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Spring 2021 Budget Highlights

08 March 2021 •

Here is a review of the headline announcements together with a reminder of the measures coming into force immediately, from 6 April 2021 and beyond.

Measures introduced immediately

Temporary Stamp Duty Land Tax (SDLT) cut

The temporary increase in the residential SDLT nil rate band in England and Northern Ireland to £500,000 has been extended until 30 June 2021. The nil rate band will reduce to £250,000 between 1 July 2021 and 30 September 2021 before reverting to £125,000 on 1 October 2021.

Coronavirus Job Retention Scheme (CJRS)

The furlough scheme will be extended until the end of September 2021. Employees will continue to receive 80% of their current salary for hours not worked up to a maximum of £2,500 per month and employer contributions are not required (except for NIC and pension contributions) until June 2021. From July, employers will be required to contribute 10% toward the cost of unworked hours and will increase to 20% in August.

Self-Employment Income Support Scheme (SEISS)

The government announced that the fourth SEISS grant covering February to April will be set at 80% of three months’ average trading profits capped at £7,500. This will be based on the tax return for 2019/20. The fourth grant will be paid in a single instalment and claims can be made from late April. The amount of the fifth and final grant covering May to September will be based on how much turnover reduced in 2020/21. If turnover falls by 30% or more the grant will be 80% of three months’ average trading profits capped at £7,500. If turnover falls by less than 30% the grant will be 30% of three months’ average trading profits capped at £2,850. The fifth grant can be claimed from late July.

Restart Grants

Non-essential retail businesses will be entitled a grant of up to £6,000 per premises and hospitality, accommodation, leisure, personal care and gym business will be entitled to a grant of up to £18,000 per premises.

Business Rates

The government announced that eligible retail, hospitality and leisure properties in England will continue to receive 100% business rates relief until 30 June 2021. The period to 31 March 2022 will see a 66% discount, up to a maximum of £2 million per business, for properties that were required to be closed on 5 January 2021 or £105,000 per business for other eligible properties.

Annual Investment Allowance

This measure will temporarily increase the limit of the Annual Investment allowance (AIA) from £200,000 to £1,000,000 for qualifying expenditure on plant and machinery incurred during the period 1 January 2021 to 31 December 2021.

Temporary VAT reduction for the tourism and hospitality sectors

The temporary reduced 5% rate of VAT for goods and services supplied by the tourism and hospitality sectors has been extended to 30 September 2021. The rate will rise to 12.5% between 1 October 2021 and 31 March 2022 before returning to 20% from 1 April 2022.  

Measures introduced from April 2021

Extended carry back of trading losses

The government will temporarily extend the period for which businesses can carry back trading losses from one to three years. This measure will have effect for company accounting periods ending in the period 1 April 2020 to 31 March 2022 and for tax years 2020/21 and 2021/22 for unincorporated businesses.

Super-deduction for plant and machinery

Additional relief will be available for qualifying expenditure incurred by companies between 1 April 2021 and 31 March 2023. Investments in new main rate assets will qualify for a 130% super deduction whereas investments in new special rate assets will benefit from a 50% first year allowance.

Off-payroll working (IR35)

Changes to the off-payroll rules were due to come into force on 6 April 2020 but this was delayed owing to the coronavirus pandemic. From 6 April 2021 all public sector authorities and medium and large private sector clients will be responsible for deciding if the rules apply and ultimately determining the worker’s employment status.

Inheritance tax nil-rate and residence nil-rate bands

The inheritance nil-rate bands will remain at existing levels until 5 April 2026.

Personal Allowance and basic rate limit

The personal allowance and basic rate limit will increase in line with inflation from 6 April 2021 to £12,570 and £37,700, respectively, but both will be frozen at this level until 5 April 2026.

Standard Lifetime Allowance

The standard lifetime allowance for pensions will be maintained at its current level of £1,073,100 for the tax years 2021/22 to 2025/26.

Taxation of SEISS grants

Future payments from the SEISS are to be taxed as income for the tax year in which they are received. Under the current legislation, a payment from the SEISS is taxed as income for the tax year 2020/21.

Measures introduced from April 2022 

VAT Thresholds

The current VAT registration and deregistration thresholds will remain unchanged for a period of two years from 1 April 2022 at £85,000 and £83,000, respectively.

Annual Exemption for Capital Gains Tax

The Capital Gains Tax annual exempt amount will be maintained at its current amount of £12,300 for individuals and personal representatives and £6,150 for most trustees of settlements between 2021/22 and 2025/26.

In the future

Corporation Tax

The rate of corporation tax will increase to 25% on profits over £250,000 from 1 April 2023. Companies with profits under £50,000 will continue to be taxed at 19%. Taper relief will be available for companies with profits between £50,000 and £250,000.

R&D Schemes

The government will consult to ensure that the UK remains a competitive environment for innovative research. This will include a decision on bringing data and cloud computing expenditure within the scope of the relief.

Interest harmonisation and penalties for late submission and late payment

The penalty regime for VAT and Income Tax Self Assessment (ITSA) will be reformed to target persistent non-compliance while being more lenient on occasional slip-ups. The reforms will come into force for VAT taxpayers from periods starting on or after 1 April 2022. The new regime will take effect for ITSA taxpayers who are required to submit quarterly updates though Making Tax Digital from accounting periods beginning on or after 6 April 2023. The new rules will apply to other ITSA taxpayers from accounting periods beginning on or after 6 April 2024.

Domestic reverse charge for the construction industry

25 February 2021 • HMRC News

If you buy or sell services in the Construction Industry Scheme the way VAT is collected from invoices, is changing from 1 March 2021.

