Category: Blog

The current standard £100 fine for late filing of self assessment tax returns is set to be changed to a points- based system from 2026.

HMRC have backed the change up to reduce the abuse of the self assessment system and to support those taxpayers who make occasional mistakes.

Taxpayers who miss a filing deadline will be give one point with a financial penalty being charged when only a set number of points is reached.

The above approach recognises that taxpayers who occasionally miss a deadline should be encouraged to comply with filing obligations, rather than being immediately charged a penalty. There will be further changes to the penalties that relate to non payment of tax, meaning the earlier an overdue tax payment is made, the lower the penalty charge will be.

For example, a payment made within 30 days will have a lower penalty charge then one made after 30 days. This is set to encourage those that can pay to do so, while taking appropriate action against persistent non-compliance.

The new penalty regime will penalise the minority who persistently do not comply by missing filing and payment deadlines, while being more lenient on those who make the occasional slip-up.

For more information on the above contact our office on 0330 2233660 to chat to a member of our expert team, and as always we will be happy to help.

As we move closer to the end of the tax year, we thought it would be a great idea to share our top 5 things to consider before the 5 April deadline.

Use your ISA and pension annual allowances

ISAs and pensions are a great way to save for the future because any income and capital gains made on investments held in both are free from income tax and capital gains tax.

Everyone over the age of 16 can save £20,000 each year in a cash ISA and anyone over the age of 18 can save the same amount in a Stocks and Shares ISA. Those aged 18 to 39 can open a Lifetime ISA and save up to £4,000 each year.

The crucial thing with ISAs is if you do not use all the allowance it cannot be carried forward to future tax years. Investors with spare money they plan to save and any unused ISA allowance for this year should consider using it before the 5 April deadline.

The pension annual allowance for this tax year is £40,000 or 100% of earnings if that is lower – this includes both contributions made by you and your employer. The annual allowance can be carried forward for up to three years, so investors should consider whether they have made as much use of their pension annual allowance as possible ahead of the end of the tax year. Note that anyone with a very high income or who has already started to take taxable income from their pension will have a restricted annual pension limit.

If you want to carry forward any previously unused pension allowance, you will only get tax relief on personal contributions up to 100% of your earnings for that year. People with no earnings (including children) can still save up to £3,600 a year in a pension (including basic rate tax relief).

Use your capital gains allowance to cut your future tax bill

Any investments held outside an ISA or pension will be subject to capital gains tax (CGT), which means the annual tax-free allowance is very valuable. Investors can make investment gains of up to £12,300 in 2022-23 without paying any tax.

Gains over that amount are added to income and if they fall in the basic rate tax band are taxed at 10% and at 20% for the higher rate tax band. An additional 8% is added to the tax rate if the gains are from a second property.

The annual capital gains tax-free allowance cannot be carried forward into future years so if you do not use it, you lose it. As well as this the annual allowance is reduced to £6,000 in 2023/24 therefore If you have investments with gains outside of an ISA or pension you should consider whether to realise some of that gain before the end the tax year to make the most of your tax-free allowance.

If you’re in a couple you can get double this allowance as you can transfer investments to your spouse to use their annual CGT allowance too. This means that for the current tax year you can lock-in up to £24,600 of gains before you face any tax.

Avoid getting caught in a tax trap!

The tax-free personal allowance for most people is currently £12,570. When your taxable income reaches £100,000, your personal allowance is cut by £1 for every £2 of your income, which means you lose it completely once your income reaches £125,140.

If you are in this position, you could consider reducing your taxable income so that it falls below the £100,000 level where the personal allowance starts to be eroded. There are two ways you can do this: by making charity donations or contributing to a pension.

By contributing to a pension, you are making tax savings in the form of getting your personal allowance back whilst also saving for your future and benefiting from pension tax relief at 40%, so you wipe out the 60% effective tax rate completely.

Don’t miss out on child benefit

In a similar way as above, people will start to lose their child benefit when one half of the couple earns more than £50,000 – and the benefit will be wiped out entirely when they hit £60,000. The frustrating factor for many parents is that the rule applies if one parent is earning more than £50,000, regardless of their partner’s income. So, you could have both parents earning £48,000 each and have no problem, but if one earns nothing and the other earns £60,000 you’ll lose the benefit.

