June 2021 Tax Update

Upcoming Deadlines

P11d forms must be provided to relevant employees and HMRC before 6 July. The Class 1A National Insurance must be paid by 22 July.

Those who deferred their VAT payments from last year (VAT due between 20 March 2020 and 30 June 2020) have until 30 June to pay the amount in full. If you are unable to pay in full by that date you have until 21 June to join the deferral payment scheme online or until 30 June to call HMRC and agree a time to pay arrangement. Failure to do the above may result in late payment interest and a penalty.

For those who have been required to work from home since 6 April 2021 as a result of the Covid-19 restrictions and are not being reimbursed for the additional costs of using your home as your office can apply to HMRC for tax relief.

All employees should now have received their P60s for 2020/21… which they can provide to their tax advisor to make a start on their tax returns (hint hint). According to recent figures approximately one million taxpayers have already filed.

Capital Allowances Super-deduction

In March the government announced a ‘super deduction’ for companies claiming capital allowances – broadly, 130% for assets within the general pool and 50% for assets in the special rate pool.

The super deduction is available for purchases between 1 April 2021 and 31 March 2023 and is pro-rated where an accounting period straddles these dates. As with the previous First Year Allowances there are certain exceptions in the nature of the eligible assets (namely cars, second-hand assets and connected party transactions).

When assets in respect of which the ‘super-deduction’ has been claimed are disposed of, the relief is clawed back to the equivalent value of the disposal proceeds. If the company intends to sell the asset at some point in the future it may be more beneficial (subject to availability) to claim the Annual Investment Allowance, particularly if the asset is being acquired this year as the £1m limit has been extended until 31 December.
There are a number of nuances to this allowance (such as date of acquisition, disposal rules, and pro-rating calculation) which we would be happy to discuss with you should you have any queries.

Small Business Emissions

The government has launched a campaign to encourage small business to commit to net zero emissions by 2050. The new UK Business Climate Hub offer small businesses resources and advice to understand their emissions and how these can be cut in half by 2030 and further reduced to net zero by 2050.

Research and Development Expenditure

It has recently been reported that the government’s R&D tax credit scheme is failing to spur investment in innovation and investment. Relief for small business (fewer than 500 employees, less than €100m turnover or €86m in gross assets) is given as an additional 130% deduction of qualifying costs, for large companies’ relief is given at 13%.

R&D relief is available to companies that work on projects to make an advance in science or technology. The conditions for meeting the qualifying conditions for the company, the project, and the expenses are stringent, and it could be that this is deterring companies either from making the necessary investments or from realising their business may qualify for the relief.

Declaring Wrongly Claimed Coronavirus Support

HMRC have added a question to the 2020/21 self-assessment tax return to ask workers and businesses to declare whether they wrongly claimed emergency coronavirus support. The question refers to the Coronavirus Job Retention Scheme, the Self-Employment Income Support Scheme or “any other applicable HMRC coronavirus scheme”.

HMRC said that many of those who made incorrect claims may have done so honestly, finding out later found that their earnings were better than expected. Those who declare wrongful claims will have to repay them in full, but it is likely this could be done in instalments. HMRC have published details of the penalties that will apply for failing to declare a wrongful claim – broadly, these fall into the same categories as failing to notify HMRC of a chargeability to tax or for making an error in your tax return i.e. a maximum of 100%.

[cs_gb id=1263]