This month the insider covers:
Increasing house prices raise inheritance tax risk.
Soaring house prices coupled with certain thresholds being frozen in the most recent Budget have the potential to drag more estates into the inheritance tax net over the coming years.
Back in March 2021, Chancellor Rishi Sunak confirmed the main inheritance tax thresholds will remain frozen at their 2021/22 levels "up to and including 2025/26".
Inheritance tax is usually charged at 40% on the value of your estate (your property, money and possessions) over the £325,000 nil-rate band. There's an additional allowance of up to £175,000 if you pass on your family home to children or grandchildren.
How new businesses can grow and flourish.
Not much can stop determined entrepreneurs from building a new business from the ground up, even during such challenging times as a COVID-19 or its ensuing fallout.
The pandemic has proven a huge challenge for businesses, with 396,155 UK firms closing in 2020 according to the Office for National Statistics, as business owners struggled to cope with restrictions and lockdowns.
The Federation of Small Businesses expects that an additional 250,000 small businesses could fold by the end of 2021.
This month the insider covers:
Should employers shift towards greener vehicles?
Despite the potentially high personal tax charge, many employees still enjoy and prefer the convenience of being offered the use of a company car by their employer.
Those employers familiar with the benefit-in-kind tax rules will be aware the tax impact on the employee is much lower for those that choose lower emission cars.
On 6 April 2020, new benefit-in-kind percentage bands were introduced which took into account very low-emission cars and electric cars, favouring full electric cars more.
Planning to take advantage of low interest rates?
After a challenging year for the UK's residential landlords, you might have read about improvements to the buy-to-let mortgage market in recent weeks.
In the three months to 31 May 2021, the average interest rates for residential landlords had declined. A two-year fixed-rate buy-to-let mortgage fell 0.10 percentage points to 2.95%, while a five-year fixed dropped 0.11 percentage points to 3.30%.
For higher loan-to-value (LTV) ratios, the drop was even more significant and as you would expect, it is vice versa for lower LTV. This may partly be down to increased competition.
This month the insider covers:
Allowable expenses and allowances in 2021/22.
If you're self-employed, your business will rack up various running costs throughout 2021/22. Some of those you’re able to deduct as allowable expenses.
By deducting these allowable expenses as part of calculating your business’s taxable profits, it's possible for us to reduce your income tax bill in the process.
For example, if your business has turnover of £50,000 in 2021/22, and you have £15,000 in allowable expenses, your taxable profit will be £35,000. This is what you will pay tax on.
An introduction to the main business tax.
VAT is a business tax on the supply of goods and services. It is charged at varying rates depending on what is being supplied, who it is being supplied to and where it is being supplied to.
But with Brexit, temporary rate changes due to COVID-19, the rollout of Making Tax Digital for VAT and new rules relating to the reverse charge and subcontractors, this is a complex time for a business grappling to ensure VAT compliance. With penalties in place for non-compliance, it’s important to seek professional help to aid with navigating any tricky issues.
As a VAT-registered business, you will essentially act as a collecting agent for HMRC. Your business can recover the VAT it incurs on purchases (known as input VAT), but in return must charge VAT on sales (output VAT).
This month the insider covers:
What's changing for the new tax year?
If there's one thing to take away from Spring Budget 2021, it's taking charge of your personal finances is going to be increasingly important over the next five years.
With the financial fallout from COVID-19 over the last year being the fiscal equivalent of fighting a war at more than £280 billion, we will be paying back that debt for many decades to come.
A new tax year is now upon us and it's much the same as the previous 12 months from a personal tax planning perspective, while the threat of COVID-19 appears to be receding. Here's what you need to know from April 2021 and in some cases beyond.
What's ahead for companies, from rate rises to MTD.
For the past 40 years or so, corporate tax rates have decreased steadily around the world. In 1980, the global average stood at around 40%, but by the end of 2020 it was closer to 24% as various countries aimed to encourage business investment.
Here in the UK, we've seen the main rate of corporation tax cut from 28% in 2010 to its current rate of 19%. Plans were originally in place to reduce it even further to 17% in 2020, but those were cancelled at the end of 2019.