The new domestic 'reverse charge' is an anti-fraud measure that shifts the liability for accounting for output VAT from the supplier (the “Intermediary Supplier”) to the customer (the “End-user). For those working in the construction industry this will now apply to invoices that would normally fall within the scope of CIS.

Who pays the VAT?

In effect intermediary suppliers receiving a service will pay VAT directly to HMRC instead of paying the supplier.

For VAT registered companies paying to receive building or construction services under the new domestic VAT reverse charge their ‘customer’ or ‘end user’ now accounts for the VAT.

Essentially it means a customer will receive an invoice from a supplier net of VAT, however the VAT is still liable to be paid directly to HMRC and not the supplier. The new regulations do not affect the ‘end user’ so normal VAT rules will continue to apply, this is your obligation.

Written Notification 

To ensure all intermediary suppliers understand their status businesses and what supplies are covered needs to be outlined in written documentation. This can be obtained in writing, either via a contract, an email or letter.

Applying the changes

As the new legislation comes into force from 1st March 2021 any projects that include construction services will now be subject to the VAT reverse charge. Below is handy flow chart outlining the process. 
If you would like to discuss how this affects your business we would be happy to discuss this further with you, or you can visit https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services.

For more information, contact us on 020 7731 6163 or email info@warrenerstewart.com.

Wishing you a Happy Christmas

16 December 2020 • Warrener Stewart News

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It’s been an unusual yet busy year for us here at Warrener Stewart. This year, in lieu of Christmas cards, we are donating to our chosen charity Glass Door Homeless Charity, who coordinates the UK’s largest open-access network of emergency winter shelters and support services for people affected by homelessness.

Thank you for supporting us throughout 2020 – we look forward to working with you in brighter times in the New Year and beyond. Over the Christmas period our offices will be closed from end of play on Thursday, 24 Dec 2020 and reopen on Monday 4 Jan 2021.

Welcoming our newest apprentice

10 November 2020 • Warrener Stewart News

Warrener Stewart extends a warm welcome to the newest member of our team: Rajeev Sriskantha.

Joining Warrener Stewart to assist our senior staff with bookkeeping and VAT returns for clients mainly in the energy sector, Rajeev supports in the review of client-submitted data, flagging queries and preparing returns, as well as capturing and reconciling entries on the bookkeeping side. His role helps us to enable clients to focus on the running of their business while we take care of their finances.

Rajeev has long held an interest in finance, completing work experience in the accounting department of his local GP surgery. Alongside his work, Rajeev is pursuing his AAT level 3 qualification, attending college once a week.

A Londoner himself, Rajeev chose to apply to Warrener Stewart based on the case studies of clients we’ve worked with.  After completing his qualifications, Rajeev hopes to become a chartered accountant. “Being an apprentice gives me the best platform to gain experience,” he says.

Outside the office, Rajeev is a keen sportsman, playing football, badminton and cricket and has a strong interest in electronics, building circuit boards from scratch.

We look forward to seeing Rajeev’s career develop throughout his time with us.

 

Five years at Warrener Stewart: Freddie Hollom qualifies as CTA

28 October 2020 • Warrener Stewart News

Congratulations are in order for our longstanding team member Freddie Hollom, who has recently qualified as a Chartered Tax Advisor.

Freddie has been with Warrener Stewart for five years, during which time he has completed all his qualifications, including ATT.

His most recent qualification took three years to achieve, for which Warrener Stewart allowed generous time off for studying and exams. Freddie sat his final exam consisting of a 2500-word essay in July at the height of the Covid-19 lockdown, in isolation at his home. An invigilator and camera had access to his computer! Despite the unusual circumstances, Freddie received his results in just six weeks.

Freddie now has a roster of his own clients, including high net worth individuals and SMEs, assisting them with UK personal tax and corporation tax. He also works closely with Damian Talbot on tax planning exercises.

Freddie, who has worked hard to reap the rewards of his studies and is a valued member of our team, still finds time to pursue his love of steam engineering. Having previously worked in museums, when not in the office, he volunteers at the London Museum of Water and Steam.

From music to money management: Ruaridh Oglivie joins Warrener Stewart as graduate accounts trainee

06 October 2020 • Warrener Stewart News

A wide variety of small to medium-sized clients, many of whom are located in and around Warrener Stewart’s Fulham base, was enough to lure Scottish born Ruaridh Ogilvie south of the border to start as our latest graduate accounts trainee. 

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Ruaridh applied for a job with us last year, after studying music at Newcastle University and incorporating several business and accountancy modules into his degree. With remarkable commercial mindedness, he recognised his potential to commence a career in the financial sector early on. “I really enjoyed the freedom and variety of studying music, but also wanted to continue learning about business having studied it at A Level”, he explains, “so I decided to study business and accountancy too.”

Armed with this knowledge and experience, Ruaridh looked at the big four accountancy firms and quickly realised he wouldn’t get much in the way of client contact time as a graduate. A Google search for SME accountants in London put Warrener Stewart on his radar.

Ruaridh was tempted by the breadth of our services and the variety of clients we work with, including the instrument manufacturer Percussion Play, as he is a keen drummer. Positive client testimonials and case studies sealed the deal, so he proactively reached out to Warrener Stewart. Following an interview in January 2020 with Colin and Nick, he was offered a job with a start date in early September. When Covid-19 hit, he was reassured that he could still take up his place with us when the time came.

Since starting, he has been working in the office with Jess and James in audit, and learning about the software he’ll need use in his day-to-day role. Across September and October, he will also be completing a course of virtual learning to begin his training to become an ACA qualified accountant. We wish Ruaridh the best of luck as he embarks on his new career and look forward to seeing him forge his own path at Warrener Stewart.

 

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