Michael Lansdell summarises the tax changes coming into effect this month.
Are you ready for all of the tax changes that came into force at the beginning of April? Here is a recap of what’s new in employment and business tax; some of these measures were expected and delayed, due to the pandemic.
The new rules for off-payroll working fall into the delayed category. There have been multiple false starts here, but from April 6 the rules, known as IR35, came into force for the private sector. These are to ensure that workers who would have been an employee if they were providing services directly, pay the same amount in income tax and NICs, broadly speaking, as other employees.
If these rules apply to you, or may do at some point in the future, you should be organised already. If you aren’t, there is a wealth of information available online via the government’s website.
From April 6, employers of veterans will get a 12-month exemption from national insurance contributions (NICs) for the first year of civilian employment, only for earnings between the secondary and upper secondary threshold though (check with HMRC if you’re not sure). The exemption will also only apply to any earnings paid on or after April 6, 2021.
Finally, for vans that produce zero carbon emissions, the van benefit charge is reduced to £0.
For any company investing in qualifying, brand-new plant and machinery, they can claim a 130 per cent capital allowance deduction. This deduction, which will knock 24.7p off your company tax bill for every £1 of expenditure, has been dubbed the “super-deduction”.
There will also be changes relating to business vehicles, reflecting the green direction that the government has restated its commitment to travel in, with a one-way ticket. In order to encourage businesses to purchase lower-emission vehicles, the CO2 thresholds have been reduced. Now the 100 per cent first-year allowances will only be available to new and unused electric cars/cars with zero CO2 emissions. Also:
- The 18 per cent current writing-down allowances will only be available on purchase of cars with CO2 emissions that don’t exceed 50kg/km.
- On purchase of a car with CO2 emissions that exceed 50kg/km, writing-down allowances will be available at six per cent per annum.
Also, for accounting periods beginning on/after April 1, 2021, the amount of research and development (R&D) tax credits that are payable is to be capped, for small and medium-size enterprises (SMEs).
If you are a SME, the amount that you can claim will be limited to £20,000, plus 300 per cent of the total PAYE and NICs contribution liability for the same period. There are a couple of key exemptions: again, check with HMRC if they apply to you.
Keep reading this blog to stay up to date with changes. At Figurit, we have been offering specialist tax-planning advice for happy clients for decades and will help you get the most of out of your business – and personal – finances.
For more information call Figurit (formerly known as Lansdell & Rose) on 020 7376 933.