Welcome to the TaxAntics October 2021 Newsletter...

tax or treat!..

We hope you like our website's new spooky Halloween theme launched in time for our October newsletter! Please do share with your friends, associates, and anyone else who may be interested in our content. 

It has been a very busy time for TaxAntics since our last newsletter. Furlough came to an end and the final Covid related self-employed income support grants deadline closed on 30 September. Businesses are starting to look forward and develop a plan of action for recovery.

Sadly some businesses are facing a more bleak outlook. Whilst only a handful of our clients are directly affected by covid and the changes to IR35 legislation, TaxAntics are well positioned to advise in a practical way to businesses having to make some very tough decisions.

TaxAntics have already assisted what was a successful London based plumbing business through the process of winding down operations so that the proprietors can enjoy family time with their grandchildren. The perceived risk with continuing operations in London were at the centre of this decision. So although some will continue to wonder if a plumber will ever turn up, there will be some extremely happy grandchildren in this world!

We have also helped several clients through the process of incorporating their personally owned property portfolios with no tax liabilities arising.  The introduction of the mortgage interest relief restriction, estate planning requirements and organic growth have led many property investors to rethink their strategy.  TaxAntics offer no obligation initial consultations and holistic advice in this area. If you know any landlords with property tax issues, we would love an introduction.

Over a dozen new clients are starting out on their property investment journey through a mixture of individual, partnership, Limited Liability Partnership  (LLP) and limited company structures. We are also excited to be providing tax advice and compliance support on a commercial to new residential property conversion which should provide at least eight new homes.

Paper filing deadline

As well as being Halloween, the 31 October marks the filing deadline for paper tax returns. It is also the start of the three month count down to 31 January 2022 when most individuals should aim to file their personal tax returns online.

TaxAntics can help prevent unwelcome fireworks by ensuring tax returns are professionally prepared and make the most beneficial use of allowances and reliefs.

In addition to making sure no one pays more tax than they should have to, there are a number of ways to ease the burden of meeting a personal income tax liability.

Tax Collected through PAYE

Anyone who is likely to owe less than £3,000 as a balancing payment can have the tax they owe collected through their 2022/2023 PAYE coding notice if they already pay tax through pay as you earn (PAYE) and the return is filed online by 30 December 2021 (or by 31 October for paper returns).

This option is not available to anyone who does not:

• have enough PAYE income for HMRC to collect the tax; or
• would have more than double their normal PAYE income tax deducted; or
• pay more than half their normal PAYE income in taxes.

Where the conditions are met, HMRC would automatically seek to collect the tax through PAYE unless the taxpayer specifically indicates otherwise in their tax return.

As well as helping meet statutory deadlines, we can also provide practical tax advice on how to structure assets more tax efficiently. Avoid a winter of discontent and contact us to find out how we can help you!

Contact us  now to discuss how we could help you.

BUDGET 2021

The third Budget since Rishi Sunak became chancellor will be held on 27 October 2021.  As we reported in our last newsletter, the new "Health and Social Care Tax" has already been announced and, as always, there have been a lot of media predictions for tax   increases and  spending cuts. 

After being told we were in for a spectacular summer, TaxAntics aren't paying too much attention to the hype although we will be watching events on the day unfold with interest.

We'd love to hear your thoughts on what might be announced and we will also provide a summary soon after the budget. In the meantime, here are some comments on we might be in store for.

Income tax

A freezing of the personal allowance has already been announced. In the current climate, stability is key and we do not anticipate any major overhaul of income tax.

A 5.7% increase in the national minimum wage (NMW) is anticipated.

The state pension is expected to increase by the higher of 2.5% and September’s inflation rate.

Capital Gains Tax

In 2020 the Office for Tax Simplification (OTS) suggested that the government should bring capital gains tax (CGT) rates in line with income tax and recommended a reduction to the CGT annual exemption.

Unincorporated businesses

Unincorporated businesses can currently choose their accounting year end and are  taxed twice on profits in the first year of trading unless their accounts are coterminous (aligned) with the tax year. 

A proposed reform would remove this basis of taxation and replace it with a ‘tax year basis’ which would mean that only profits arising in a given tax year are taxed as part of that particular year.

The 'reform' of basis periods for the self-employed is being communicated as a form of simplification. The idea is that this will help sole-traders and partnerships make the transition to Making Tax Digital (MTD) quarterly reporting with effect from April 2024. 

The reforms could cause issues  for businesses that have to rely on provisional figures  and then have to submit amended tax returns. This could arise in situations such as when contingencies exist  or profit  sharing reports from corporate  entities  with different year ends  are required.

Corporation Tax

Marginal rates of corporation tax are already making a return from 1 April 2023! Incorporated businesses with profits of less than £50,000 will be unaffected.

For businesses with taxable profits above £250,000 the main rate of corporation tax will increase from 19% to 25% from 1 April 2023. 

Where profits are between £50,000 and £250,000 the main rate (25%) will be payable although reduced by marginal relief.

This will also mean the return of the “associated companies” rules to prevent business owners trying to keep profits below the £250k threshold by separating activities. 

For example, if two connected companies are under common control, the £250k threshold becomes £125,000 for each company.

Close investment companies (those controlled by five or fewer participators which only undertake investment activity), will also pay the 25% rate of corporation tax on their profits. Property letting companies should not be affected although some family investment companies are likely to be caught.

Important Dates

27 October – the Budget!

31 October – deadline to submit paper self-assessment tax returns if you’re old school

1 November – due date for corporation tax for period ending 31 January 2021

7 November – filing deadline for quarterly VAT return for period ending 30 September 2021

19/22 November – due date for October PAYE and CIS payments

1 December – due date for corporation tax for period ending 28 February 2021

30 December – deadline to submit online tax returns if you meet the conditions for HMRC to collect any tax due via PAYE coding notices in the 2022/23 tax year

1 January – due date for corporation tax for period ending 31 March 2021

31 January 2022 – deadline for filing self-assessment tax return and settling any taxes due for the year ended 5 April 2021