A parent with two children will get £1,885 a year in child benefit, but for every £1,000 they earn over £50,000 they will lose 10% of their child benefit – so someone earning £51,000 will lose £188.

However, parents who have just tipped over the threshold can get around this by increasing their pension contributions. What’s counted for the purposes of the child benefit high income charge is your salary after any pension deductions. This means if you contribute enough to your pension to get your salary back to £49,999 then you’ll get the full child benefit again.

Another option is to make charitable donations from any income over the £50,000 limit, which you’ll need to declare to HMRC on your tax return.

Start saving for your children

Like adults, children also have tax allowances that can be used each year. The Junior ISA allowance is now a very generous £9,000 a year, which means that if you have spare cash you can start building a very healthy fund for your children’s future. They won’t be able to access the money until they are 18, at which point it automatically turns into a normal ISA and transfers into their name, giving them full access.

For many families putting the full £9,000 into the pot isn’t realistic, particularly if you have more than one child. But even a more modest £50 a month, earning 5% returns a year, would give your child a £16,000 present on their 18th birthday.

You can also pay up to £2,880 into a Junior SIPP each year, with government tax relief automatically boosting that to £3,600. Your child will not be able to access the money until they are at least age 57, maybe later if the government increases the age limit, which means there’s plenty of time for them to benefit from compound investment returns.

If you paid in the maximum each year until your child turns 18 and they don’t contribute anything else, assuming 5% investment returns each year after charges, the pot would be worth £713,000 by the time they turn 57 or just over £1.1m by the time they hit the current state pension age of 66.

Want to know more?

No problem, we’d love to help! Contact our expert team today on 0330 22 33 660, we are always here to have a chat on questions, queries or advice you may be in need of.

Digital adoption is the way of the future. Adapting to new technology and fully leveraging its features is imperative to the modern organisation and it is what leads to digital transformation.

We understand that many small businesses are still reluctant to embrace digital transformation. This could be due to resistance to change, uncertainty over outcome, hassle of digital adoption and the endless options when it comes to technology. So what are the benefits?

Continue reading “The Importance of Digital Adoption”

So what is credit insurance? And how can it help protect your business? We are here to explain all!

In this article our CEO Steve Timmis asks Martyn Curnock of Euler Hermes to answer questions on Credit Insurance and how it can help SME’s protect their businesses. Martyn discusses with Steve the benefits of credit insurance and specifically Euler Hermes products.

What does credit insurance cover?

• Credit insurance safeguards you against the failure of your customers to pay their trade credit debts, due to customer insolvency or cash flow difficulties.
• Trade receivables are goods or services despatched & invoiced on short-term credit terms 30 – 90 days.
• Credit insurance covers the risk of any non-payment when a business offers trade credit to a customer. It is an essential risk management tool, that enables companies of all sizes to trade with confidence at home or abroad.

Does credit insurance cover 100% of the bad debt?

If a customer goes into liquidation, 76% of the time a business will get nothing. In the course of a year the average company will lose more than three of its active customers because of financial distress, insolvency, administration or receivership. A credit insurance policy will return 90% of the monies owed if an approved customer enters into insolvency.

If the customer is however still trading but can’t pay due to cash flow issues then Euler Hermes’ in-house collections team will try and collect the debt on your business’s behalf. The collections service is offered as a “no-win, no-fee service” but if we are successful the business will retain 99% of the insured debt.

Is credit insurance expensive?

• Consider how disastrous a bad debt of £50,000 would be to your business, compared to a typical cost of £150 to insure the same invoice, based on a typical whole turnover annual premium.
• Perhaps you’re not worried about the risk of bad debt because previous ones have been small, but what’s the guarantee the future will be the same?
• Remember you can incorporate the cost of credit insurance into your quotes to clients, and spread the cost with our instalment options.
• You can use utilize our extensive information to both target new customers and grow your existing client portfolio, knowing that your invoices are insured.
• Your credit insurance comes as a package with our outstanding management services and information no-one else can provide. We can help you make money as well as protect you from losing it. A £100,000 increase in turnover, will cover a £10k premium at 10% margin, whilst insuring the original forecasted turnover at no additional premium increase.
• Credit insurance is a cost you can plan, protecting you from non-payments and late payments that are unplanned problems.

