Here’s what you need to know going into the new tax year, viewed through the lens of the current crisis. During the recent upheaval, the days of the week and dates may have taken a backseat to more immediate concerns. We aim to support you looking forward to future plans and responsibilities.
Your personal tax return is always of paramount importance. In the current climate, you will probably want to prepare for it (and the income tax due) even more closely than normal.
Remember these recent announcements:
- All self-assessment payments in July 2020 are deferred.
- These ‘payments on account’ are an advance on tax due in January 2021. This will be calculated based on your income from the year just ended (to 5th April 2020).
You will still be liable for tax on income from this year, just at that later date.
- Your previous three years tax returns will determine your eligibility for the government grant for contractors and consultants.
Taking all this into account, it is clearly more critical than ever that you share your records for the just-ended tax year with us, as soon as you can. Start to collect paperwork now! Keep an eye out for any letters and certificates you may need. They could be from your bank, employer or business to detail all your income for the past 12 months.
Getting your self-assessment return ready now (well in advance of the January 2021 deadline) will not change when the tax is due but may allow us time to work together to ensure you are prepared for it.
Employee Benefits (P11Ds)
Don’t forget amongst all the announcements and immediate measures you will still need to submit P11D forms to HMRC for every member of staff who received taxable expenses or benefits from you as an employer or from others as a result of their employment.
There is some good news: from April 2020 it is now possible to drive a company car without paying any personal tax. In an attempt to boost the adoption of electric cars, the benefit-in-kind percentage will reduce from 16% in 2019/20 to 0% from 6 April 2020. Hybrid cars are similarly incentivised depending on their battery range.
Forms P11D and P11D(b) need to be completed in the coming weeks. If we do not already support you in doing this and you would like help with this, please get in contact now.
Capital Gains Tax on Property Disposals
From 6 April 2020, anyone making a taxable gain from the sale of UK residential property will have to pay the Capital Gains Tax (CGT) owed within 30 days of the completion date.
CGT was previously paid as part of annual self-assessment returns. This therefore represents a significant change and may be of critical importance to you when considering whether to dispose of investment properties in response to current events.
Off-payroll working (IR35)
If you were due to be affected by the introduction of these rules to the private sector you will have been relieved to hear that they have been delayed until April 2021. These measures would have increased the tax paid by contractors and responsibilities of those using them.
We recommend you still bear in mind their introduction next year and take action to protect yourself.
Payroll and Employment Updates
The biggest recent news in the crisis has been the option of furloughing staff to receive a grant of up to 80% of their wages and two weeks of Statutory Sick Pay being covered by the government.
There are also some more routine important changes taking effect…
Minimum Hourly Wage
|From April 2020||Previously|
|25 and over||£8.72||£8.21|
|21 to 24||£8.20||£7.70|
|18 to 20||£6.45||£6.15|
From April 2020 a new entitlement will be introduced for 2 weeks paid leave for parents who lose a child.
Eligible parents will be entitled to two weeks’ statutory pay from day-one. The definition of parent is broad to include adoptive parents, those fostering and carers.
The primary threshold before anyone has to pay NI has increased significantly to £9,500. This was announced in the budget which may seem like ancient history despite being a mere matter of weeks ago.
The government estimated the move will provide a giveaway for a typical employee of £104 in 2020-21, while self-employed people will have £78 cut from their bill.ft.com
From 6 April 2020 eligibility rules and the amount will change. This potentially means an increased £4,000 a year (up from up to £3,000) reduction of an employer’s National Insurance bill.
However, you can only claim if your total (secondary) Class 1 National Insurance contributions liability is below £100,000 in the previous tax year. This cap is applicable across connected companies, even if they have different payrolls.
More Immediate Support
Check our Coronavirus Recovery Support centre for news of recent measures and resources to help you and your business weather the current turbulent events. Get information on your ability to access government grants, income support and loan schemes.
We are fully open and here to help and advise you, contact us or review our recent live briefing and Q&A session.