A Bumpy Road
Journey through the Tax Year and the Budget
Even with all good intentions you never know what is around the corner, therefore it is vitally important to keep on track with your bookkeeping. Now changes may be on the horizon, but the current process for completing your Tax Return hasn’t changed a great deal over the last ten years. With a New Tax Year rapidly approaching, let’s take a journey through the year and offer our advice at the important stops along the way.
While important tax dates are the same each year, things can change. It’s wise to be aware of key dates falling on weekends or bank holidays, so while you might think you have one extra day to make a payment or meet the deadline, the truth is you could lose working days. For example, the 31st January 2021, falls on a Sunday. Your tax return and payments need to be with HMRC by the deadline date, so if it falls on a weekend this could affect payments from your bank. Here’s the road through the tax year as we know it and things you should think about along the way (see above). The Chancellor of the Exchequer presented his Budget on the 11th March 2020: “A people’s budget for the people’s government” stated the new Chancellor of the Exchequer, Rishi Sunak. A key topic throughout was COVID–19, though the realities just a week later when I’m writing this, leave his speech and commitments in disarray. But these are the main points that affect us, whether they remain in the long-term or not.
There were numerous temporary measures set to assist with the current worldwide COVID-19 pandemic. The measures have been put in place to help support those affected by COVID-19, whether that be as an individual or a business. These measures are changing day by day, with strong calls for support of those working as self-employed or on zero hours contracts and not usually in a position to receive statutory sick pay or business support measures. Employment Support Allowance (ESA) is paid to those who are self-employed and too sick to work. It is worth £73.10 a week, or £57.90 for the under-25s. The process will be quicker with the qualifying number of sick days reduced from 8 to 1. Get your sick note from 111 and take their advice, then contact the Department of Work & Pensions and begin the process of claiming. A 100% reduction in Business Rates for small business’s was also introduced in the Budget, more interesting for a lot of very small businesses was a £3,000 grant aimed at all small businesses, though we are awaiting clarification. Finally, HMRC have been asked to assist taxpayers with their payments. To that end, a new team to deal with ‘Time to Pay’ arrangements for businesses affected by Coronavirus has been set up. If you find your capital reserves are running low and you are worried about paying your next tax bill, we strongly recommend you call them on 0800 015 9559.
On The Money
Other budget announcements:
● From the 6th April the National Insurance threshold is increasing from £8,632 to £9,500, meaning you can earn more profit before paying
Class 4 National Insurance.
● Fuel Duty will be frozen for the 10th consecutive year and there will also be a
freeze in duty rates for beer, ciders and spirts.
● Another tax to be cut is VAT on digital books, newspapers and magazines.
● The 5% rate of VAT on sanitary products – referred to as the ‘tampon tax’ – will be abolished from January.
● People can put a lot more into tax-free savings for children. The allowance for Junior ISA’s (Individual Savings Accounts) and Child Trust Funds will be increased from £4,368 to £9,000 in April. However, the typical amount saved is only about £1,000.
● There was no change to tax rates, with the personal allowance remaining at £12,500.
● Self-employed NI Class 2 payments increase from £3.00 per week to £3.05.
● Potholes on local roads will be filled with £2.5bn funding.