The UK Government announced a new capital allowances relief. From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to claim:

• 130% super-deduction capital allowance on qualifying plant and machinery investments
• 50% first-year allowance for qualifying special rate assets

This super-deduction is designed to promote companies to invest in productivity enhancing plant and machinery. It is important businesses understand and take advantage of these generous new reliefs while they are available.

The super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest, ensuring the UK capital allowances regime is amongst the world’s most competitive. There is no upper limit set for the expenditure, so as long the expenditure is incurred between 1 April 2021 – 31 March 2023. The enhanced relief also does not allow for plant and machinery that will be made available for leasing (including landlord fixtures within rented property) and excludes cars.

The pandemic has been a big blow for a lot of businesses, if you have been looking at equipment to help you grow, now may be the time to use this relief. If you are not sure on whether it is the right time to make a purchase, or if the equipment qualifies for the super-deduction relief, message us on nicola@crossaccountingservice.co.uk or if you would prefer to chat, call Cardiff: 02920 653 995 or Bridgend: 01656 530 063. Our team is always happy to help.

We are seeing a lot of restrictions being eased and it is the closest to normality for a very long time. The bonus of the sunshine is something to make the most out of. While we enjoy ourselves and plan for an entertaining summer, we should not forget about business. We should take steps in to planning on how to bounce back stronger.

As the country opens slowly and the opportunity arises to mingle with other business owners, you should make time to try and attend where businesses are likely to be. Nearer the end of 2021, we are likely to see trade fairs taking place, with all businesses on the same boat, getting the business name out there.  

If you do not have the budget or time to be a part of the trade show, then you should try and attend as a visitor. It will be a great way to connect and being a visitor will give you the freedom on your timing as you can leave when you feel like you have made the most out of the day. Who knows, you may even bump into some familiar faces, for a long-awaited catchup.

Our usual go to for these types of events are The Welsh Business Show, Zokit and Introbiz. Some may have updated dates for the events, some may be posting later. Keep an eye out on social media as we are sure there will be a buzz. Click here to look at what is out there with trade fairs https://10times.com/cardiff-uk/business-consultancy/tradeshows

To get your company to achieve the highest levels, you may need a hand by employing staff. This may seem a scary step to take, especially if this will be your first time employing someone. There are many things to consider. Due to the disruption of jobs during the pandemic, the government have introduced a Kickstart scheme. This scheme is to provide funding to create new jobs for 16- to 24-year-olds on Universal Credit.

It does not matter on the size of your business, everyone can apply. The funding will cover:

·        100% of the National Minimum Wage (or the National Living Wage depending on the age of the participant) for 25 hours per week for a total of 6 months

·        Associated employer National Insurance contributions

·        Minimum automatic enrolment pension contributions

Further funding is available for training and support so that young people on the scheme can get a job in the future.

More info on how to apply, please click here https://www.gov.uk/guidance/apply-for-a-kickstart-scheme-grant

If you already have staff, and are bringing them back in to work, remember the furlough scheme is flexible and available until 30 September 2021. You will have to contribute for any hours worked by your employees. From 1 July 2021, the level of grant will be reduced, and you will be asked to contribute towards the cost of your furloughed employees’ wages. To be eligible for the grant you must continue to pay your furloughed employees 80% of their wages.

You can continue to choose to top up your employees’ wages above the 80% for the hours not worked at your own expense. This is completely up to you and not a requirement.

Let us try and finish 2021 strong and push past this pandemic. It has been tough for everyone, but with planning and preparing, we can start looking ahead.

All the important rates and threshold for the tax year 2021/2022

National Minimum Wage

This takes effect from 01 April 2021 and all workers are entitled to.

Please note the age rate bracket has changed from previous years also.

PAYE Tax Rates and Threshold

These rates depend on the amount of income you earn.

Employment Allowance

Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to the annual allowance amount.

Statutory Sick Pay (SSP)

The same weekly SSP rate applies to all employees. However, the amount you must actually pay an employee for each day they’re off work due to illness (the daily rate) depends on the number of ‘qualifying days’ they work each week.

Dividend Allowance

You also get a dividend allowance each year. You only pay tax on any dividend income above the dividend allowance.

Mileage Allowance

The allowed deductible rate per mile for business use.

Full list of services for when you must and must not use the reverse charge.

