In this newsletter, we take a look at the latest tax news and updates which may affect you or your business...

As the national cost of the pandemic increases, tax rises of some kind seem inevitable - so it would be worthwhile considering the effects of potential changes and whether these can be mitigated in some way.

A recent report by The Office of Tax Simplification laid out several potential changes to the Capital Gains Tax (CGT) regime.  

The 2 key focal points of the report were:

1. To increase the rate of CGT to that of Income Tax.
2. A substantial reduction in the annual allowance for CGT which would bring far greater numbers into the scope of the tax.

Other recommendations included:

• Ending the death ‘uplift’ to market value.
• Scrapping the business asset disposal relief (formerly Entrepreneurs’ Relief)
• The abolishment of investors’ relief.

Changes could be announced in the next Budget but for now, we are here to offer advice on how to take advantage of the current CGT rates whilst they last.

Please get in touch to discuss your specific circumstances.

HMRC allow an exemption for the cost of holding an ‘annual event’ for employees, which (subject to certain conditions being met) means no tax and the national insurance contributions on costs – up to £150 per attendee.

Many companies claim this relief for their annual Christmas party – but with everything being rather different at present, it is not yet clear whether virtual staff parties will be eligible.

We are looking out for further guidance on this but, if you are planning a virtual party, it would be wise not to consider the relief a certainty.

An additional/alternative idea might be to consider providing your employees with a gift - as non-cash gifts up to £50 are considered ‘Trivial Benefits’ and are non-taxable. Please note, however, that the gift must not be a reward for work or performance.

Employees may be able to claim tax relief for additional household costs if they must work at home either for all or part of the week. It does not apply to those who simply work from home out of choice nor does it apply where the employer is reimbursing the employee for their costs.

You can claim tax relief on £6 per week without the need to produce evidence.  A claim for actual costs is possible but only for additional costs incurred and for which you will need to produce evidence.
 
HMRC has set up a new dedicated working-from-home tool that automatically applies the whole 2020/21 tax year's relief via an employee’s tax code.  This is normally applied on a week to week basis but for this current tax year the claim applies to the whole year.

Anyone making a claim for this tax year, who hasn't already put in a claim, can use it.

If you are an employer with staff working at home please share this information with your team members who may be eligible to claim.

The Annual Investment Allowance (AIA) had been due to fall from £1M to £200k at the end of this year.

We have previously reported that tax relief on expenditure would be limited in the period January 2021 to March 2021 if your accounting year ended in that period. However, that no longer applies as the temporary increase to £1M has been extended to 1^st January 2022.

In a new consultation, HMRC has confirmed that Making Tax Digital (MTD) for corporation tax (CT) (MTD for CT) will not be implemented until 2026 'at the earliest'.

Self-Assessment Tax for Individuals

Self-Assessment taxpayers can now apply online for additional support to help spread the cost of their tax bill into monthly payments without the need to call HMRC with the online payment plan service having been increased to £30,000 for those who are struggling to pay their tax because of the pandemic.

Once you have completed your tax return for the 2019-20 tax year, you may have the option of using the online self-serve ‘Time to Pay’ facility through GOV.UK to set up a direct debit and pay any tax that is owed in monthly instalments, up to a 12-month period.

However, it is important to note that you should have:

no outstanding tax returns
no other tax debts
no other HMRC payment plans set up

The payment plan needs to be set up no later than 60 days after the due date of a debt. Interest will still be charged as normal.

As you will need to have filed your 2019/20 tax return to be able to access the online service, please can you let us have your records in good time, if you have not yet done so.

Corporation Tax

Whilst there is no specific system in place to help spread Corporation Tax you might be able to set up a Time to Pay Arrangement with HMRC to allow you to pay in instalments.

If you have already received a letter demanding payment, call the HMRC office which sent you the letter. If you have not yet received a payment demand please call the Payment Support Service on 0300 200 3835. Their lines are currently open Monday to Friday, 8am to 4pm.

VAT

Businesses who deferred VAT due from 20 March to 30 June 2020 have the option to pay in smaller interest free payments up to March 2022, rather than as a lump sum by the end of March 2021. This will not be automatic and it will require you to opt in.

Meanwhile, if you are struggling to pay your VAT or other taxes such as PAYE, please contact the Payment Support Service (number as above).