longden-and-co

Detailed Autumn Budget 2025 Summary and Tax Planning Impact

Wed, 10 Dec 2025 09:54:23 GMT

Detailed Autumn Budget 2025 Summary and Tax Planning Impact

Following the Autumn Budget statement and recent policy discussions, we have compiled a detailed breakdown of the key legislative changes that will significantly affect your personal income, investments, and business strategy over the next few years.

2. Business & Employment

3. Welfare Changes

Making Tax Digital (MTD) for ITSA: A Phased Approach

Tue, 17 Sep 2024 15:40:18 GMT

The move to Making Tax Digital for income tax from 2026 will cost sole traders and landlords on average £350 to set up the correct reporting system.

HMRC estimates that the new MTD rules will result in an average annual additional cost of £110 for those reporting within the £30,000 to £50,000 threshold, while those with income over £50,000 will face transitional costs of £285, with ongoing costs of £115 a year.

Up to 780,000 people with business or property income over £50,000 will have to report through the MTD for ITSA service from April 2026 with a further 970,000 set to sign up from April 2027 when the scheme extends to those with income between £30,000 and £50,000.

Under MTD for income tax, landlords and sole traders will have to report income on a quarterly basis but the government dropped the requirement for a fifth report consolidating the annual information, a move announced at the Autumn Statement last November.

The extension of MTD is set to raise an additional £120m in tax in the first year of operation, rising to £465m in 2027-28. The new reporting requirements are designed to reduce the level of errors and help to close the tax gap when they come into force from April 2026.

HMRC estimates a transitional cost to business of around £561m and a net increase in the continuing costs of tax compliance of around £196m for those businesses mandated to use MTD for ITSA.

Transitional one-off costs will include time spent in familiarisation with the new MTD reporting with digital record keeping and quarterly submission of information, in-house training, the purchase of new hardware or upgrading of existing hardware and additional accountancy or agents' costs. Transitional costs can be offset against the business' profits for tax purposes.

Ongoing costs for business will be made up of the cost of subscriptions to MTD compatible software systems, additional time for making quarterly updates, and the cost of bridging software for those who want to continue using spreadsheets. Software and agent costs for business purposes, are tax deductible.

HMRC estimates IT and non-IT costs for this next phase of MTD expansion will be in the region of £500m to the end of March 2028.

'MTD for ITSA is intended to help businesses get their tax right, with mandatory use of digital record keeping and using MTD compatible software to provide updates and returns digitally,' HMRC said.

'These measures are expected to improve businesses' experience of dealing with HMRC as managing their tax affairs will be simpler. Once businesses are used to operating the new MTD processes, we anticipate that they will find that MTD makes it easier for them to get things right and reduce errors.'

At the moment, original plans to extend MTD for ITSA to those with income below £30,000 are on hold, while HMRC said it ‘remains committed’ to extending the scheme to partnerships.

To be fully compliant and set up, please get in touch: lee@longdencompany.co.uk .

MTD for income tax will cost landlords £350 to implement

Mon, 04 Mar 2024 18:42:06 GMT

The move to Making Tax Digital for income tax from 2026 will cost sole traders and landlords on average £350 to set up the correct reporting system.

HMRC estimates a transitional cost to business of around £561m and a net increase in the continuing costs of tax compliance of around £196m for those businesses mandated to use MTD for ITSA.

HMRC estimates IT and non-IT costs for this next phase of MTD expansion will be in the region of £500m to the end of March 2028.

'MTD for ITSA is intended to help businesses get their tax right, with mandatory use of digital record keeping and using MTD compatible software to provide updates and returns digitally,' HMRC said.

At the moment, original plans to extend MTD for ITSA to those with income below £30,000 are on hold, while HMRC said it ‘remains committed’ to extending the scheme to partnerships.

To be fully compliant and set up, please get in touch: lee@longdencompany.co.uk .