Are there any sectors that are more difficult to get credit insurance for?

No any business who trades business to business on open credit terms would have the risk of non-payment and therefore credit insurance would mitigate that risk. Each credit limit is assessed on a case by case basis and based on the financial strength of that buyer.

When a bad debt occurs, who chases the debt in?

In the event of insolvency, our claims team will pay a claim within 30 days so no further action will be needed. When a customer is unable to pay then action would be taken by Euler Hermes in house collections team who will chase the debt on our clients behalf via a series of letters, emails and telephone calls. Once you have notified Euler Hermes that you have an overdue invoice, they will endeavour to collect the payment within 60 days. If they are unsuccessful, then an insurance claim will be paid, which is called protracted default. Our current collections and claims stats are:

• 82% of all domestic recoveries are collected at pre-legal stage
• >98% claims paid
• 70% of all claims paid within 30 days

Once I have cover is there any other costs that may be incurred?

Our fixed premium policies allow businesses to budget for the cost of insurance with no further costs. Claims will be made based on the policy structure, which can be tailored to reflect a business’s ledger or amount of risk a business would like to share with Euler Hermes. Just like any insurance policy there is an excess, example £1000, therefore any claims below this amount are excluded.

Can credit insurance help me get finance?

A credit insurance policy insures your receivables, which is typically the largest asset on a balance sheet. Banks and trade financiers like the security a policy provides as they typically will be using the insured receivables to decide on the value & cost of any lending.

Next steps

Here’s what Steve has to say following his chat with Martyn

‘There are clear advantages for SMEs to look into credit insurance, and probably now more than ever. The fallout from COVID is far from finished and a credit insurance is just one way for you to protect your income streams. Clients should regularly credit check their customer and impose trading limits to ensure they are not overly exposed, credit insurance allows them to trade with peace of mind. If you would like to know more about credit insurance let us know on 03302233660 or contact Martyn directly on martyn.curnock@eulerhermes.com or via 07879 600 516.’

As there are now less than two months until the end of the tax year, we thought it would be a great idea to share our top 5 things to consider before the 5 April deadline.

1 – Use your ISA and pension annual allowances 

ISAs and pensions are a great way to save for the future because any income and capital gains made on investments held in both are free from income tax and capital gains tax.

Everyone over the age of 16 can save £20,000 each year in a cash ISA and anyone over the age of 18 can save the same amount in a Stocks and Shares ISA. Those aged 18 to 39 can open a Lifetime ISA and save up to £4,000 each year.

The crucial thing with ISAs is if you do not use all the allowance it cannot be carried forward to future tax years. Investors with spare money they plan to save and any unused ISA allowance for this year should consider using it before the 5 April deadline.

The pension annual allowance for this tax year is £40,000 or 100% of earnings if that is lower – this includes both contributions made by you and your employer. The annual allowance can be carried forward for up to three years, so investors should consider whether they have made as much use of their pension annual allowance as possible ahead of the end of the tax year. Note that anyone with a very high income or who has already started to take taxable income from their pension will have a restricted annual pension limit.

If you want to carry forward any previously unused pension allowance, you will only get tax relief on personal contributions up to 100% of your earnings for that year. People with no earnings (including children) can still save up to £3,600 a year in a pension (including basic rate tax relief).

2 – Use your capital gains allowance to cut your future tax bill

Any investments held outside an ISA or pension will be subject to capital gains tax (CGT), which means the annual tax-free allowance is very valuable. Investors can make investment gains of up to £12,300 in 2021-22 without paying any tax.

Gains over that amount are added to income and if they fall in the basic rate tax band are taxed at 10% and at 20% for the higher rate tax band. An additional 8% is added to the tax rate if the gains are from a second property.

