The tax payable on dividends is set to rise from 7.5% to 8.75% for basic rate taxpayers from 6.4.22. Higher rate taxpayers will pay 33.75% on dividends and additional rate taxpayers must budget for dividend tax of 39.35%. These rates will apply to all dividends taken from all companies where the total dividend income exceeds the dividend allowance (this has been held at £2,000 for 2022-23).
In the March 2021 Budget the Chancellor announced a super-deduction scheme that provides a 130% deduction for the cost of new plant or equipment if it is purchased by a company before 1.4.23. Expenditure on other new assets such as fixtures and integral features in buildings can also qualify for a 50% first year deduction if purchased before 1.4.23.
There are two major restrictions to these attractive investment reliefs:
Most VAT registered businesses were required to comply with the making tax digital (MTD) regulations for VAT periods beginning on or after 1 April 2019. HMRC has not been imposing penalties for non-compliance with those rules, preferring to nudge businesses with letters and advertising campaigns instead.
However HMRC is starting to take a tougher approach with traders who have not signed up to MTD. Around 800 businesses have been told that they can file their current VAT return using the old HMRC portal (online form) but from 8 July 2021 they will have to file using MTD software as the old
portal will be closed to them. If the response to this test-run is positive HMRC will roll it out to others in a similar position.
Businesses whose annual turnover is less than the VAT registration threshold of £85,000 are not required to file using MTD until their first VAT period starting on or after 1 April 2022 but should prepare for their move to MTD sooner rather than later.
The MTD regulations require that the VAT data flows through the accounting system without manual intervention such as re-typing or copying and pasting figures. If your system still contains these manual breaks they need to be replaced by digital links without delay. I can advise on the best options available to you.
All businesses using MTD for VAT need to have digital links in place in their accounting systems from the first accounting period that starts on or after 1 April 2021.
Employee expenses and benefits provided in the year to 5 April 2021 must be reported to HMRC by way of the P11D process by 6 July 2021. Every employee who received benefits or expenses in the year should be included in that process even if they have already left the company.
Employers who have already accounted for the value of the benefits during the payroll process do not have to complete a P11D for those employees but must submit a P11D(b) to HMRC to report the class 1A NIC which is due.
Many employees were provided with extra support from employers in 2020-21 to enable them to work in a covid-secure way. HMRC introduced some concessions to ensure that employees are not taxed on the benefit of this necessary support. Where the employee was required to work at home as the workplace was closed or they had to self-isolate, the following costs are not treated as taxable benefits if met by the employer:
• broadband internet connection if it was not already available;
• computer tablet, laptops and office supplies;
• reimbursing employee for the cost of home office equipment; and
• working at home allowance up to £6 per week.
Strictly there should be no significant private use of the broadband and equipment to allow the provision to be tax free but HMRC says that the private use measure should be based on the employee's duties and the need for them to have the equipment or services provided to do their job.
I am able to help deal with P11D and P11D(b) filing and advise on what costs should and should not be included.
Applications for the second self-employed income support scheme (SEISS) grant opened on 17 August.
If you are self-employed and your business has been adversely affected by the COVID-19 pandemic on or after 14 July 2020 you can apply for the grant as long as you meet the following criteria:
• your self-employed profits make up at least half of your average annual income;
• you started your business before 6 April 2019;
• you submitted your 2018-19 tax return before 23 April 2020; and
• your average annual self-employed profits for 2016-17 to 2018-19 were no more than £50,000.
The grant will be paid at the rate of 70% of your average annual profits for 2016-17 to 2018-19, capped at £6,570 for a three-month period. If you missed applying for the first SEISS grant between 13 May and 13 July 2020 you can still apply for the second grant. Unfortunately I cannot do this on your behalf; you need to go to the gov.uk website and search for 'claim SEISS'. You will need your:
• national insurance number;
• self assessment UTR number;
• government gateway ID and password (this can be applied for at stage 1 of the grant application); and
• bank account number and sort code for the account you would like the grant paid into.
This will be the final SEISS grant and applications will close on 19 October 2020.
Please find attached Budget Report:
A dedicated helpline has been set up to help businesses and self-employed individuals with outstanding tax liabilities. Businesses may be able to agree a bespoke Time to Pay arrangement.
If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.
Emergency legislation will make SSP payable to employees who are advised to self-isolate at home and those caring for others who have self-isolated. The employee will be able to obtain a fit note from NHS111 online or by phone.
The government will reimburse employers for the costs of SSP paid for up to 14 days per employee (as long as the absence from work is due to the coronavirus and not for any other reason).
The allowance can cover up to £1,000 of trading income per tax year. This means that the income is not taxable. If you have trading income of more than £1,000 you can deduct the allowance from your trading income (this is instead of deducting your expenses). Please contact me for more information.