HMRC’s more detailed guidance can be found using this link: https://www.gov.uk/government/publications/extension-of-making-tax-digital-for-income-tax-self-assessment-to-sole-traders-and-landlords/making-tax-digital-for-income-tax-self-assessment-for-sole-traders-and-landlords

Average earner will be £450 better off from Saturday

Mon, 08 Jan 2024 14:03:51 GMT

The Chancellor’s cut to national insurance comes in from Saturday 6 January, reducing tax bills in January pay packets

The 2p cut to National Insurance will see the rate for employees cut from 12% to 10% from Saturday, with the average worker earning £34,963 saving £447.86 in for Class 1 contributions over the year. This amounts to £8.61 a week.

According to Quilter, due to the freeze on tax thresholds, which is set to stay until 2028, workers will be just £2.68 better off a week, or saving a total of £139.46 over the year, assuming the government had raised thresholds in line with inflation.

Rachael Griffin, tax and financial planning expert at Quilter said: ‘Getting more money into people’s pockets is key, and thawing the frozen income tax thresholds could help considerably.

‘With an election rapidly approaching, the Spring Budget will likely be the Chancellor’s final opportunity to make any vote swaying announcements and income tax is widely rumoured as being top of the agenda to curry favour with voters – particularly younger cohorts.’

According to the Office for Budget Responsibility (OBR), by the 2028/29 tax year there will be approximately 7.5 million taxpayers paying 40% tax if the brackets remain frozen. This is almost double the number in the 2019/20 tax year when 3.8 million people paid the higher rate.

Griffin said: ‘For the time being, the uptick in monthly take home pay following the NI cut will help ease the strain on people’s personal finances - albeit only marginally.’

The cut to NICs will impact 29 million working people and will cost the Treasury approximately £9bn a year.

Impact of NIC cuts

*Average Salary

NI contributions for the self-employed are also being reduced from 9% to 8% on any profits between £12,570 and £50,270. This will impact approximately two million people.

Owner managers will have to give HRMC dividend breakdown

Mon, 31 Jul 2023 08:00:02 GMT

HMRC will be given extra powers to collect information about the amount of dividend payments earned by owner managed business directors while employers will have to report the number of hours worked by individual employees

From April 2025, there will be new rules on dividend disclosure. Anyone involved with an owner managed business will need to use their self assessment tax return to split out the amount of dividend income received from their own companies from other dividend income, and the percentage share they hold in their own companies.

HMRC will request specific information on the SA102 form related to the value of dividends and percentage shareholding in a close company of which the individual is a director.

Draft legislation confirms that the changes will come into effect from tax year 2025-26 and employers will be required to provide detailed information about how many contracted hours are worked by employees using real time information PAYE reporting.

It is not clear why HMRC needs this level of information as companies already need to report national minimum wage liability and employees paid outside the minimum wage can be paid whatever rate the company wants to pay. HMRC said the data collected would ‘help improve government support for the labour market’.

It is also part of wider attempts to clamp down on tax evasion with better ‘compliance’ cited as an important objective after investigations activity levels are still recovering from the pandemic delays.

The draft legislation on the hours worked issue appears to pre-empt objections, stating: ‘PAYE regulations may include provision requiring an employer to provide any information that is specified or described in regulations made by the Commissioners (whether or not that information is also relevant to the assessment, charge, collection and recovery of income tax in respect of PAYE income).’

Finally, taxpayers who are self-employed will need to provide information on the start and end dates of their self-employment using their self assessment tax return.

However, HMRC had to scale back their initial plans after receiving pushback from stakeholders in the original consultation in 2022. As a result, the tax authority has dropped plans to collect data on employee job titles, employees’ precise working location and details about locations of business’ offices and factories based on a geographic location, as well as details about the precise type of work undertaken by individual self employed workers.

In the consultation outcome, the government said it would ‘look to take a measured and proportionate approach to collection of new data. The government intends to progress options where customers already hold the data, whilst keeping data collection requirements under review for other options where data is not already held or it would potentially add significant administrative burden to provide data in the format proposed’.

Following negative feedback from respondents to the consultation, plans to collect data on the occupations of individual taxpayers employed in companies was dropped as this was described as unnecessary data which would not increase tax take and questions were raised about potential penalties as failure to comply would not affect what tax was paid.

The collection of employee location data based on working location was also criticised, particularly as more employees work on a hybrid basis or remotely, and there was no correlation between location and tax liability.

Plans to drill down into the business sector activities of the self employed were also abandoned as this was felt to be excessive information collection which would add to red tape when these taxpayers were already under pressure with the tough trading environment.