The annual capital gains tax-free allowance cannot be carried forward into future years so if you do not use it, you lose it. If you have investments with gains outside of an ISA or pension you should consider whether to realise some of that gain before the end the tax year to make the most of your tax-free allowance.

If you’re in a couple you can get double this allowance as you can transfer investments to your spouse to use their annual CGT allowance too. This means that for the current tax year you can lock-in up to £24,600 of gains before you face any tax.

3 – Avoid getting caught in a tax trap!

The tax-free personal allowance for most people is currently £12,570. When your taxable income reaches £100,000, your personal allowance is cut by £1 for every £2 of your income, which means you lose it completely once your income reaches £125,140.

If you are in this position, you could consider reducing your taxable income so that it falls below the £100,000 level where the personal allowance starts to be eroded. There are two ways you can do this: by making charity donations or contributing to a pension.

By contributing to a pension, you are making tax savings in the form of getting your personal allowance back whilst also saving for your future and benefiting from pension tax relief at 40%, so you wipe out the 60% effective tax rate completely.

4 – Don’t miss out on child benefit

In a similar way as above, people will start to lose their child benefit when one half of the couple earns more than £50,000 – and the benefit will be wiped out entirely when they hit £60,000. The frustrating factor for many parents is that the rule applies if one parent is earning more than £50,000, regardless of their partner’s income. So, you could have both parents earning £48,000 each and have no problem, but if one earns nothing and the other earns £60,000 you’ll lose the benefit.

A parent with two children will get £1,828 a year in child benefit, but for every £1,000 they earn over £50,000 they will lose 10% of their child benefit – so someone earning £51,000 will lose £183.

However, parents who have just tipped over the threshold can get around this by increasing their pension contributions. What’s counted for the purposes of the child benefit high income charge is your salary after any pension deductions. This means if you contribute enough to your pension to get your salary back to £49,999 then you’ll get the full child benefit again.

Another option is to make charitable donations from any income over the £50,000 limit, which you’ll need to declare to HMRC on your tax return.

5 – Start saving for your children

Like adults, children also have tax allowances that can be used each year. The Junior ISA allowance is now a very generous £9,000 a year, which means that if you have spare cash you can start building a very healthy fund for your children’s future. They won’t be able to access the money until they are 18, at which point it automatically turns into a normal ISA and transfers into their name, giving them full access.

For many families putting the full £9,000 into the pot isn’t realistic, particularly if you have more than one child. But even a more modest £50 a month, earning 5% returns a year, would give your child a £16,000 present on their 18th birthday.

You can also pay up to £2,880 into a Junior SIPP each year, with government tax relief automatically boosting that to £3,600. Your child will not be able to access the money until they are at least age 57, maybe later if the government increases the age limit, which means there’s plenty of time for them to benefit from compound investment returns.

If you paid in the maximum each year until your child turns 18 and they don’t contribute anything else, assuming 5% investment returns each year after charges, the pot would be worth £713,000 by the time they turn 57 or just over £1.1m by the time they hit the current state pension age of 66.

Want to know more?

No problem, we’d love to help! Contact our expert team today on 0330 22 33 660, we are always here to have a chat on questions, queries or advice you may be in need of.

If you are self-employed, Universal Credit will provide support to help you grow your business.

To get this support you will need to be able to show that:

• self-employment is your main job or your main source of income
• you get regular work from self-employment
• your work is organised – this means you have invoices and receipts, or accounts
• you expect to make a profit

If you can show all of the above you will be considered to be ‘gainfully self-employed’. If you can’t show all these things you might have to look for other work if you are to keep receiving Universal Credit. To find out more about your eligibility head over to  GOV.UK to find out more.

How much you’ll get

If you are gainfully self-employed whilst claiming Universal Credit you will not be expected to look, or be available, for other work. This will help you to concentrate on making your business a success.

However, it will be assumed that you are earning the same amount as someone who is in paid work. This will usually be what someone of your age would earn if they worked at the National Minimum Wage for the number of hours that you are expected to work or look for work (this amount is called the Minimum Income Floor).

Next Steps

Still got a question, no problem at all, get in contact with us today on 0330 22 33 660, to chat with a member of our expert team.

