Since March 2020 my Budget page was renamed as ‘Budgeting’ because everyone across the UK and globally is still having to rebudget.
Updated 31 March 2022
The key challenge for many in the Arts and Entertainment in the coming tax year will be the rising cost of living against a backdrop of uncertain times for work. Most of the various ‘one-off’ forms of financial assistance have now stopped.
A number of my clients are making use of HMRC budget payment plans to pay a certain amount of tax in advance, and take the sting out of their January and July tax bills.
3 March 2021
After the leakiest of build ups, some key points from the actual Budget are given here.
- The self-employed income support scheme will also be extended at its current level with a fourth grant covering the period February to April. This will be 80% of the relevant profit figure. A fifth grant will cover following three months, but this will be at a lower level for those who have seen less than a 30% drop in turnover. Eligibility for the SEISS will be extended to include those who became self-employed in 2019/20. There will be a SEISS 5 later this year.
If you qualify based on your self-employed profits, you can prepare to consider whether you are eligible by checking what your income (turnover) from self employment was during February March and April 2020, compared to the previous year.
If you claimed one or more of the previous SEISS grants, this is a good time to check that you won’t have overclaimed in total over the course of the last year.
- The coronavirus job retention scheme (CJRS) will be extended in full until the end of June 2021 and then phased out over the following three months.
If you are employed, your employer should be able to confirm how this will affect you.
- The personal allowance and higher rate threshold will rise to £12,570 and £50,270 for 2021/22 and will then be frozen for the next four years.
For those with paid work starting up again, or growing as things open up, think about your savings for tax. HMRC offer an option to pay monthly. This means paying early, but may be useful to some taxpayers to help manage cashflow.
- The capital gains tax annual exemption, the inheritance tax rate nil rate band and the lifetime allowance will all be frozen at their current levels until April 2026.
Remember also that house sales now need to be reported to HMRC within 3 days of completion. There are penalties for late notification. Any taxpayer who owns an investment property should set up an online account with HMRC well in advance of any sale
- The exemption from stamp duty land tax on the first £500,000 of residential property value will be extended to 30 June and then replaced by a £250,000 exemption until 30 September 2021.
- A new residential mortgage guarantee scheme will run from April 2021 to December 2022, aimed at increasing availability of 91%-95% loan-to-value mortgages. The maximum property value will be £600,000 and mortgages must be arranged on a repayment basis.
- The temporary 5% VAT rate for hospitality, hotel and holiday accommodation and admission to certain attractions will be extended to the end of September 2021 and then replaced by a 12.5% rate until 31 March 2022.
- Fuel duty has been frozen again this year, alongside alcohol duties which are frozen for the second year running.
- The main rate of corporation tax will be increased to 25% from April 2023 for companies with profits of at least £250,000. At the same time, a small profits rate of 19% will be introduced for companies with profits below £50,000.
- For two years from April 2021, companies investing in qualifying new plant and machinery assets will benefit from a 130% first-year capital allowance.
- The business rates holiday for retail, hospitality and leisure businesses will be extended for three months and then reduced to a 66% relief until the end of March 2022.
Updated 13 March 2020
Income tax rates have already been announced. Current rates are here https://www.gov.uk/income-tax-rates
Increasing National Insurance thresholds – The Budget confirms the thresholds at which employees and the self-employed start paying National Insurance contributions (NICs) to £9,500 from April 2020. Some people will be taken out of paying Class 1 and Class 4 NICs entirely.
Review of changes to the off-payroll working rules (commonly known as IR35) – this only affects those operating through a company or LLP
Tapered annual allowance for pensions – The pensions annual allowance is the maximum amount of tax-relieved pension savings that can be accrued in a year. For those on the highest incomes, the annual allowance tapers down from £40,000.
Lifetime allowance for pensions – The lifetime allowance, the maximum amount someone can accrue in a registered pension scheme in a tax-efficient manner over their lifetime, will increase to £1,073,100.
Starting rate for savings tax band – The band of savings income that is subject to the 0% starting tax rate will remain at its current level of £5,000 for 2020-21.
Individual Savings Account (ISA) annual subscription limit – The adult ISA annual subscription limit for 2020-21 will remain unchanged at £20,000.
Junior ISA and Child Trust Fund annual subscription limit – The annual subscription limit for Junior ISAs and Child Trust Funds will be increased from £4,368 to £9,000.
Capital Allowances: Structures and buildings allowance (SBA) rate – The annual rate of capital allowances available for qualifying investments to construct new, or renovate old, non-residential structures and buildings will increase from 2% to 3%. The change will take effect from 1 April 2020 for corporation tax and 6 April 2020 for income tax. The introduction of SBA at Budget 2018 greatly enhanced the international competitiveness of the UK’s tax system and this increased rate of relief goes even further, providing businesses who invest with over £1 billion in additional relief by the end of 2024-25. (23)
Capital Gains Tax: Reduction in the Entrepreneurs’ Relief lifetime limit – From 11 March 2020, the lifetime limit on gains eligible for Entrepreneurs’ Relief (which offers a reduced 10% rate of Capital Gains Tax on qualifying disposals) will be reduced from £10 million to £1 million.
Updated 14 March 2019
Spring statement was light on tax detail, but promised
-Detail on a new allowance for commercial buildings
-Changes to the apprenticeship levy to make the apprenticeship route more accessible to smaller employers
-Confirmation that Making Tax Digital for VAT is going ahead from April 2019
-A promise that income tax returns would not move over to a digital system in 2020
Updated 29 October 2018
Billed by the Chancellor as a ‘Budget for hardworking families… strivers, grafters and carers’.