Stakeholders stressed that HMRC already held vast amounts of data which could be used instead to build a broader picture of the self employed sector and could not see any justification for collecting this information unless it was for use across other government departments.

There will be a penalty of £60 for failure to comply with the legislation.

Corporation tax: small profits rate and marginal relief

Mon, 17 Apr 2023 16:54:21 GMT

Calculating the small profits rate after the increase in corporation tax to 25% requires a complex calculation.

After an eight-year hiatus, the small profits rate and marginal relief kicked in for companies with profits between £50,000 and £250,000 from 6 April.

Before 1 April 2015, there were two main rates of corporation tax. The main rate applied to companies if taxable total profits exceeded an upper limit and the small profits rate applied if total profits fell below a lower limit. Marginal relief was given to companies whose total profits lay between the lower and the upper limits in order to smooth the transition between the two.

Between 1 April 2015 and 31 March 2023, these separate rates were merged into one main corporation tax rate, so the small profits rate and marginal relief rules became redundant and were repealed.

This article provides an introduction to the new rules and how they work in practice.

Basic rules

There are three main situations that can arise:

(1) where corporation tax (CT) is calculated using the main CT rate with no deduction for marginal relief;

(1) where CT is calculated using the main CT rate with a deduction for marginal relief; and

(2) where CT is calculated using only the small profits CT rate.

Main CT rate with no deduction for marginal relief

A company’s corporation tax is calculated using the main CT rate with no deduction for marginal relief in all circumstances where a company’s augmented profits exceed the value of the upper limit.

The upper limit for FY 2023 is £250,000 for a standalone company.

In group and certain other situations of common control, the upper limit must be divided by one plus the number of companies that are associated with the taxpaying company. Augmented profit is a wider measure of profit than taxable total profits and is defined below.

Small profits CT rate

The small profits CT rate is being reintroduced at a rate of 19% with effect from 1 April 2023; however, companies that qualify to calculate CT at the small profits rate will see no change in their effective tax rate because the main rate of tax for FY 22 is also 19%. The small profits CT rate can be used if:

(1) the company’s augmented profits do not exceed the lower limit;

(2) the company is UK resident in the accounting period; and

(3) the company is not a close investment-holding company in the period.

The lower limit for FY 2023 is £50,000 for a standalone company. This limit must be divided by one plus the number of associated companies in the group and certain other situations of common control. No marginal relief deduction is given where the small profits rate applies.

A close investment-holding company is, very broadly, any close company unless it exists, wholly or mainly, for one or more permitted purposes throughout the accounting period in question.

Permitted purposes include commercial trading activity, investments in commercially let property, and certain other activities including group holding, or group finance, activities.

Main CT rate with a deduction for marginal relief

CT is calculated using the main rate, but with the benefit of a deduction for marginal relief, in the following circumstances:

(1) where the company’s augmented profits exceed the lower limit (£50,000 divided by the number of the company’s associated companies plus one);

(2) where the company’s augmented profits do not exceed the upper limit (£250,000 divided by the number of associated companies plus one); and

(3) where the company is not a close investment-holding company in the period.

It is important to note that all of the company’s taxable total profits are charged at the main rate in this scenario, even those falling below the lower limit.

In the absence of marginal relief, this method of calculation would give rise to a ‘cliff edge’ increase in the amount of CT payable once profits rose above the lower limit.

The effect of marginal relief is to remove this cliff edge effect and thereby provide a smooth transition between the small profits rate and the main rate.

Calculation of marginal relief

The amount of marginal relief is equal to F × (U − A) × (N ÷ A) where:

• F represents the standard marginal relief fraction (set at 3/200ths for FY 2023);

• U represents the upper limit of £250,000 divided by one plus the number of associated companies;

• A is the amount of augmented profits; and • N is the amount of taxable total profits.

Meaning of augmented profits

A company’s augmented profits for an accounting period are the company’s taxable total profits for the period, plus any exempt distributions of a qualifying kind received by the company that are not excluded.

Exempt distributions of a qualifying kind are, very broadly, distributions from non- group unassociated companies.