Late payment continues to be a huge problem small businesses face. As the business community looks forward to a post-pandemic trading landscape, we thought it would be a great time to have a look at what practical steps can be taken to reduce instances of late payment.

For small businesses, in particular, navigating the pandemic has been super challenging to say the least. And as we all know ensuring a stable cashflow has always been a fundamental component onto which a sustainable and profitable business is built. But as we start to enter a post-Covid world, what does this mean for cashflow and will late payments continue, improve, or even erode further?

Reporting on the state of the small business landscape across Europe, the European Payment Report, 2021 from Intrum concludes that in the UK, 62% of respondents are more concerned than ever about debtors’ ability to pay on time, with nearly half (46%) stating they believe the widening gap between payment terms and duration of paying is a real risk to the sustainable growth of their businesses.

Our Founder Steve Timmis comments “All small businesses rely on prompt payment for their goods or services, it could be argued that the small business delivers its goods or services with passion, purpose and dedication sometimes more so than the national brands. Slow payment endangers their very survival. Small business deserves to be paid for good work in a timely way, with 30 days as the suggested ‘maximum’. embedded in both the Good Business Charter.”

Prompt Payment Code

The government has strengthened the existing Prompt Payment Code, which is underpinned by the Late Payment of Commercial Debts (Interest) Act 1998. The Code now requires signatories to pay 95% of their invoices from small businesses (with less than 50 employees) within 30 days. This is half the time previously allowed by the Code.

The Prompt Payment Code (PPC) was created by the UK government in 2008 in response to a call from businesses for a change in payment culture. It established a set of principles for businesses when dealing with and paying their suppliers that commit them to paying fairly and on time.

Late Payment Culture

Despite steps to abolish the late payment culture, it’s still one of the biggest challenges facing small businesses today, research shows that the pandemic has only made things worse. 59% of small business owners have said that bigger companies increased the length of their payment terms during the lockdowns. This creates a cashflow squeeze, which in turn impacts on things like the ability to hire and retain staff.

Xero’s Small Business Insights (SBI), their snapshot of the health of the UK’s small business sector, shows average payment times remain longer than pre-crisis levels. The impact that this can have on a business is huge.

Small businesses are being put under pressure by larger businesses, in some cases being asked to drop their prices by 10% or extending their payment terms to anything up to 90 days.

Here’s our top tips to reduce instances of late payment

1. Ideally, negotiate shorter payment terms – so there’s less of a chance of an invoice getting lost. It’s best to have these discussions and confirm payment terms as part of the initial agreement.
2. Overcome politeness – Asking for money is awkward at the best of times. Don’t be afraid to ask for what you’re owed. When an invoice is overdue, send a reminder or make a phone call straight away. An accountant can often help with these uncomfortable conversations, or you can use technology to automate the chasing of invoices.
3. Adopt the right technology to make keeping on top of finance simpler – Xero automates the process of chasing invoices, so you can track cash flow and invoice payments in real time. There are more specialised apps such as Satago that are focused on debt collection.
4. Make sure your terms and conditions are up to date and prepared by a solicitor – Large businesses have been know to take advantage of small businesses where they may have weak or very little T&Cs. Make sure your documents and processes are strong.
5. Good discipline – Start by sending a gentle reminder before an invoice becomes due and follow up when they first become due, don’t wait until they are 30 days overdue.  Wishful thinking doesn’t get you paid!
6. Charge Interest – After 30 days have passed from the date payment was due, you are legally allowed to charge statutory interest on top of the original invoiced amount. There might be hesitancy to do this amongst the small business community so as not to damage relationships.
7. Accept online payments by adding a ‘Pay now’ button to your online invoices and get paid twice as fast by connecting to a payment service provider such as Stripe, GoCardless and others.

How can Sempar help you?

At Sempar we have our very own credit control service, where our professional team will chase in the payment of your invoices, we also believe in automation and our tech team can help you plug in apps like Satago that will chase in you invoices whilst you focus on growing your businesses. Simply contact our expert team today on 0330 22 33 660 to discuss how we can create a bespoke package to suit your circumstances.