Pledges to ‘leave more of people’s hard-earned money in their pockets’ include raising the tax-free personal allowance to £12,500 and the higher-rate (40%) threshold to £50,000 in April 2019, earlier than preannounced.
Sale of home and Capital Gains Tax – From April 2020, the reliefs on sale of a residential property will be restricted in some circumstances. The CGT-free 18 months between moving out and sale will drop to 9 months, and letting relief will apply to fewer taxpayers. Anyone who has owned a property and always lived in it as their home, moving out when they sell it, will remain completely exempt from CGT on sale. The ‘rent a room’ income tax relief for those taking a lodger into their main home remains in place.
VAT registration threshold – this will remain the same for the next two years (£85,000 of income over any 12 months). There was very little mention of Brexit, but the assumption is that UK VAT will continue – and is a significant revenue raiser.
Class 2 NICs – Meanwhile it was confirmed last month that Class 2 NICs for the self employed would not be abolished as planned. When abolition was first proposed, I among many wrote to question whether this was fair on self-employed taxpayers with a low-profit year who currently choose to pay Class 2 voluntarily, keeping up their ‘NIC record’ and protecting entitlement to state benefits. Until a way can be found to offer contributory benefits for those with lower earnings, despite the glitches Class 2 seems to be causing within the Self Assessment system, I am pleased that Class 2 and the option to pay voluntarily at £2.95 per week (rather than Class 3 at £14.65 per week) is staying put. Frustrating that there have been so many changes of mind over NICs by ‘Fiscal Phil’ along the way.
Current and new tax figures once available can be found to the right, by clicking under TAX LINKS on -Allowances and Rates-
Updated 22 November 2017
The second Budget of 2017. A number of surprises. Many changes are pre announced, but when some of these are then scrapped, and other changes are brought in without warning, this makes the pre announcements less useful.
This was likely to change, but hasn’t:
The Chancellor had spoken recently of a move to lower the VAT registration threshold, currently set at income of £85,000, but this has not gone ahead. This is good news for small businesses trading below the threshold, as VAT registration brings an extra time commitment and usually some extra costs. Voluntary VAT registration is open to those in business with income below the threshold.
This was not supposed to change, but has:
Class 2 NICs – the flat-rate national insurance contributions (currently £148.20 for the year) due from self-employed taxpayers with profits over £6,025 – were due to be abolished from April 2018 (announced back in 2016). This has been delayed a year so Class 2 will remain until April 2019. This is positive for those who choose, in a lower-profit year, to pay Class 2 voluntarily in order to maintain entitlement to state pension and other benefits. I am one of many who raised concerns that once Class 2 disappeared, voluntary contributions would become far more expensive. However the transfer of Class 2 collection over to Self Assessment has not gone smoothly in many cases. And the way taxpayers who do some work in other EU countries are being invoiced separately, and earlier than the usual deadline, for all or part of their contribution, is annoying.
This was going to change, then it wasn’t, now it will:
Class 4 NICs – the Chancellor announced before the March Budget that Class 4, the earnings-related contributions, would be increased. This looked likely to be an unpopular measure. In the March Budget, he made a U-turn on this, saying the rates would not increase. In the autumn Budget he has now announced that they will increase after all. (An ‘O-turn’?) Which looks likely to be just as unpopular.
This had already changed and has stayed the same since then:
Making Tax Digital had been pared down and delayed for some years. The earliest move to a new system was, and still is, rescheduled for April 2019, just for VAT returns for registered businesses.
New tax figures for this year and next can be found to the right, by clicking under TAX LINKS on -Allowances and Rates-
Next year’s single budget should be in autumn. Unless there’s another change to the schedule.
from 8 March 2017
The first of two budgets this year.
Remember, changes announced in the 2017 Budgets will generally not show in your tax return until we prepare the 2018 return (later where changes have been pre-announced). Your 2017 return is prepared based on the rates in force for the year to 5 April 2017. For tax allowances and rates, please click on ‘Allowances and rates’ on the right under Tax Links.
- National insurance rates for the self employed were to be increased – however the Chancellor has changed his mind on this.
- ISA savings limits are rising again. But taxpayers can earn at least £500 of interest tax free (£1,000 for basic-rate taxpayers). So saving into an ISA will not necessarily be more tax efficient, or earn more interest, than an ordinary deposit account, depending on circumstances.
- Class 2 for the self-employed will be abolished from 2018. Changes to Class 2 in its final two tax years (it has moved from the NIC office over to Self Assessment) have caused some issues, especially for taxpayers who apply for forms A1 when self employed abroad.
- All clients paying tax at 40% or more have the opportunity to reduce tax in the current tax year by making certain payments to a pension or to charity by 5 April.
- All clients who are self employed should think of bringing allowable work-related expenditure forward to happen by the end of their accounting year (most often 31 March or 5 April).
- Please keep/obtain statements of bank and mortgage interest and all charity payments made under gift aid.
- I shall be issuing new engagement letters to clients to take us from April 2017 until the tax system moves over to the new digital regime.
Self-employed clients please also check:
- Whether you are near the VAT threshold of self-employed income of £83,000 (to April 2017), if you are not already registered. If income (before deducting any expenses) has reached the threshold over any 12-month period, or if this threshold will be breached within a 30-day period at any point, we need to register you for VAT immediately to avoid any penalty.