The distribution must be CT exempt by virtue of the exempt dividend rules, and it must be a distribution only by reason of falling within paragraph A, B, G or H of the main definition of distribution in CTA 2010, s1000(1).

If it falls to be treated as a distribution for any other reason, it cannot be an exempt distribution of a qualifying kind. Exempt distributions are excluded if they are received from a 51% subsidiary or in certain other similar situations.

Meaning of associated company

The basic position is that a company is an associated company of another at any time when one of them controls the other, or when both of them are under common control.

The meaning of control is a specially modified version of control based on that used in the close company rules and, for these purposes, there may be attributed to a person all the rights and powers of the person’s associates, or of any companies the person (including associates) controls.

A person is however treated as having no associates if the relationship between the two companies is not one of substantial commercial interdependence.

In addition to the basic rule, there are exclusions for companies that do not carry on a trade or business, and an exclusion for passive holding companies. If a company is another’s associated company at any time in an accounting period, it is that company’s associated company for the whole of that accounting period.

Example marginal relief calculations Scenario

A company has taxable total profits of £75,000 and received exempt distributions of £10,000 in the 12-month accounting period ending 31 December 2024.

Calculations

The first part of the accounting period, from 1 January 2024 to 31 March 2024, falls within FY 2023 (1 April 2023 to 31 March 2024).

The second part of the accounting period, from 1 April 2024 to 31 December 2024, falls within FY 2024 (1 April 2024 to 31 March 2025).

Table 1 illustrates the apportionment of taxable total profits and augmented profits to each of financial years 2023 and 2024. Augmented profits for the full accounting period are £85,000, ie, the company’s taxable total profits of £75,000 plus the exempt distribution of £10,000.

These amounts are apportioned to the relevant financial years on the basis of a simple daily time apportionment.

It is also necessary to apportion the upper and lower limits of £50,000 and £250,000 between relevant financial years using the same basis of apportionment.

Table 1

Apportionment of taxable total profits

Once the apportionments are complete, it is possible to determine whether the company pays tax at the small profits CT rate or the main CT rate (with or without marginal relief in the latter case).

For FY 2023, apportioned augmented profits are £21,134. This is above the apportioned lower limit of £12,432 and is below the apportioned upper limit of £62,158. This means that the company pays CT at the main rate of 25% but with an additional deduction for marginal relief. The same conclusion arises in relation to FY 2024.

Table 2 illustrates the calculation of CT payable and the deduction for marginal relief. For FY 2023, CT payable at the main rate is £4,662. This is the £18,648 of taxable total profits apportioned to FY 2023 multiplied by the main CT rate for FY 2023 of 25%.

Marginal relief for the accounting period apportioned to FY 2023 is calculated as £543 using the standard marginal relief formula described above; the time apportioned limits calculated above; and the marginal relief fraction of 3/200.

The equivalent amounts for FY 2024 are calculated in a similar manner.

Combining the results for both FY 2023 and FY 2024 gives total CT payable of £18,750. From this amount is deducted total marginal relief of £2,184 to arrive at a net CT liability after marginal relief of £16,566.

Table 2

Calculation of CT payable and marginal relief

Useful links

For commentary on the small profits rate and marginal relief, see In-Depth at 713- 150. https://library.croneri.co.uk/cch_uk/btr/713-150

Dividend or bonus: what is most tax effective?

Thu, 30 Mar 2023 09:31:45 GMT

Dividend or bonus: what is most tax effective?

Tax changes mean that the choice between paying dividends or taking a bonus is narrowing, especially as corporation tax rises to 25% from April. Lee Longden, explains the pros and cons

Dividend versus bonus is an important tax planning exercise for the owner-managed company but for some time it’s been largely academic as the dividend has had the edge in most circumstances.

However, changes made in recent years have narrowed the gap between the dividend and bonus, and from April – when the main rate of corporation tax increases by six percentage points from 19% to 25% – the dividend’s advantage can no longer be taken for granted.

In this article, I’ll look at how to determine which of the dividend and the bonus is the most tax-efficient in your circumstances. Please do remember that there are other considerations, including the company law requirements relevant to dividends. For the full picture, please follow the links below to guidance from Croner-i.

Let’s begin with a quick summary of the tax rules, rates and allowances applying for 2023-24 for the dividend and the bonus.