When you must use the reverse charge

You must use the reverse charge for the following services:

·         constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services

·         constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence

·         installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure

·         internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration

·         painting or decorating the inside or the external surfaces of any building or structure

·         services which form an integral part of, or are part of the preparation or completion of the services described above - including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works

When you must not use the reverse charge

Do not use the charge for the following services, when supplied on their own:

·         drilling for, or extracting, oil or natural gas

·         extracting minerals (using underground or surface working) and tunnelling, boring, or construction of underground works, for this purpose

·         manufacturing building or engineering components or equipment, materials, plant or machinery, or delivering any of these to site

·         manufacturing components for heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems, or delivering any of these to site

·         the professional work of architects or surveyors, or of building, engineering, interior or exterior decoration and landscape consultants

·         making, installing and repairing art works such as sculptures, murals and other items that are purely artistic signwriting and erecting, installing and repairing signboards and advertisements

·         installing seating, blinds and shutters

·         installing security systems, including burglar alarms, closed circuit television and public address systems

It has been great to see the UK finally move in a positive direction out of lockdown. While we can look forward to restrictions loosening, we need to remember the financial new rules coming in April. It is always this time of year when the financial rules start to come in to place, the budget will be announced this week, and we will digest this for you to see what kind of economical shape we will be in, so keep your eyes for that one.

IR35 (Off Payroll Working)

The long overdue of IR35 also known as off payroll working, was initially announced to come in, in April 2020, however due to the pandemic, this has been pushed back to April 2021.

This will affect you if you are in the private sector from any industry and provide a service through an intermediary such as your own limited company, a partnership or an individual who is on self-assessment and the client could constitute an employer/employee relationship.

So, why are these rules coming in?

The rules are coming into level the playing field and to make sure that workers who would have been an employee if they were providing their service directly to the client, pay broadly the same tax and national insurance contributions as employees. You could claim travel expenses and other expenses before, which would lower your tax liability, now this will not be allowed.

If you are a worker and your client is in the private sector, it is your responsibility to decide your own employment status for each contract. Things that will help decide your employment status are;

·         Who has the control? Can you reject certain projects and decide your working days?

·         Do you use your own tools?

·         Do you have public liability insurance?

If you are a worker and your client is in the public sector like a school or library, it is their responsibility to decide your employment status. You should be told of their decision; we have seen a large number of the larger companies starting to make changes to their arrangements with their subcontractors in preparation for this.

Reverse Charge VAT

If you are in the construction industry, there are changes coming in from

1^st March 2021 to the way you apply VAT to your invoices. If you are VAT registered in the UK, and supply building and construction industry service, if the following applies for you, then you will have to use the reverse charge;

·         Your customer is registered for VAT in the UK

·         Payment for the supply is reported within the Construction Industry Scheme (CIS)

·         The services you supply are standard or reduced rated

·         You are not an employment business supplying either staff or workers, or both

·         Your customer has not given written confirmation that they do not make onward supplies of the building and construction services supplied to them, also known as an end user.

So, that might have been a bit of jargon and hard to follow, so let us break this down in simpler terms.

Example 1

If Alpha Ltd are selling a standard or reduced rated service for building and construction to Joe Bloggs (this can be a company as well), and Joe Bloggs is VAT and CIS registered and has not given Alpha Ltd written confirmation that he is an end user, then the reverse charge VAT must be used.

Alpha Ltd bills Joe Bloggs;

Net - £1,000

VAT - £0

Gross - £1,000

(Reverse charge applies)

Example 2

If Alpha Ltd are selling a standard or reduced rated service for building and construction to Joe Bloggs, and Joe Bloggs is not VAT registered, then the reverse charge must not be used, and VAT must be charged as normal.

Alpha Ltd bills Joe Bloggs;

Net - £1,000

VAT - £200

Gross - £1,200

The services you may provide that are subject to reverse charge are;

·         constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services

·         installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure

Please click here for the full list of services.

What you will need to do

If you are needing to use reverse charge VAT then you will need to verify some of your customers information. You will need to verify;

·         If your customer has a valid VAT number – (Click here to verify)

·         If your customer is reporting under CIS. (This can be verified using the construction industry scheme online service)

Sole trader:

o   Name

o   Unique taxpayer reference

o   National Insurance number

Company:

o   Name of Company

o   Company’s unique taxpayer reference

o   National Insurance number

·         Ask your customer to confirm whether they are an end user or intermediary supplier (you will need written confirmation)

These rules will be enforced by HMRC, so you will have to take care to do this correctly. If you are facing problems with your own subcontractors with IR35, or if you are not sure whether this reverse charge VAT applies to you, please get in touch with us. This can be complicated to get your head around. 

