Business Owners will most likely be aware of the important Inheritance Tax (“IHT”) relief currently available on the value of their businesses. Business Relief (“BR”) can relieve the full value of the business and it has long been recognised that the policy objective behind the relief is to prevent the breaking up or sale of businesses on death. Whilst this may be hugely advantageous for all businesses, the benefit is perhaps most keenly felt by family businesses where the legacy is as much about heritage and history as it is about a continuing trade.
We are in the process of setting our budgets for this year and my mind instantly flipped back to this time last year. No-one could have foreseen the year that was about to descend upon us. The three-week lockdown from 23rd March 2020 feels like a distant memory. I am writing this now from my fully operational home office that I didn’t have a year ago. I left the office on the afternoon of 23rd March to not return for over 6 months and even that was for just a day. As the virtual finance director, I had the ability to leave the office, go home, plug in, and pick up where I left off.
The Treasury and Chancellor previously suggested that more effective tax changes would be introduced after undertaking consultation and seeking comment on the output from such consultation exercises. Therefore, instead of this being lost in the Budget Announcement a separate date, Tax Day, was set for the consultation announcements to be delivered – 23 March 21.
Despite the global mobility issues Covid-19 has caused during 2020, UK companies have still been presented with opportunities to work overseas. In particular, we have seen UK clients working in Norway, Denmark, Germany, UAE, Saudi and Taiwan, just to name a few. When any work is undertaken in an overseas territory, it is important to remember that UK companies must remain compliant with the local tax laws and any resultant filing obligations, in addition to their UK tax obligations. Additionally, it is evident that overseas authorities are actively seeking to ensure that non-resident companies are compliant, paying the required taxes due, and filing the necessary returns by monitoring their days spent in country. Some authorities are more advanced, like Norway who have a dedicated tracking system.
Even with COVID19 overshadowing everything during 2020, Brexit did not exactly creep up on exporters on 1 January 2021. However, with the EU-UK Trade and Cooperation Agreement only being finalised on Christmas Eve, UK businesses had very little time to prepare for the reality of Brexit. It is little wonder, therefore, that we have had all of the headlines in the first few months of 2021 around delays at the ports, rotting food on lorries and empty shelves in stores. Even the UK’s beloved “Percy Pig” was threatened by EU “red tape”!
In a bid to support UK business growth and employee retention, the government has announced they will be reviewing the HMRC approved Enterprise Management Incentive (“EMI”) share scheme with a view to making EMI accessible to more businesses.
As we approach the end of the 2020/21 tax year, we will shortly be in the P11D reporting window for employee benefits. While completing P11Ds may be something that you have done for as far as you can remember, it may be worth considering moving to the Payrolling Benefits scheme from April 2021 to streamline and simplify your employee benefit reporting.
Following on from the Budget that was delivered by the Government yesterday, Wednesday 3rd March, it has now been confirmed that Coronavirus Job Retention Scheme (CJRS) will be extended until September 2021.
The cost to the taxpayer of Covid by the end of the next financial year is predicted to be £407 billion, much of which has been funded by debt.
Following Rishi Sunak’s budget announcement earlier today the temporary reduced rate of 5% VAT for the Tourism and Hospitality Sectors has been extended for a further 6 months until 30th September 2021. Furthermore, an interim rate of 12.5% will be introduced for the sector from 1st October 2021 until 31st March 2022. Thereafter the standard rate of VAT will apply again.
As we find ourselves in another National lockdown, businesses may be questioning whether we will see another delay to the implementation of the IR35 Off-Payroll Working changes due to come in from April 2021. This however is wishful thinking as we hear the Government has pledged its commitment to introducing the rules as planned with Parliament having already passed the legislation.
The construction sector has experienced a sustained period of challenge, the weak period of trading many experienced Q2 to Q3 2020 due to Covid has caused finance challenges to continue. Whilst some of these challenges were relieved by good cash management, payment holidays and changes to compliance requirements, the upcoming 2021 Budget announcement and the ongoing Covid problem means now is the time to ensure you are best placed to overcome any impending hurdles.
Before the scheduled Autumn budget, advisors and taxpayers alike were bracing themselves for a hike in the rate of Capital Gains Tax (“CGT”) as well as the very real possibility that some reliefs might be withdrawn altogether. For example Business Asset Disposal Relief (“BADR”), known previously as Entrepreneurs’ Relief. When the budget was pushed back to Spring there was an audible sigh of relief but with a number of recent budgets containing surprise announcements, it is important to consider any possible changes ahead of budget day on 3rd March.