Dividend

A dividend is paid out of the company’s post-tax profits. This means that it is not deducted in calculating the company’s profits subject to corporation tax, and so paying a dividend does not reduce the company’s corporation tax bill.

For the individual, the dividend is taxed at the dividend rates of income tax, and these apply across the UK. There is a tax-free dividend allowance and for 2023-24 this is £1,000, down from £2,000. The basic rate of tax is 8.75%, the higher rate 33.75% and the additional rate 39.35%.

The tax due is paid through self assessment. So, for a dividend paid in 2023-24, the full amount of tax due would be payable on 31 January 2025, except where payments on account are required on 31 January 2024 and 31 July 2024.

Bonus

For the individual, income tax and National Insurance contributions (NICs) are payable on the bonus.

The rates of income tax depend on where in the UK the person is resident as different rates apply in Scotland compared to England, Wales and Northern Ireland.

For a taxpayer resident in England, Wales or Northern Ireland, the rates are 20% in the basic rate band, 40% in the higher rate band and 45% in the additional rate band. The higher rate band limit was £150,000 but it is reduced to £125,140 for 2023-24.

The rates of NICs are 12% for earnings above £12,570 and up to £50,270, and 2% above £50,270.

NICs are also payable by the company, at 13.8% on earnings above £9,100.

Income tax and NICs are paid through the PAYE system.

The company is entitled to corporation tax relief for the bonus and the NICs it has paid, meaning that it can deduct both in arriving at its profits subject to corporation tax. Depending on the circumstances, this could save corporation tax at the small profits rate of 19% or at as much as 26.5% where profits fall in the marginal relief band.

Two important points to note: the wholly and exclusively rule applies, and relief will be given on a paid basis (rather than the accruals basis) where the bonus is paid more than nine months after the end of the company’s accounting period.

Which is the most tax-efficient?

So, how do we calculate which of the bonus and dividend is most tax efficient in the circumstances?

There are a number of ways to approach this but here I’m going to keep the cost to the company the same and identify which option gives the highest after-tax receipt for the individual.

Let’s work through an example. A company has profits of £500,000 for the year. It has funds of £40,000 available to pay as a dividend or bonus. The recipient has earnings of £50,270 and so the dividend/bonus will fall within the higher rate band.

If the company goes down the bonus route, it will have retained profits after corporation tax at 25% of £345,000, as shown below. To get the same result under the dividend route – that is, retained profits of £345,000 – it will need to pay a dividend of £30,000.

The next step is to work out the tax and NICs on the dividend and bonus for the individual. As shown below, under the bonus route, the receipt for the individual after income tax and NICs is £20,386; and under the dividend route it is £20,213. So, the bonus route gives the higher after-tax receipt for the individual by £173.

To put this into context, had we done the same exercise for 2022-23, when the rate of corporation tax was 19%, the dividend would have given the higher after-tax receipt, by £2,138. So that’s a swing of over £2,300 from dividend to bonus in just one tax year due in large part to the increase in the rate of corporation tax from 19% to 25%.

Conclusion

The simple example above illustrates the importance of carrying out detailed calculations for your clients this year. Much depends on the circumstances but there are some broad principles to bear in mind, a dividend is likely to be more tax efficient than a bonus where the company continues to pay tax at 19%, or where the recipient is a basic rate taxpayer.

Tax Tips before Tax Year End 5th April 2023

Mon, 13 Mar 2023 15:55:07 GMT

With less than a month to go before the end of the tax year, there are some essential tax saving measures that people can take before the tax year ends on 5 April Download PDF>

Lee Longden, owner at Longden & Co said: ‘This is the perfect time of year to review your finances and make sure you’re not missing out on any available tax reliefs – particularly as some of these reliefs become less generous from 6 April.

‘The tax system is complicated but there are some simple steps that anyone can take to make sure they are benefitting from available tax reliefs before the year end. However, for more complicated arrangements, it’s always a good idea to seek professional advice.’

1. Take advantage of tax-free pension contributions

The standard amount that an individual can set aside tax-free each year for a pension is £40,000 – and any unused relief in the prior three tax years can be brought forward. There is also a lifetime limit of £1,073,100 which is frozen until the 2025/26 tax year.