It has been a tough past 12 months for everyone. A lot of our plans have been ruined due the ongoing pandemic and we are still not sure when we are expecting better days. We should not let 2021 be a repeat of 2020. The best plan is to move forward and move better.

We are one month down and 11 more to go, although we are probably keeping count on the number of lockdown days we are in. 2021 shouldn’t be another year of standstill, this should be the year to plan.

There is support out there available for the economic environment to soften the blow. The furlough scheme is still available at 80% to help cover wages for non-working staff. The Welsh government has helped with the economic resilience fund. For full details of the grants, click here to see what is available.

Is there something you have been wanting to do for your business, but have held back on doing so? You should write down your goals and set a plan to achieve this. We need to make 2021 a positive stepping stone to achieve the most we can for our business. Is there a sales target you want to hit? Is there software or machine you want to purchase? Writing down what you will need for this is the best way to plan.

You should sort out your goals in short term and long term. What is it that you want to achieve in the next month, or 6 months, or 1 year or 5 years?         Click here for a great template that you can work off to get started.

Set your Goal what do you want to achieve in one years time, 3 years time,

or 5 years time.      WRITE IT DOWN

Then piece together what you need to do in small manageable tasks what you need to do to achieve this goal.   It does not even have to be a goal for the business, but a personal goal that the business can help you materialise.

Watch your costs, time runs away with us so easily, and so do the costs. Make sure you are tracking these. If you need to renew a contract, do so. 

It’s a telephone call, it’s a form. What have you got to lose? But to gain you will.  Don’t be afraid to negotiate even with the large companies.

What you want to say at the end of this year 2021, I not only lived through a pandemic and survived it, but I made something of my year that is 2021.

We have to plan and overcome this pandemic, we have to strive to progress.

If you want help with budgets or cashflow, get in touch with us and we can discuss on 02920 653 995. You can find all our latest information on www.crossaccountingservice.co.uk

If you have sold an asset that has increased in value, then Capital Gains Tax will be due. It is the gains that you will pay tax on and not the amount of money received. When Capital Gains Tax is due, it is more than often, when a house has been sold. Although Capital Gains Tax will be due when you have sold a painting, stocks and shares, sale of a business etc…

So, for example, if you have bought a house for £120,000 and sold it for £190,000 then Capital Gains Tax will be due on £70,000. You do not pay any Capital Gains Tax if you have sold a house that is your main home and residence. You also do not have to pay Capital Gains Tax if all your gains in a year are under your tax-free allowance.

Your tax-free allowance also known as the Annual Exempt Amount for Capital Gains for this current tax year (2020/2021) is £12,300.

You do not pay Capital Gains Tax on assets you give or sell to your husband, wife, or civil partner, unless,

• You separated and did not live together at all in that tax year
• You gave them goods for their business to sell on

If they decide to sell later, they may have to pay tax on any gain. Their gain will be calculated on the difference in value between when you first owned the asset and when they sold it. They should keep a record of what you paid for the asset. 

The rules have changed from April 2020.

 If you sell a house, you must report and pay any tax due within 30 days of selling. Before you had until your next self-assessment to report and pay. If you have not reported and paid any gains within 30 days of selling, HMRC can charge penalties and even interest on any late payments.

You will have to register and you’ll need a Government Gateway user ID and password to set your account up or sign in. If you do not have a user ID, you can create one the first time you sign in.

You will need the following information at the ready,

• Property address and postcode
• Date you got the property
• Date you exchanged contracts when you were selling or disposing of the property
• Date you stopped being the property’s owner (completion date)
• Value of the property when you got it
• Value of the property when you sold or disposed of it
• Costs of buying, selling or making improvements to the property

Once you have an account you can sign in at any time to report Capital Gains Tax on UK property or see any returns you have already sent.

Once you have sent your return to HMRC, you will be notified on how much you owe in Capital Gains Tax, how to pay and when to pay by.

How much do I pay?

Rates on Capital Gains varies. If you are a higher rate taxpayer you will pay,

• 28% on your gains from residential property
• 20% on your gains from other chargeable assets

If you are a basic rate taxpayer, the rate depends on the size of the gain and your taxable income.

