMI options to employees who do not meet the working time requirement as a result of COVID-19. This measure will have effect until 5 April 2022.
Major new investment reliefs
A new “super-deduction” and a 50% first year allowance are to be introduced that will allow businesses to increase the tax relief they can claim for qualifying investments in plant and other equipment. It will apply to expenditure between 1 April 2021 and 31 March 2023.
The super-deduction will mean that assets will qualify for tax relief based on 130% of the actual cost of expenditure incurred.
Assets that qualify for the special rate relief will qualify for the 50% first year allowance.
The existing Annual Investment Allowance £1m limit will continue to be available until 31 December 2021.
Freeports
In an attempt to reposition the UK as a global player a raft of tax incentives are to be provided to the eight freeport locations in England announced in the Budget. They will include enhanced structures and buildings allowances.
Inheritance Tax
No changes in the present rates and allowances that are all frozen at current levels until April 2026.
This means the nil-rate band will be £325,000 and the residence nil-rate band at £175,000 for this period.
VAT
There be no changes to the standard 20% rate.
The £85,000 registration limit and the £83,000 deregistration limit will be frozen until 31 March 2024.
Other announcements
Universal Credits
The recent increase in benefits of £20 per week is to be extended for a further six months.
Working Tax Credit claimants will receive equivalent support via a £500 one off payment.
Duties
There will be no increases in duty on alcoholic drinks or fuel.
Vehicle excise duties will see a small increase in line with the Retail Prices Index (RPI).
Air Passenger Duty long haul rates will also increase in line with RPI as will gaming duty and Landfill Tax.
ISA investment limits for 2021-22
The limits set for 2021-22 are:
• Adult ISAs the limit remains at £20,000
• Junior ISA limit remains at £9,000
• Child Trust Funds remain unchanged at £9,000
National Living Wage increase
The NLW will increase to £8.91 per hour from 1 April 2021.
VISA reforms
There will also be new reforms to the immigration system that will help ambitious UK businesses entice top talent. These reforms will include a new unsponsored points-based visa to attract highly skilled migrants and a new, improved visa process for scale-ups and entrepreneurs.
Help to Grow schemes
Two new Help to Grow schemes are set to launch by the autumn to help support 130,000 small and medium sized businesses. The Help to Grow: Management scheme will help small and medium sized businesses get world-class management training with the government contributing 90% of the cost.
In addition, the Help to Grow: Digital scheme will help small businesses develop digital skills by giving them free expert training and a 50% discount on new productivity-enhancing software, worth up to £5,000 each.
Single contactless payments
Our final comment on the Budget seems to anticipate a coming consumer spending bonanza. The legal limit for single, contactless payments is increasing from £45 to £100.
1 March 2021 – Due date for Corporation Tax due for the year ended 31 May 2020.
2 March 2021 – Self-assessment tax for 2019/20 paid after this date will incur a 5% surcharge.
19 March 2021 – PAYE and NIC deductions due for month ended 5 March 2021. (If you pay your tax electronically the due date is 22 March 2021)
19 March 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2021.
19 March 2021 – CIS tax deducted for the month ended 5 March 2021 is payable by today.
1 April 2021 – Due date for Corporation Tax due for the year ended 30 June 2020.
19 April 2021 – PAYE and NIC deductions due for month ended 5 April 2021. (If you pay your tax electronically the due date is 22 April 2021)
19 April 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2021.
19 April 2021 – CIS tax deducted for the month ended 5 April 2021 is payable by today.
30 April 2021 – 2019-20 tax returns filed after this date will be subject to an additional £10 per day late filing penalty.
