HLAS

As we head towards April now is the time to think about pre-tax year planning, doing the year end administration and filing the necessary forms to HMRC. Time is running out to make the most of your tax allowances this year.  The first step to making the most of your tax allowances can mean looking closely at your pension. UK residents under 75 can add money to a pension and receive tax relief on it. You’ll automatically get basic rate tax relief (currently 20%) paid into your pension by the government. If you pay tax at a higher rate you [...]

The Office for National Statistics (ONS) has published “Coronavirus: a year like no other”. A year on from the first government instructions to significantly limit social contact because of the coronavirus (COVID-19) pandemic, ONS look at what the data tells us about these extraordinary 12 months and the way our lives have changed. The data shows the stark reality of deaths and hospitalisations resulting from the pandemic. The figures also show annual average hours worked dropped significantly in lockdown which, when you consider up to 8.9 million people on furlough and many businesses unable to trade as normal during lockdown, [...]

Last week the UK learnt more about the vaccine supply chain problems, EU states suspending and then resuming the AstraZeneca vaccine rollout and more posturing from politicians on vaccine availability. Despite the news rollercoaster, more than 27.6 million people (more than half of the adult population) have now had the jab and the government says it remains on track for its phase 1 target of 32million first vaccine doses by the 15 April. It also appears we are still on target for the relaxation of restrictions by the summer even if the EU restrict supply. This is good news for [...]

These are the suggested reimbursement rates for employees' private mileage using their company car from 1 March 2021. Where there has been a change the previous rate is shown in brackets.   Engine Size Petrol Diesel LPG 1400cc or less 10p   7p 1600cc or less 9p (8p) 1401cc to 2000cc 12p (11p) 8p 1601 to 2000cc 11p (10p) Over 2000cc 18p (17p) 12p 12p   Note that for hybrid cars you must use the petrol or diesel rate. You can continue to use the previous rates for up to 1 month from the date the new rates apply.

The thresholds for employee and employer national insurance contributions (NICs) have been increased by £1 a week for the 2021/22 tax year. Employees will be liable to 12% NICs between £184 and £967 a week (£50,270 a year). Employer contributions will start at £170 a week. The self-employed will pay 9% Class 4 NICs on profits between £9,570 and £50,270. The higher rate tax threshold for 2021/22 will be aligned with the £50,270 NIC upper earnings limit and the personal allowance will be uprated by the same percentage to £12,570 for 2021/22. Note that there are rumours that the chancellor [...]

Your business year end, not 5 April, is relevant for capital allowances purposes. If however you are running a business and making up accounts to 31 March or 5 April you should consider buying plant and machinery to take advantage of the £1 million Annual Investment Allowance (AIA). The AIA provides a 100% tax write off for equipment used in your business. This tax relief extends to fixtures and fittings within business premises such as electrical, water and heating systems. AIA does not apply to motor cars but there is a special 100% tax relief if you buy a new [...]

The new “reverse charge” system of VAT accounting affects sub- contractors supplying their services to main contractors in the construction sector. Under the new rules, supplies of standard or reduced-rated building services between VAT-registered businesses in the supply chain are no longer invoiced in the normal way. Under the new reverse charge system, the sub-contractor does not show VAT on their invoice to the main contractor and does not account for output VAT on that transaction. The new reverse charge applies to activities covered by the construction industry scheme (CIS) payment rules. So if Eddie the Electrician does £10,000 of [...]

For every £2 that your adjusted net income exceeds £100,000 the £12,500 personal allowance is reduced by £1. Pension contributions and Gift Aid can help to reduce adjusted net income and save tax at an effective rate of 60%. The restriction applies between £100,000 and £125,000 adjusted net income. Another way that you could avoid this trap would be to agree with your employer to sacrifice some of your salary in exchange for a tax-free benefit in kind such as an additional pension contribution.

Where large or medium-sized organisations are paying workers via personal service companies (PSC) or agencies they will need to operate new procedures from 6 April 2021. The new rules will apply to partnerships, LLPs and larger charities as well as limited companies. Only those organisations that would be classed as “small” under the Companies Act criteria will be outside of the new rules. From 6 April 2021 the end user organisation will be required to determine whether or not the worker would be an employee of the organisation if directly engaged. That determination will need to be communicated to the [...]