In a world of social media and email, a world of instant contact and instant replies, a world that’s fast paced and often more careless than carefree, we shouldn’t be surprised that opportunities pass us by each day because we don’t stop and think about our customers and properly engage with them to understand their problems.

How many of you can honestly remember the last time you picked the phone up to speak to your customer to see how they were? Popped in to see one of your customers for a cuppa to ask them how they are doing and what’s changed for them?

Many of you may think you don’t need to, as sales are still coming in and life’s about doing less not more surely, automation is king I hear you say?

Well, yes that’s true … but then COVID came along like a lightening bolt and changed the world as we know it overnight, forever! There’s no going back to ‘normal’, the world has changed and it has changed for good. So what do we do now?

It’s time to pick up that phone and talk to those customers that are still there buying from you. You will be amazed what you learn…

• Take some time don’t rush the call, once you have them make sure you get as much information out of the them as possible. Find out what you’ve done well, what you haven’t.  The latter are opportunities for you to upsell or to increase the scope of your products and services.
• Speak to as many as you can and keep an eye out for trends, as these may give you confidence to start offering new services or products or on the other hand that you have some service issues that need fixing quickly.
• Talk to your customers about the pandemic, how has their world changed and how do they think it will continue to change.
• Try and work out where you fit into that new world does this mean more business or less business for you?

This exercise will certainly give you more questions than answers but it will give you a starting point and information that will begin to shape your business future. You know what industries to look for and which ones to avoid. You already have a good idea of their needs and their pains and you know the first thing to do when you meet them…. LISTEN!

To finish up we are going to leave you with our four value bombs for igniting your sales revenue for 2021 out of listening to your customers:

1. Listen to understand what’s important to your customer and what challenges they are facing
2. Find the opportunities that exist for you to UPSELL your services or products to solve these challenges
3. What trends do you see across your customers that could open up new products or service lines
4. Where else do the customers that you can upsell to and sell new products and services to also exist

If you haven’t already check out one of our latest Sempar Talks episodes here where Steve shares four questions you can ask your customers to unlock revenue and grow your business. By talking to your customers and listening to what they’ve got to say, you can identify trends and opportunities for offering new products or fixing issues before you lose business. Understand your customers’ needs and ignite your sales revenue for 2021.

Now get out there and start listening to your customers to grow your businesses.

We wanted to share with our Spring Budget 2021 review, highlighting the main areas the Chancellor touched on following last week’s briefing. With this probably been the most-watched budget in our lifetime there are certainly some key aspects to talk about.

Steve and Pete our Head of Tax have joined together to record a short informative video to discuss their thoughts on the changes announced.

The main points to takeaway

 

Covid-19 support measures

The Coronavirus Job Retention Scheme (CJRS) and the Self-employed Income Support Scheme (SEISS) have both been extended to September 2021. To reflect the fact that lockdown restrictions will be lifted some time before then, the value of the support will fall towards the end of the schemes. The CJRS will continue in its current form until July, at which point the employer will be asked to contribute towards the cost of unworked hours (10% for July and 20% for August and September). The employee will continue to receive at least 80% of their current salary for hours not worked.

A fourth and fifth grant will be paid under the Self-employed Income Support Scheme (SEISS). The eligibility criteria will remain the same except that the person must have submitted a tax return for 2019–20. This is a significant change as it should mean that around 600,000 individuals – mainly the newly self-employed – who were prevented from claiming grants one to three will now be eligible to claim grants four and five. The amount of each grant is equal to 80% of three times average monthly profit, capped at £7,500; however, there is an added complication for the fifth grant: where turnover has fallen by less than 30%, the grant will be capped at £2,850. The fourth grant may be claimed from late April and the fifth by late July. Grants four and five will be taxable in 2021–22.

Business taxes

The pre-Budget kite-flying exercise had suggested a staggered increase in the rate of corporation tax for all companies from 19% to 23%, beginning in September 2021. Instead, the rate will increase to 25% from April 2023. Importantly, the rate will remain at 19% for companies with profits up to £50,000, and a taper mechanism will apply where profits are between £50,000 and £250,000. However, even at 25% the UK’s corporation tax rate will remain the lowest in the G7, and a significant chunk of that cash will be returned to businesses by way of a new ‘super-deduction’ for capital investment.