Taxpayers close to the limit should take advice on contribution levels, as exceeding the available allowance will mean a tax charge will arise.

Qualifying taxpayers who don’t receive full tax relief at source should disclose their contributions in their annual tax return to receive a rebate at their marginal rate.

2. Boost your state pension by filling gaps in your National Insurance record

You can usually pay voluntary National Insurance contributions for the past six years to fill gaps in your National Insurance record to boost your qualifying years that are used to calculate your state pension entitlement. The deadline is 5 April each year.

However, because of changes to the state pension system introduced in 2016, ‘transitional arrangements’ are in place which enable men born after 5 April 1951 or women born after 5 April 1953 to make up for gaps between tax years April 2006 and April 2016.

While the deadline to do this was meant to be 5 April 2023, this has now been extended to 31 July 2023, giving people extra time to decide whether to fill the gaps in their National Insurance record. After this time, you will only be able to pay voluntary contributions for the past six years.

Voluntary contributions will not always increase your state pension entitlement, but for those who are eligible – and depending on circumstances – a modest outlay could help top up your state pension payments. Visit www.gov.uk to find out more or seek advice from the Future Pension Centre (if you’re below state pension age) or the Pension Service (if you’ve reached state pension age).

3. Use your ISA allowances

UK residents aged 18+ can invest up to £20,000 each and parents can fund a junior ISA or child trust fund with up to £9,000 per child for 2022/23 – making a total of £58,000 for a family of four.

Children will automatically have access to the funds in their ISA when they reach age 18 but ISAs are a useful vehicle for building up funds to support them through higher education.

Investors who have not used up their full ISA allowance, should consider selling shares yielding dividends outside their ISA and buying them back within this tax-exempt wrapper, although care should be taken as this could trigger a capital gains tax charge.

4. Avoid the child benefit clawback

Child benefit is clawed back where annual taxable income (or the taxable income of a partner) exceeds £50,000.

If both partners can keep their annual taxable income below £50,000, child benefit will not be clawed back through the high income child benefit charge at a rate of 1% of the benefit for every £100 of income over £50,000.

Making personal pension contributions or exchanging salary in return for employer pension contributions can reduce your taxable income to keep it below the £50,000 threshold.

5. Use annual exemptions

Everyone can realise capital gains up to the annual exemption tax-free – £12,300 in 2022/23. The exemption is available to each individual, including minor children, but any exemption unused in a year cannot be carried forward.

Married couples and civil partners can transfer assets between them on a no gain/no loss basis and such transfers should be considered to ensure that the annual exemption can be fully used.

It is important to note that the annual exemption will be reduced from £12,300 to £6,000 from 6 April 2023 and further reduced to £3,000 from 6 April 2024.

6. Match capital gains and losses to reduce your tax bill

If you hold stocks and shares outside an ISA, selling them can trigger capital gains: where your total gains exceed the annual exemption (see above) you will pay tax on them.

If you also have investments standing at a loss, selling the asset allows you to set that loss against any gains that are taxable – either in 2022/23 or in later years (provided you claim it through your tax return). So matching gains and losses can cut your overall tax bill.

If you think the loss-making shares had long term potential, you cannot buy back them back immediately (a 30-day matching rule applies) but you can buy alternative shares in companies in the same sector, or buy them through your ISA or your spouse could invest in them.

7. Own a company? Consider paying yourself a dividend

It should generally be more tax-efficient overall to withdraw profits from your company by way of dividends rather than salary payments for 2022/23.

The position depends on a number of factors for company owner-managers but the balance will shift for some company owners when corporation tax rises from 1 April: in 2023/34 dividend payments will suffer more tax overall than salary payments if you are a higher or additional rate taxpayer.

Of course, there are other factors to consider as well: dividends are only possible if the company has sufficient ‘distributable reserves’ and may alter the value of the company’s shares up or down. Also dividends do not allow the recipient to pay tax-deductible pension contributions.

8. Entrepreneur? Consider SEIS/EIS/VCT investments

The Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) all offer tax benefits, but are really only suitable for experienced business owners and investors.