1. Work out your taxable income
2. Work out your taxable gains
3. Deduct your annual exempt amount from your taxable gains
4. Add this to your taxable income
5. Work out which tax rate you pay

If the amount falls within the basic income tax band (£12,501 to £50,000 for 2020/2021) you will pay,

Example

With the latest announcement and ever-changing forms of support, it looks like the Government have given in to the pressure and will continue with the furlough of 80%. The furlough scheme also known as the job retention scheme is to last until March 2021. This is to support businesses with the cost of employees’ wages as it seems likely to be in and out of a ‘firebreak’ lockdown.

Coronavirus job retention scheme

This is like the original scheme when it started up back in March. The scheme contributes the wages of people who cannot do their jobs, either because their workplace is closed, or because there is no longer enough work for them.

About 10 million jobs have already been claimed for, with an estimated two million people still on furlough at the end of October.

The government will pay 80% of salary for any unworked hours, capped up £2,500 per month, with employers responsible to pay pension and National Insurance contribution. If staff are on furlough, they cannot undertake any work for you. Any work done by staff, will then be the responsibility of you paying 100% for hours worked.

Rishi Sunak, the chancellor said the furlough extension meant the plans to pay a £1,000 job retention bonus to companies for every furloughed staff member they kept on until the end of January would now be scrapped. 

Support for the Self-Employed

Support for the self-employed will also be increased for November to January to a similar level as the furlough scheme. So, the grant will cover 80% of profits up to a total limit of £7,500. Please note that this grant will be treated as income, and tax implications will apply.

Applications will be open from 30 November 2020 for those who are eligible and have been affected by coronavirus. The government's original plan was for this third grant to only cover 40% of average monthly trading profits, with a limit of £3,750 in total. This was then updated to cover 55% of trading profits, but just a few days later was extended again to 80%.

Economic Resilience Fund 

These packages of support are designed to cover as much of the Welsh Economy as possible and are mainly focused around providing financial support for businesses.

There are two types of fund available. You will have to choose the correct one that applies to you.

Lockdown Non-Domestic Rate Grant

Grant 1
Business can get a grant of £5,000 for retail, leisure and hospitality businesses that have been forced to close and occupy properties with a rateable value of between £12,001 and £51,000.

Grant 2 
A grant of £1,000 is being made available to ALL businesses eligible for small business rates relief in Wales with a rateable value of up to £12,000

• Businesses eligible for small business rates relief that have been subject to local restrictions for 3 weeks or more and have been materially impacted (>50% reduction in turnover) up to the 23rd October will be eligible for a further grant of £1,000

•  and a discretionary enhanced £2,000 top-up grant will be made available on an application basis for those businesses with a rateable value of £12,000 or less who are forced to close by the firebreak lockdown.

You are not eligible for the Lockdown Non-Domestic Rate Grant if, you are eligible for, or have received, the Lockdown Discretionary Grant from your Local Authority.

The second of the fund is the Lockdown Discretionary Grant.

Lockdown Discretionary Grant

Grant amount 1

A discretionary grant of £1,500 is available to assist businesses that have:
•    Been forced to close as a result of the national firebreak lockdown
•    OR are able to demonstrate that the national firebreak lockdown will result in at least a 80% reduction in their turnover for that period

Grant amount 2

a discretionary grant of £2,000 is available to assist businesses that have:
•    Been forced to close as a result of the national firebreak lockdown
•    OR are able to demonstrate that the national firebreak lockdown will result in at least a 80% reduction in their turnover for that period

AND 

have been subject to local restrictions for 3 weeks or more up to the 23rd October and experienced at least a 50% reduction in their turnover for that period.

You cannot apply for both Grant 1 and Grant 2.
You are not eligible for the Lockdown Discretionary Grant if you are eligible for, or have received, the Lockdown Non-Domestic Rate Grant from your Local Authority, if you have 50 or more employees and If the business generated less than 50% of your income, the business must be your main source of income.

The grant will be open to applications from the timeframe of 28th October to 20^th November 2020 or when the fund is fully committed.

The Local Authority will deal with applications on a first come first served basis. This may lead to applications not being appraised after they have been submitted if the fund is fully committed.

The Local Authority aim to process grant within 30 days of receiving the application. If your application is unsuccessful, you will receive an email outlining the reasons for rejection. There unfortunately is no appeal process available if unsuccessful.