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Uncategorised

Please find below all the articles that have been categorised as 'Uncategorised'.

Student loans for 2021-22

Starting from 6 April 2021, there is a new type of undergraduate student loan that employers need to be aware of when operating payroll – the Plan 4 loan (SLP4). The new plan type has been necessary due to the Scottish government amending certain details regarding repayment, including the increase of the earnings threshold. SLP4 will apply to all new and existing Scottish borrowers. This means that Scottish borrowers that were in repayment before 6 April 2021 using the Plan 1 (SLP1) arrangements will need to be moved…

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Latest news round up

Off-payroll working

The extension of the off-payroll working rules to medium-sized and large organisations finally took effect on 6 April. The responsibility for making an employment status determination for each engagement where the worker’s services are provided through an intermediary now rests with the client receiving the services, i.e. the engager/hirer for affected entities.

The rules now apply to all public sector clients and, from 6 April, private sector companies that meet 2 or more of the following conditions:

– the annual turnover of more than £10.2 million;
– the company has…

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Tax relief for loans used for businesses

There has been an unprecedented amount of support for businesses struggling due to Covid-19. However, back at the start of the crisis there were delays in the various schemes being set up. Additionally, a high number of newer businesses were completely ineligible. Many company owners used personal borrowings to help keep the business afloat and pay employees, as banks pulled credit products from the market.

Let’s take a simple case study of a company owner who has two employees. She and her husband (not involved with the company) remortgaged…

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Dealing with an overdrawn Directors Loan Account

Many companies use 31 March as the accounting reference date. As such, now is a good time to review the position of directors’ current accounts for close companies.

It is a common misunderstanding that if the company charges a commercial rate of interest on any loan made to the participators or employees there are no tax consequences. In fact, whilst doing this does protect against a benefit in kind arising, there is a further consideration for the company.

A charge arises under CTA 2010, s. 455 where amounts are owing…

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Loss relief extension

The Budget saw an announcement that the loss relief provisions available to both unincorporated business and companies are to be temporarily extended. There are differences in the way this will operate between the two types of business vehicle.

Unincorporated businesses

The affected rules are those in ITA 2007, s. 64, i.e. “sideways” loss relief. This permits a trader to set off losses suffered in a tax year against general income of the same year, the preceding year, or both years. This is not automatic, and must be claimed or…

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Latest news round up

Budget

The Budget finally took place on 3 March 2021. None of the speculated tax changes, e.g. raising CGT came to pass, although the main rate of corporation tax will increase in 2023. Several allowances, such as the personal allowance and CGT annual exempt amount have been frozen until April 2026. Further detail of the Budget announcements were included in our Budget newsletter.

Covid-19

In terms of Covid-19 measures, details of the fourth SEISS grant have now been published. Additionally, a fifth tranche for the period from May to September…

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Venture Capital Trusts – are the dividends exempt?

When preparing a tax returns, it is easy to look at a dividend statement from a VCT and think “It’s exempt” and simply file it away. Of course, in most cases this is probably sufficient. However, sometimes a little more care is needed.

Dividend exemption

Where an individual aged 18 or over acquires qualifying shares up to the permitted annual maximum of £200,000, any dividends paid on the shares whilst the VCT remains approved are exempt from tax. In addition, if the VCT shares are newly issued, the individual may…

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Reporting Covid-19 support payments

A business receiving support payments for Covid-19 needs to ensure the receipt is correctly recorded as taxable income for corporation tax purposes. For unincorporated businesses using the cash basis, this is straightforward enough. However, where the accounts are prepared using GAAP, more care is needed.

Section 106 of Finance Act 2020 that payments received under the following schemes are within the scope of this:

– the coronavirus job retention scheme;
– the self-employment income support scheme;
– any other scheme that is the subject of a direction given under section 76 of…

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Import One-Stop Shop

One of the consequences of Brexit is that exports of goods from GB to customers based in the EU are now zero-rated as far as UK VAT is concerned. However, if the consignment is valued at more than £22 there will be an import VAT liability at the other end. This isn’t too much of a problem for B2B sales where the customer is VAT registered – they can simply claim back the VAT according to the particular process relevant to that country. However, for unregistered businesses and…

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Latest news round up

Covid-19

There have been relatively few announcements related to Covid-19 support this month. The only real announcement of note was an amendment to the terms of the Pay As You Grow scheme for repaying Bounce Back loans. Under the revised rules, a borrower will be able to take a six-month repayment holiday without needing to have made any previous instalments. Before the amendment, they would have needed to have made at least six payments before this was an option. Full details are available here.

Self-assessment

A welcome announcement in February…

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