Senior Manager, Chloe Greenbank, and Tax Manager, Simone Brown, recently took part in a webinar with Mashroom, where they discussed what the Spring Budget means for landlords and how landlords can become more tax efficient.
The webinar is available to watch on demand here.
As business advisers, we’re often asked whether incorporation is the right choice for new and growing businesses.
The Government has launched a series of short, informational videos designed to help your business move goods between the UK and the EU and the rest of the world.
Here’s where to find them, and how they might assist you.
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For help and advice on any related matters, please get in touch with our expert Brexit advisory team today.
Business in the UK will face some huge challenges if proposals for sweeping changes to the taxation system are implemented.
Changes could come into force following the long-awaited publication of the House of Commons Treasury committee report ‘Tax After Coronavirus,’ which was published at the start of March.
Reform has already begun on reforms to Capital Gains Tax (CGT) and Inheritance Tax (IHT), and we can expect to see changes in these areas in the short to medium term, while some of the areas recommended for action have already been addressed in Chancellor Rishi Sunak’s Budget of March 3. These include the threshold on the amount you can earn each year before paying any income tax. This will rise next year but stay at that level until 2026. This means that if people do get a wage rise, they will be paying more Income Tax.
The Chancellor also announced that the tax on company profits – Corporation Tax – would rise from its current rate of 19 per cent to 25 per cent in 2023. However, only companies making profits of more than £250,000 per year would pay the full amount
All committee members agree with the report, but its findings are recommendations to the government rather than new laws. The government may choose to implement all, some or none of the recommendations. However, it must make a formal response by 1 May 2021.
The 80-page volume delves into how the country will bounce back after coronavirus, what taxes may have to rise and what allowances will be affected. Businesses should now be planning how to handle any proposed changes and what effect they will have.
The pandemic has had a huge effect on the UK economy. The Office for Budget Responsibility (OBR) – which keeps tabs on government spending – said that borrowing would be £355bn for the financial year to April 2021, before falling back to £234bn over the next year.
That’s the highest figure ever seen outside wartime. Over £100bn is being spent on support for jobs, such as the furlough scheme, where the government steps in to pay most of workers’ wages.
However, the pandemic has reduced the amount the government raises in tax.
Unemployed or furloughed workers pay less income tax, businesses pay less tax if their profits are lower, and shoppers pay less VAT if they buy fewer things.
Raising funding has been hampered by the Conservatives’ manifesto pledge that there will be a tax “triple lock” for the duration of this parliament, i.e. no rises in Income Tax, National Insurance or VAT and the unknown impact of the UK’s departure from the European Union.
The report looks at several areas and notes that Income Tax, National Insurance and VAT made up 66 per cent of the 2019/20 total tax yield. However, any slight upward movement in the rates of any of the three would generate a substantial amount of extra tax, but would be a political gamble.
Areas under consideration could be a three-year loss carry-back for trading losses which would allow losses made during the pandemic to be set against up to three previous profitable years, generating a tax refund. This would be a similar policy to those adopted during the economic crises of 1991 and 2008.
In addition a proposed windfall tax of 10 per cent could be levied on those businesses that have thrived during the pandemic, but there are reservations about a one off wealth tax, because of implementation and administration issues.
Standard rate of VAT could see an increase, while the median rate of VAT in the EU is 21 per cent so this would not be seen as too damaging, but the removal of some exemptions and reduced rates is seen as more difficult and open to challenge. Wholesale merging National Insurance and Income Tax is not recommended, but a gradual removal of distortions in the system should be the priority.
The following are seen as the main areas for reform:
It also remains to be seen how quickly the UK economy bounces back from the pandemic. Current opinion would suggest that the general public’s morale is low, and any increases in the major taxes, particularly those ‘protected’ by the triple lock would not be a popular choice.
The coronavirus pandemic hit the hospitality industry particularly hard, with no remote or home-working options viable for these employees and many still on furlough.
Pricing a product or service can be a challenging task for any business, especially with the increased competition that many companies now face.
The growth of online sales and the diversification of many markets means that it has never been more important for businesses to find pricing strategies that work for them.
Small and medium-sized enterprise (SME) leaders are optimistic about post-Covid-19 recovery time, suggesting it will take an average of 12 months for their businesses to make up for the lost revenue.
Parents are being encouraged to check whether they are missing out on a tax-free childcare bonus of £500.
Families using tax-free childcare accounts to pay for their childcare costs could receive a Government top-up worth up to £500 every three months, but thousands are missing out on the payout, HM Revenue & Customs (HMRC) has warned.
Tax-free childcare allows parents or carers who have children aged up to 11, or 17 if their child is disabled, to pay their childcare provider through the scheme, and receive a 20 per cent Government top-up on any money deposited. The top-up is paid directly into the child’s account and is ready to use almost instantly.
