The Scottish Budget for 2021-22 has been delivered but what does it mean for the Scottish taxpayer?
Since the Coronavirus Job Retention Scheme (CJRS) was first thrust upon us just over 10 months ago, it has acted as an unprecedented support mechanism in helping employers and employees across the whole of the United Kingdom cope with the uncertainty in surviving as a business whilst also retaining employees in their jobs. Although all jobs have not been saved, thousands of jobs, have thankfully been saved due to the scheme.
As the family business grows, succession can be a challenge. In order to bring the relevant knowledge and expertise to continue to grow the business, it is usually necessary to move to a more “corporate” structure and recruit senior management out with the family. However, to attract and retain the right talent finding a remuneration package that rewards and empowers management, without conflicting with the family’s objectives, can bring challenges. This is an area many of our clients ask for assistance with as they strive continue their business success by striking the right balance of being commercially minded whilst continuing to protect their legacy.
Since 6 April 2016, a tax exemption for “trivial” benefits provided to employees has been made available to employers. The legislation allows an employer to provide a benefit costing £50 or less to an employee without triggering a tax or National Insurance charge, whilst also removing the need to report.
For any companies who previously relied on an EU directive in relation to Withholding Tax (“WHT”), there will be a need to consider the impact between the UK and other EU entities. The terms of the relevant Double Tax Treaty (“DTT”) should be reviewed to determine if there is any reduction, or possibly even elimination, of the withholding tax obligation. There may also be a requirement to make a new or amended claim to the relevant tax authority too.
The Government’s announcement on their plan to ban the sale of petrol and diesel cars in the UK from as early as 2030 has left many businesses concerned about the cashflow impact of replacing business vehicles.
The Wealth Tax Commission have now published their final report which considers whether a UK Wealth Tax should be introduced, and if so, how this could be applied. Although the Chancellor was quoted in July 2020 as dismissing the introduction of a Wealth Tax, the deficit as a result of the COVID-19 pandemic has continued to increase and six months on the country is back in a state of lockdown with much of the economy closed for business. The Commission have estimated that a one off Wealth Tax could raise one-quarter of a trillion pounds.
Following the UK’s exit from the EU, both parties have reached an agreement regarding the details of the National Insurance rules to be applied between the EU states and the UK from 1 January 2021. This agreement largely replicates the current EU social security coordination regulations and aims to ensure workers who move between the UK and the EU are required to only pay into one country’s social security scheme at a time, usually the country where the work takes place. There are special provisions for multi-state and detached workers, with current rules continuing to apply to those protected by the Withdrawal Agreement.
*Updated 26 January 2021*
With the end of the festive season, the New Year is traditionally a time for us to reflect on the year just gone and identify areas for improvements which can be made in the next year. Whilst this is traditionally done on a personal sense (how to lose 40lbs in January!), this is also the perfect time to review your business processes to see if they are truly working for you and not the other way around!