Monthly Archives: September 2021

Income Tax MTD Delayed 12 months

In a statement to MPs, new financial secretary to the Treasury Lucy Frazer has confirmed that the introduction of Making Tax Digital (MTD) for income tax will be postponed by a year

The quarterly digital reporting for landlords and the self employed was due to start in 2023, but it will be pushed back by 12 months, the second delay to the digitisation programme.

‘The government recognises the challenges faced by many UK businesses and their representatives as the country emerges from the pandemic over the last year. In recognition of this and of stakeholder feedback, we will now be introducing MTD for ITSA a year later, in the tax year beginning in April 2024,’ said Frazer in a written statement.

‘General partnerships will not be required to join MTD for ITSA until the tax year beginning in April 2025.

‘The date at which all other types of partnerships will be required to join will be confirmed later.’

This delay will also affect the introduction of the new penalty scheme for late filing and late payment of tax for ITSA. This will now be introduced for those who are mandated for MTD for ITSA in the tax year beginning April 2024, and for all other income tax self assessment customers from April 2025.

Editorial comment – the delay of the implementation of this radical change to the tax system is welcome. It is very clear from our experiences and exchanges with HMRC in recent months that they are struggling to cope even more than ever with just basic data input and dealing with correspondence and enquiries. Attempting to bring in such complicated technological changes would, in the short term, in our view, only make the system even more unfit for purpose.

Plastic Packaging Tax

The Government has announced a new tax which will come into force in April 2022. It is aimed to encourage the use of recycled rather than new plastic within plastic packaging.

The rate of the tax will be £200 per metric tonne of plastic packaging.

If you have a business that manufactures or imports ten or more tonnes of plastic packaging over a 12 months period, you will need to register for the tax regardless of whether you will have to pay any tax.

Those businesses that manufacture or import plastic packaging should make sure now that you have the information needed to establish how much tax you need to pay or to confirm that you have nothing to pay.

If you are responsible for accounting for the tax as a manufacturer or importer, any invoice you issue to a business customer must show a statement that Plastic Packaging Tax has been paid on the packaging concerned.

This may require in-changes to your invoicing software and accounting procedures although further details of the requirements will not be given until later in the year.

Further information is given on the HMRC website and if you need further information after that, you can contact HMRC by email on indirecttaxdesign.team@hmrc.gov.uk.

VAT Rate Change

We would like to remind you all that the reduced 5% rate applicable in the leisure and hospitality sector, which was introduced to help businesses struggling with social distancing measures, will come to an end on 30 September.

It will increase to a transitional rate of 12.5% from 1 October 2021 to 31 March 2022.

Furlough comes to the end

The Furlough scheme, the popular name for the coronavirus Job Retention Scheme will officially come to an end next week.

That is to say that the grant that covers a percentage of staff wages who have been unable to work due to the coronavirus crisis will no longer be available.

Government contributions already fell to 70% of staff salaries in July and the employer making up 10% of the 80% which needed to be paid to staff.

In August and September, those contributions fell further to 60% meaning that employers had to make up the further 20%.

For those businesses who still have staff who are unable to work, this will raise a number of questions in particular whether or not those staff who were receiving furlough payments and who still do not have full time employment, may need to seek advice on redundancy or variation of contract.

Reminder to all our self-employed clients

We would just like to remind all our self-employed clients or those who are members of partnerships that the deadline to apply for the fifth and final Self-employment Support Scheme grant is 30 September 2021.

The eligibility criteria for this grant are different from the first three grants. We cannot make the claim for you but you may need our help in deciding whether or not you are eligible.

The closure of the scheme is less than a week away so if you think you are eligible and have not yet made a claim, please contact us as soon as possible for further details.

There is also plenty of guidance on HMRC’s own website.

Tax Investigation Fee Protection Scheme

Many of you will by now have received letters or emails from us relating to the renewal of our annual tax investigation service.

For those of you who have not received any communication directly from us and are interested in the service, would you please contact us as soon as possible because the renewal date is 1 October.

The service means that any fees arising as a result of HMRC enquiries into Income Tax, Corporation Tax, VAT or Payroll matters, will be covered in full.

The scheme now also covers investigations into the Furlough Scheme and Self-employed Income Support Scheme and also Gift Aid cover and Stamp Duty Land Tax matters.

It also gives you free access to a business legal helpline on a 24/7 basis.

Government Plans for increases in National Insurance

The Government confirmed yesterday that from April 2022, a 1.25% Health and Social Care levy will be introduced.

It is nominally taking the form of a 1.25% increase in National Insurance both for employees (Class 1) and Self-Employed (Class 4) with a similar increase for employers as well.

There will be no further opportunities for saving this levy by using dividends in limited companies as there is also a 1.25% increase in dividend tax rates.

This increase also applies to highest rates possible so that successful companies who reward their directors with dividend income over £150,000 will effectively be paying tax, once corporation tax has been taken into account at 58.85% on that marginal income.

If the planned corporation tax rise to 25% comes in as well, then owner managed businesses in that bracket will then be paying tax at 64.85%. However, there will be undoubtedly other changes between now and the time of full implementation of the increased corporation tax rate and we will keep you posted and continue to optimise your tax planning opportunities.

The rise is ostensibly linked to improving social care so that from October 2023 nobody starting care will pay more than £86,000 in their lifetime and no one with assets less than £20,000 will have to make any contribution from their savings or housing wealth.

Top 20 Tips for SMEs Guide

We have just come through probably the toughest 18-months any of us have experienced in our business lives.

Thankfully, there has been support available to help us through the crisis. Government schemes including furlough and SEISS, tax deferrals and business loans, have injected money into businesses and have enabled businesses to pay their staff and have held off the squeeze that may follow for many. However, 18 months on and it is still a challenging market.

We have been in the eye of the storm but we are now, hopefully, exiting the storm, which will be challenging in itself, but there are a number of steps that SMEs can take to build a solid platform to help them with the opportunities and challenges ahead.

These are the 3 key areas that SMEs need to focus on:

• Your cash;
• Your people; and
• Your customers.

Without cash, people or customers businesses will fail. Focusing on these 3 vital areas and making informed decisions will provide a platform for businesses to look to the future with confidence.

We have produced a helpful guide, which can find below, with our Top 20 Tips on what you need to be doing right now in your business. The guide highlights the importance of ensuring you have enough cash in the business, the key things you need to do to look after your people and steps you should be taking with your customers.

Congratulations!

The Martlet Partnership warmly congratulates our Dan White for passing his final exam at AAT Level 3. Dan now moves on to the final phase – Level 4.

Dan, who is an excellent cricketer, celebrated his 21^st birthday last week by scoring a century for Littlehampton against Findon – what better way to mark the occasion!