This is part Budget and part reminder of a few other topical areas:

• Budget Comment
• Budget Bullet Points
• Making Tax Digital
• Pensions Again
• Are You Really Self-Employed?
• Reporting UK Property Capital Gains
• Government Gateway

Budget Comment

As Budget build ups go this one was as hysterical as ever, anticipating, in particular, a massive raid on individual wealth with forecasts of increases to Capital Gains Tax (CGT), Inheritance Tax (IHT), restrictions to Lifetime Gifts, Trusts and Pensions. Not to mention Income Tax and VAT (forgetting that Boris had hand-cuffed Rishi in this area!).

And in the end – nothing!

It hasn’t stopped the media announcing ‘BIG TAX RISES IN THE CHANCELLOR’S BUDGET’ (that’s the BBC for you). There are no tax rises – ok the freezing of Allowances will impact those lucky enough to get a pay rise (those on pensions and savings income are unlikely to be affected). But they have been frozen before and this comes after 9 years of generous increases. It makes you wonder what the headlines would have been if there were real TAX RISES.

Either way it’s probably best not to count your chickens – surely big TAX RISES will have to come before long (once the hand-cuffs are off?).

It is always good to plan ahead but why would Rishi announce frozen thresholds for 5 years (well into the next Parliament!). He can’t be sure when social distancing will end – how can he freeze anything in these circumstances?
 

Budget Bullet Points

• Furlough to be extended to the end of September 2021. Employers to contribute 10% in July and 20% in August & September 2021
• SEISS (Covid Self Employed Grants) extended to end of July 2021 and now include those who submitted a 2019-20 Tax Return with new qualifying self employment. The fourth grant covers February to April 2021 at 80% of average trading profits with a maximum of £7,500. A fifth grant in July covering May to July 2021 but you only get the full grant if your turnover fell by 30% or more – if not you will receive a 30% grant.
• Covid Business support grants
  · A new re-start grant of between £6,000 and £18,000 per premise for non-essential retail, leisure, hospitality & gyms.
  · Recovery Loan Scheme with a Government guarantee of 80% open to all businesses until the end of the year
  · £3,000 for each new apprentice hired between 1 April and 30 September 2021
• £20 per week Universal Credit top up continues until September 2021
• Corporation Tax rises to 25% from 1 April 2023 for profits greater than £250,000; small businesses with profit of £50,000 or less continue to pay the current 19% with a sliding scale in between
• CGT & IHT thresholds, Pensions, Lifetime Allowance, Income Tax Personal Allowance and Basic rate thresholds are all frozen at 2020-21 levels until 2025-26 (not big news on IHT which will have been frozen for 16 years by then!)
• VAT and National Insurance – no change (as per manifesto)
• Stamp Duty holiday on first £500,000 extends to June and then on £250,000 until 30 September 2021
• Business Rates holiday extended
• 130% business investment ‘super-deduction’ for expenditure in the two years ending 31 March 2023
• Green Savings Bond to be issued by NS&I in the summer
• From 1 April 2022 significant changes to late payment and late submission penalties (these won’t affect you if you do everything on time!)

Making Tax Digital ‘MTD’

As previously noted there’s a revolution on its way (slowly!). First announced in the April 2015 Budget, ‘MTD’ will affect us all. The timing has been significantly delayed. So far it has happened for VAT registered businesses above the VAT threshold (£85,000) and we expect the next wave of MTD to affect VAT registered businesses with a turnover below £85,000 for the first returns starting on or after April 2022.

At present, Self Employed and Landlords with income above £10,000 will be required to follow MTD rules from the accounting period starting on or after 6 April 2023. Further details to follow…
 

Are you really Self Employed?

The rules are tightening! If you (or the person/business engaging you) want your status to be ‘self-employed’ (either on your own account or through your own limited company), it is important for you to be seen to be running a business rather acting as an employee. Otherwise you and (more particularly) your engager could have an issue with the UK tax authorities (they may insist that you are paid through an official payroll). There are no hard and fast rules here but having a ‘self-employed’ status generally means for example, seeking additional customers, not directly supervising client staff, working with your own equipment, having a Website describing your business and of course you should be the one advising people what to do rather than being told what to do!
 

Pensions

Recapping, this is an increasingly complex area for which we recommend specialist advice but there are still a few things to look out for:

• Personal Pension Annual Allowance continues to be £40,000 (with potential to bring forward unused allowance from the previous three years) providing you have earned income of at least this level
• Once your adjusted income is over £240,000 your Personal Pension Annual Allowance will be lost at the rate of £1 for every £2 that your total income exceeds £240,000. It carries on tapering until your total income exceeds £312,000 at which point you are fully tapered down to £4,000 (previously the full taper only took you down to £10,000)
• The Lifetime Allowance remains at £1,073,100

Reporting UK Property Capital Gains

For all UK residential property sales since 5 April 2020, where tax is due, you must submit a Capital Gains Tax Return within 30 days of the completion – the estimated Capital Gains Tax (CGT) is due at the same time. Penalties and interest will be charged on late submissions. We say ‘estimated’ because CGT rates depend on your level of income and you may subsequently realise a loss that can be offset.

It is clear that many Solicitors don’t consider it to be their responsibility to point out this obligation(!) so please inform us immediately on sale if you are unsure whether your Solicitor is dealing with the Return…

The sale will also still form part of your Self Assessment Tax Return for the year in question.
 

Government Gateway

You may have heard the expression ‘Government Gateway’. It is becoming more and more a feature of everyday life!

If you haven’t registered then we recommend that you do so – it’s good to be prepared!
Follow the link here: www.gov.uk/personal-tax-account/sign-in/prove-identity

Just to be clear, we deal with your Self Assessment (and where applicable) Company Corporation Tax through our own Agent Government Gateway but we cannot set up your individual Gateway. There are a number of areas for which it is required. For example:

• Reporting UK residential property sales (see above!)
• Applying for time to pay your tax liability
• Accessing your Personal Tax Account
• Submitting Making Tax Digital VAT Returns
• Submitting Making Tax Digital Rental Income Returns (to follow)
• Applying for your State Pension forecast

The comments above are brief highlights and each item is subject to change, please note the full chart of Rates and Allowances below and remember – there is always more to it than meets the eye so please contact us before taking or refraining from action.

Rates and Allowances for 2021 and 2022

Rates and allowances for Income Tax, Corporation Tax, Capital Gains Tax, and Inheritance Tax are set out below.