Parents and carers can get up to £500 every three months (up to £2,000 a year) for each child to help with the costs of childcare. This goes up to £1,000 every three months if a child is disabled (up to £4,000 a year).
Currently, almost 248,000 families across the UK saved money using tax-free childcare in December 2020, an increase of almost 43,000 families from December 2019, who have received a share of more than £25 million in Government top-up payments.
Families can use the money to pay a wide range of childcare providers, including childminder fees, after school clubs or sports activities, where the provider has signed up for tax-free childcare.
Families could also save money now to earn the Government top-up and use the money to pay for childcare, summer camps and play schemes during school holidays.
An HMRC statement said: “As children return to their schools, after-school clubs and nurseries, help is available towards the cost of childcare.
“Families using tax-free childcare to pay their childcare provider are already benefiting from the 20 per cent Government top-up on deposits. To find out more search ‘tax-free childcare’ on GOV.UK.”
Tax-free childcare is also available to families with pre-school aged children attending nurseries, childminders or other childcare providers.
The tax-free savings on childcare costs can provide financial support to families affected by the pandemic. If parents and carers’ working patterns have changed because of COVID-19 or they have received either furlough payments or the Self-Employment Income Support Scheme grant, they may still be eligible to receive tax-free childcare.
Each eligible child requires a tax-free childcare account. If families have more than one eligible child, they will need to register an account for each child.
The 20 per cent Government top-up is then applied to deposits made for each child, not each household.
Account-holders must confirm their details are up to date every three months to continue receiving the top-up.
Link: Tax-free childcare bonus of up to £500 not being claimed
A new scheme that supports small and medium-sized businesses with a grant of up to £2,000 has opened.
The scheme provides grants to help tackle the new admin requirements for imports and exports to and from EU countries, as well as elsewhere in the world, or the movement of goods between GB and Northern Ireland.
The grant can be used for training on how to complete customs declarations, how to manage customs processes and use customs software and systems or specific import and export related aspects including VAT, excise and rules of origin.
It can also be used to help businesses access professional advice, including support from their accountant, so that they can meet the customs, excise, import VAT or safety and security declaration requirements.
Firms can apply for a grant if the business has been established in the UK for at least 12 months or holds Authorised Economic Operator status and has always met its tax or customs obligations. To be eligible, the company must have no more than 550 staff and an annual turnover under £100 million.
The fund applies if the business:
A business must also either:
A spokesman for the Federation of Small Businesses, said: “The vast majority of UK small firms that do business overseas trade with the EU. Not only are they trying to stay afloat as lockdowns gradually ease, they now have new, unfamiliar paperwork and costs to navigate when they buy from, or sell to, Europe.
“We encourage all eligible small businesses to take a look and apply for this new source of help.”
Applications will close on 30 June 2021 or earlier if all funding is allocated before this date. To apply for funding, please click here.
Link: £20 million SME Brexit Support Fund opens for applications
A special police task force, tackling fraud in England, Wales and Northern Ireland, says it is investigating 6,000 cases of cybercrime, worth a staggering total of £34.5 million since March last year.
The Action Fraud team is investigating many cases, but said that of those reporting a cyber-attack to volunteer-run Cyber Helpline, only a quarter also reported the incident to the police.
However, the pandemic appears to have coincided with a fall in one type of cyber-crime. Reported cases of computer software service fraud – in which criminals call offering fake tech support to fool victims into sharing their payment card details and other credentials – dropped by 15.5 per cent.
Meanwhile, the National Cyber Security Centre is tackling about 30 “significant attacks” a month against the country’s pandemic response infrastructure.
These involve attempts to breach the NHS, vaccine producers and vaccine supply chains, among other organisations.
In the capital, City of London Police, which coordinates efforts to combat fraud, said more than 150 related arrests were made since the pandemic began.
In addition, more than 2,000 websites, phone numbers and email addresses linked to the crimes have been recorded and there was a total of 416,000 reports of fraud and cyber-crime.
The activity peaked between April and May 2020, and January this year – both times when lockdowns were in force.
Many of the scams involved conning people out of their money and financial details by focusing on internet shopping.
Related fraud was 42 per cent higher over the pandemic than the preceding year, as criminals took advantage of the fact many physical stores had been forced to close.
Charities are also common targets as one in three suffered a cyber-attack during the first 10 months of the pandemic, according to a survey by Ecclesiastical Insurance.
Another popular type of cyber-fraud involved romance scams, in which people looking for relationships via the net often get fooled into sending money to prospective partners, who prey on their emotions.
Businesses and individuals are being warned to take caution in light of this surge in scams.
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