Following the COVID-19 pandemic, as governments around the world look to cover the costs they've incurred, company tax rates could now be about to go in the opposite direction.
This month the insider covers:
The Chancellor has attempted to strike a balance between continuing to prop up the businesses worst affected by COVID-19, while setting out a roadmap to wean the UK economy off this emergency support.
In his second Budget and 14th fiscal announcement since succeeding Sajid Javid in February 2020, Sunak resisted the urge to start raising the main taxes in a bid to rebuild the UK economy and tattered public finances.
For employers, employees and the self-employed.
Our state pension, benefits, health service and more are all funded by National Insurance contributions (NICs).
These are paid in different ways and at different rates by employers, employees and the self-employed, and they can also be paid voluntarily.Recently, the differences in the way NICs are paid by those groups has created some controversy, and could lead to future changes to the National Insurance (NI) system.
Are you prepared for changes to the IR35 rules?
Exactly a year later than planned, changes to the off-payroll rules – known as IR35 – will take effect in the private sector next month. The emergence of COVID-19 put paid to the changes affecting large and medium-sized private-sector organisations this time last year, but now it's for real.
They were originally introduced back in 2000 to ensure that someone working like an employee, but through a company, pays similar levels of tax to other equivalent employees.
Non-compliance was forecast to cost the Treasury around £1.3 billion by 2023/24 if not tackled, prompting the Government to reform the rules starting with the public sector from April 2017.
This month the insider covers:
Useful guide that covers: Personal Allowances, Inheritance Tax, Tax Credits, Entrepreneurs' Relief, VAT, Penalties, Corporation Tax, Business Deductions, Captial Gains Tax, ISAs, Pension Contributions and Non-UK Domicile Taxation.
Finally the guide touches on upcoming changes.
Get on track for a comfortable retirement.
If you have a defined contribution pension scheme – whether private or through your employer – your retirement savings have probably been hit quite hard by the COVID-19 pandemic over the past 12 months.
That's because pension funds invest in the stock market and recent turbulence, which has caused big rises and falls, have had a significant impact on how much is in your pot.
The average pension lost around 15% when the coronavirus first hit the stock market back in March 2020, before recovering 13% of the lost ground by the end of August 2020.
Meeting your obligations amid COVID-19 disruption.
It's not often that HMRC makes exceptions to its tax deadlines or late-filing penalties, but the past year has, as in so many ways, been different.
Between optional deadline deferrals, new payment schemes and temporary reliefs, keeping on top of the changes to the usual tax timetable hasn't been easy.
In total, HMRC has made more than 60 temporary policy changes or clarifications in response to the impact of COVID-19, and plans to "keep the situation under constant review".
As a general rule, however, we recommend sticking to your usual tax deadlines if you can.
This month the insider covers:
Reaching international markets in 2021 and beyond.
The UK has left the EU, and for British exporters, that presents both opportunity and uncertainty.
While the new trade agreement places no tariffs or quotas on goods traded between the UK and EU from 1 January 2021, it may come with additional costs and bureaucracy as the UK is no longer part of the single market and customs union.
There's potential for businesses to branch out to new markets outside of the EU, but that comes with a new set of rules and procedures to navigate now that the transition period has come to an end.
The effects on supply chains from 1 March 2021.
Those working in the UK's construction industry will have to handle and pay VAT differently from 1 March 2021, unless there's another last-minute Government U-turn.
This is when the VAT domestic reverse charge for building and construction services, to use its full name, will finally take effect at the third time of asking. In this article, we'll refer to it simply as the 'reverse charge'.
This month the insider covers:
Planning ahead to boost your business's resilience.
During what would normally be the busiest period of the year for businesses in retail, hospitality and other sectors, many will now be keeping a close eye on their cashflow as they deal with the impacts of COVID-19.
While Government-backed schemes like furlough, grants and loans will provide some much-needed support, there could be additional disruption to contend with as the UK reaches the end of its transition period with the EU and new rules take effect from 1 January 2021.