Moore Accountancy Update

HOPE FOR 2021

Happy New Year!

We hope that you all had a relaxing break. Although we are starting 2021 in our third national lockdown, we hope to provide you with as much support and assistance as we can, despite the children being back "home schooling".

Susie is back on reduced hours from her extended leave, and the kind words from many of you are very much appreciated.

At this time of year we often think about New Year’s resolutions. ("Dry January" was considered, but only until the evening of the 4th January!)

It is also a good time to start planning your tax affairs before the end of the tax year on 5th April.

An obvious tax planning point would be to maximise your ISA allowances for the 2020/21 tax year (currently £20,000 each). Although with interest rates at an all time low there may be better interest being earned on a savings account linked to your current account, but stocks and shares ISA could also be an option.

You might also want to consider increasing your pension savings before 5 April 2021 as the unused annual pension allowance is lost after three years.

For those looking to do some inheritance tax planning, it would be a good time to review (or make) your Will.

If you have missed any of our previous newsletters, then our website has a backlog of them here.

PENSION PLANNING

For most taxpayers the maximum pension contribution is £40,000 each tax year, although this depends on their earnings. This limit covers both contributions by the individual and by their employer.

Note that the unused allowance for a particular tax year may be carried forward for three years and can be added to the relief for the current, but then lapses if unused.
Hence the unused pension allowance for 2017/18 will lapse on 5 April 2021 if unused.

Note that there are rumours that pension tax relief may be restricted in the next Budget, but who knows given how quickly the Government change their minds on things at the moment!

Under the current rules, the net after tax cost of saving £4,000 in a personal pension for a higher rate taxpayer is £3,000. HMRC then add a further £1,000 to your contribution and there is a further £1,000 relief when your tax liability is calculated, thus the value of your pension pot would be £5,000, for a net cost of £3,000.

Remember that pension fund investments can go down as well as up, but a 40% fall would be unlikely.

FURTHER ROLLOUT OF MTD

2021 will see many business adopt new technologies to help them streamline their administration.
We hope many of our clients will move to cloud accounting software ahead of the April 2022 “Making Tax Digital” deadline. This is when voluntarily registered VAT businesses have to use MTD, and the pilot begins for Income Tax MTD.

Cloud accounting software has several advantages for business owners:
1.   A clear picture of your current financial position, in real-time;
2.   Your accounts 100% online, so there’s no software to install and everything is backed up automatically. Updates are free and instantly available;
3.   Your bank feeds your data directly into your accounts on a DAILY basis;
4.   You take a photo on your phone of a purchase invoice and it is posted automatically; and
5.   You can see your results, who owes you money, who you owe and your business bank balance 24/7, 365 from your smart phone, tablet or computer.

Please talk to us about moving your accounting system online ahead of the new legislation in 2022.

SATR FILING DEADLINE FAST APPROACHING

The filing deadline remains as at 31/01/21 for Self Assessment Tax Returns for 2019/20.

However as mentioned in previous newsletters there is a Time To Pay arrangement available with HMRC to spread payments over the next 12 months.

An online process allows those with a SA liability of £30,000 or less to apply for time to pay over 12 months. Applications made online are granted automatically so long as the conditions (such as all returns being up to date) are satisfied. The limit was increased from £10,000 to £30,000 in response to the pandemic. The online process involves setting up a direct debit and so is available to taxpayers but not via agents.

Please use the link here to arrange a payment plan online. Note your 2019/20 SATR must be filed beforehand, so that HMRC can set up an appropriate plan.

THE BREXIT TRANSITION PERIOD HAS NOW ENDED

Changes have now come into effect for businesses that trade goods with Europe or represent businesses who do.

There is a Government Brexit checker to assist with the planning for business, family, and personal circumstances. Use the Brexit checker to get a personalised list of actions. You can also sign up for emails to get updates for what you need to do.

See: https://www.gov.uk/transition

If you many supply goods to the EU then the trader checklist here is a good summary of actions to consider.

FIND COVID-19 FINANCIAL SUPPORT FOR YOU BUSINESS

Coronavirus (COVID‑19) support may be available to employers and the self-employed, including sole traders and limited company directors.
You may be eligible for loans, tax relief and cash grants, whether your business is open or closed.

Use the government tool here - https://www.gov.uk/business-coronavirus-support-finder - to see if any further support is available to you

KEY DATES

19/01/21 - PAYE & NIC deductions for month ended 05/01/21 (December payroll)

31/01/21 - Corporation tax due for year to 30/04/20

31/12/21 - Deadline for filing 2019/20 self-assessment tax return online and paying your outstanding tax for 2019/20 and first payment on account of 2020/21 tax.
Note that if this liability is less than £30,000 you can agree with HMRC to spread over the 12 months (please see detail above for guidance on how to arrange this)

19/02/21 - PAYE & NIC deductions for month ended 05/02/21 (January payroll)

28/02/21 - Corporation tax due for year to 31/05/20

For any businesses struggling with payments, please contact HMRC to see if they will agree a Time To Pay arrangement - https://www.gov.uk/difficulties-paying-hmrc

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Moore Accountancy · 1 Northway · Altrincham · Cheshire, WA14 1NN · United Kingdom