Happy New Tax Year!
6th April marks the start of the 2020/21 tax year, and is the day on which tax rates, allowances and thresholds change. As these changes will have been announced over several Budgets, please go to our summary.
23 March 2021 marked the UK’s first Tax Day, with the Government publishing consultation documents, calls for evidence, and other documents relating to the future shape of the UK tax regime. We were not quite clear in advance what to expect from Tax Day and had thought that significant reforms would be announced. As it happened, many of the announcements were either technical in nature or intended to start discussions. No tax policies or tax changes were published, for example, changes to capital gains tax or the taxation of self-employed individuals. Two main areas of interest arising from Tax Day are:
- Furnished Holiday Lets – a paper was released setting out the tightening of rules for owners of second homes who will now only be able to register for business rates if their properties are genuine holiday let businesses. Currently, owners of second homes are able to declare they intend to make their property available to let but there is no requirement to verify that it is actually being used commercially. Owners may then also claim small business rates relief, thereby paying no Council Tax or business rates. New legislation will mean a second home's qualification for business rates will depend on the actual number of days the property was rented for.
- Treasury plans pay-as-you-go tax – a second paper set out a pay-as-you-go tax model in a bid to tackle evasion by the self-employed, landlords and investors. The measures, which will make it harder for people to hide their earnings, are based on a system used in New Zealand. The move will see the annual tax return replaced with a system that sees tax paid throughout the year. Taxpayers would be given a digital tax account that is automatically updated by banks, investment managers, workplaces and pension providers, with information about earnings, investments and pensions logged. The reforms will be at the centre of HMRC’s ten-year tax strategy and will play a part in efforts to recoup the £31bn the Revenue believes people are not paying in tax each year.
Full details of the Tax Day consultations can be found HERE.
HMRC TO CHECK TAXPAYERS CREDIBILITY
If you are due a tax repayment, HMRC has set up a new team, The Direct Tax Repayment Credibility Team, who may contact you. The new HMRC team is being set up to minimise fraud and confirm the identity of those to whom payments are being made. Taxpayers are being asked to complete a questionnaire, two documents to prove identity and one for address, having 30 days to comply. Remember they will not ask for your bank account details to make the repayment.
UK COMMUNITY RENEWAL FUND
Gloucestershire County Council is inviting organisations to submit schemes which can boost Gloucestershire’s economy. This competitive funding opportunity is intended for projects that focus on the removal of barriers to employment. Projects must deliver activity that is line with the UK Community Renewal Fund prospectus and align with at least one of the investment priorities which are - investment in skills, investment for local business, investment in communities and supporting people into employment. Projects should be revenue based and not focus on the construction or major refurbishment of buildings, the purchase of land or the purchase of large pieces of equipment. Bids must be submitted to the county council by midnight on Sunday 9 May 2021. More information on the bid process, assessment criteria and how to submit an application can be found HERE.
ANNUAL TAX ON ENVELOPED DWELLINGS
Commonly known as ATED, this is an annual tax charge payable by onshore and offshore corporate entities, including companies, partnerships with corporate members, or other collective investment vehicles that own, wholly or partly, UK residential properties (“dwellings”) valued above £500,000. Any corporate entity within the regime is required to file an ATED return and make a payment by 30th April each year. There are reliefs from the annual tax, for example letting a property on a commercial basis or holding property for development. However, to claim the relief a return must be filed, which can only be filed online. Penalties are incurred for late filing. If you believe you are caught within the ATED regime or wish to enquire, please call our offices on 01452 713277.
COVID-19 BUSINESS UPDATE
As we continue to work through to hopefully the end of lockdown 3, we continue with our Business Forward Covid-19 Updates. The most recent can be found HERE.
Please note that the automatic three-month extensions granted for Companies House filings, for example, accounts and confirmation statements due to Covid-19, will come to an end for filing deadlines that fall after 5 April 2021. Thereafter late filing penalties will apply, unless a filing extension is applied for.
The Chancellor announced in the Budget, £100m of investment to create a taskforce to deal with COVID-19 fraud, appointing 1,000 investigators. The Government believes that one-third of taxpayer funded support has been claimed illegally, or in error, for example there are rumours circulating of self-employed construction workers whose work has been minimally affected by Covid-19 but have still claimed SEISS grants. A survey by Grant Thornton found that 13% of mid-size businesses had made incorrect furlough claims and that 16% had not checked their claims were in order. To minimise the risk of an adverse decision or a prolonged compliance check, please make sure you have your supporting documents and workings in place for any Government support you have received.
DATES FOR YOUR DIARY
- 6 April 2021 – Recovery Loan fund opens up;
- 30 April 2021 - ATED return and payment for the year 1 April 2021 to 31 March 2022 due;
- 5 May 2021 - Scale Up 4 Growth www.scaleup4growth.co.uk application deadline.
In these difficult times, scammers and fraudsters will continue to try and exploit the coronavirus pandemic as an opportunity for financial crime, so please be vigilant. For example, HMRC will never request your bank details by phone, email or text. There is expected to be an increase in criminal activity as individuals rush to complete house purchases to beat the 30 June stamp duty holiday. Guard your identity, check post, never make any payments to anyone who rings you, confirm who you are making payments to, check details before giving details or transferring money. A fraud protection checklist.
ASK FOR HELP
We know that this is a very difficult time for all businesses, with constant change and some difficult decisions having to be made. Should you wish to speak with us about a specific matter, or just to be a sounding board or for a chat, please do not hesitate to give us a call.
Please do not hesitate to give us a call - 01452 713277