Briefly, companies investing in qualifying plant and machinery between 1 April 2021 and 31 March 2023 will benefit from new first-year allowances (FYAs). For main-rate assets, there will be a 130% FYA and for special-rate assets, a 50% FYA. Finally, there will be a temporary extension to the period over which a business may carry-back trading losses, from one year to three years. This extension will apply to a maximum of £2m of unused trading losses made in each of 2020–21 and 2021–22.

Personal taxes

A number of allowances and thresholds will be frozen at the amounts applying for 2021–22 for all tax years up to and including the tax year 2025–26. This includes the income tax personal allowance and the basic rate limit, which will be set at £12,570 and £37,700 respectively from 6 April 2021 to 5 April 2026. This is a significant revenue raiser for the Government: freezing the personal allowance and basic rate allowance alone are expected to bring in roughly £19bn.

It will also widen the tax base considerably, meaning that more people will pay income tax than before, and it will significantly increase the number of individuals who pay tax at the higher rate. The Chancellor can expect some hissing here, particularly in light of the manifesto commitment not to raise the rate of income tax and before that, the Prime Minister’s aspiration to increase the point at which the higher rate kicks in to £80,000 (the higher rate threshold is £50,270 for 2021–22).

Other allowances and thresholds to be frozen include the pensions lifetime allowance (£1,073,100) and the capital gains annual exempt amount (£12,300). The Class 1 NICs upper earnings limit and the Class 4 NICs upper profits limit will remain aligned to the higher rate threshold.

Other announcements include:

• the temporary increase in the residential SDLT nil rate band to £500,000 in England and Northern Ireland will be extended to 30 June 2021. The nil rate band will reduce to £250,000 from 1 July 2021 and will return to £125,000 on 1 October 2021;

• the extension of the temporary reduced rate of 5% VAT for goods and services supplied by the tourism and hospitality sector until 30 September 2021. A rate of 12.5% will apply between 1 October 2021 and 31 March 2022;

• the extension of the business rates holiday for businesses in the retail, hospitality and leisure sectors in England to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022;

• the payment of restart grants in England of up to £6,000 per premises for non-essential retail businesses, and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses; and

• a new Recovery Loan Scheme under which the Government will provide an 80% guarantee on eligible loans between £25,000 and £10m. The scheme will be open to all businesses, including those who have already received support under the existing Covid-19 guaranteed loan schemes.

• To combat fraud relating to Covid-19 support measures, in particular the CJRS and SEISS, and including the Bounce Back Loan Scheme, the Government will invest over £100m in a Taxpayer Protection Taskforce of some 1,265 HMRC staff.

Next Steps

We will ensure we keep you up to date as further information is released, in the meantime, if you wish to discuss any of the above, contact us today on 0330 22 33 660 to speak to a member of our team who would be happy to assist.

HMRC has announced that Self assessment taxpayers will not be charged a 5% late payment penalty if they pay their tax or set up a payment plan by 1 April 2021.

The self assessment payment deadline is 31 January and interest is then charged from 1 February on any amounts outstanding.

Normally, a 5% late payment penalty is also changed on any unpaid tax that is still outstanding on 3 March. However this year, due to the impact of the COVID-19 pandemic, HMRC is allowing taxpayers more time to pay or set up a payment plan.

Taxpayers can pay their tax bill or set up monthly installments via a payment plan online at GOV.UK. This will need to be done by midnight on 1 April to prevent being charged a late payment penalty.

The online Time to Pay facility allows taxpayers to spread the cost of their self assessment tax bill into monthly installments up until January 2022.

Taxpayers who are required to make payments on account and are expecting their 2020/21 tax bill is going to be lower than the previous year; for example where loss of earnings are down because of the pandemic, can make a claim to reduce these payments.

Finally, self assessment taxpayers who have yet to file their 2019-20 tax return should file by 28 Feburary to prevent being charged a late filing penalty of £100.

For more information and support on self-assessment please contact us if you wish to speak to a member of our expert team on 0330 22 33 660 and we will be happy to help.