Under the SEIS, an individual can invest up to £100,000 (due to increase to £200,000 from 6 April 2023) in start-up enterprises in a tax year and claim income tax relief at 50% irrespective of his or her marginal rate of tax.

Investments in qualifying EIS companies (for example, certain companies listed on AIM or that are unlisted) attract income tax relief at 30% on a maximum annual investment of up to £1m for qualifying individuals.

Investments in VCTs provide income tax relief at 30% on qualifying investments of up to £200,000 and dividends received from the units are tax-free. In addition, the VCT can buy and sell investments without suffering capital gains tax (CGT) within the trust and there is no CGT payable on any gain made when you sell the VCT units.

9. Make gifts to use annual inheritance tax allowances

Reducing the value of the part of your estate that is above the nil rate band (£325,000) will reduce the inheritance tax (IHT) payable when you die.

Consider giving assets you do not need to other family members now. Gifts to a spouse or civil partner to enable them to use up their nil rate band are tax-free and gifts to other family members can also be tax-efficient over time.

Most lifetime gifts to individuals that are not covered by a lifetime exemption do not immediately trigger IHT and become totally exempt if you survive for seven years. Whilst the gift remains in your estate, the rate of IHT applied to it on death (40%) reduces each year depending on how many years you survive after making the gift.

You can give away up to £3,000 worth of gifts a year plus £250 to as many individuals as you like in a year and £5,000 to your children on their marriage.

10. Plan ahead for 2023-24

Plan ahead for 2023-24 by checking your tax codes. This can be done by logging into your personal tax account. Here you can inform HMRC about any changes that are likely to affect your tax code during the tax year. Helping HMRC to get it right from April onwards means you shouldn’t have any nasty surprises later.

Corporation Tax Changes - April 2023

Thu, 12 Jan 2023 11:17:19 GMT

Corporation Tax Changes - April 2023

Autumn Budget 2022

Mon, 21 Nov 2022 11:39:18 GMT

Autumn Budget 2022

Chancellor Jeremy Hunt today announced a series of new measures designed to reduce the Government's deficit, tackle inflation and restore confidence in the UK's economy.
A full copy of the statement can be found here.

https://www.gov.uk/government/publications/autumn-statement-2022-documents

Income Tax, National Insurance and IHT

The point at which the 45% rate of income tax applies will be reduced from £150,000 to £125,140.

The allowances and bands for income tax, national insurance and inheritance tax will be frozen until April 2028.

Employers' NIC thresholds to be frozen.

Dividend Allowance and CGT

Dividend allowance will be reduced from £2,000 to £1,000 next year, and then to £500 from April 2024.

Capital Gains Tax Annual Exemption Amount is to reduce from £12,300 to £6,000 from April 2023 and then to £3,000 from April 2024.

Research and Development

For expenditure on or after 1 April 2023 the RDEC rate will increase from 13% to 20%.

The SME additional deduction will reduce from 130% to 86% and the SME credit will decrease from 14.5% to 10%.

Business Rates

Planned revaluation of properties to go ahead. Though additional support will mean that two-thirds of business will not pay higher rates next year.

This support includes the Multiplier Freeze, the Transitional Relief Schemes, the Retail Hospitality and Leisure Relief and the Supporting Small Businesses Scheme.

VAT

VAT registration threshold to be held at £85,000.

The Government will not be pursuing the Online Sales Tax (OST).

National Living Wage

£10.42/hr from 01 April 2023.

Windfall Tax

Windfall tax affecting oil and gas industry to increase from 25% to 35% and an electricity generator tax set at 45%.

Inflation Forecasts

The OBR forecasts inflation to hit 9.1% this year and 7.4% next year.

Energy Price Guarantee

The price cap will increase from April 2023 to bring the average cost of energy for a typical house to £3,000 per year for a typical household.

Benefits and Welfare

To increase by 10.1% next year.

Pensions

Pensions triple lock to be protected.

Pension credit to increase by 10.1%.

Spring Statement 2022

Thu, 24 Mar 2022 11:27:25 GMT

Spring Statement 2022

23 March 2022

Rishi Sunak, Chancellor of the Exchequer, presented the Spring Statement 2022, on the 23rd March.

The ongoing energy crisis will see energy bills rocket by nearly £700, once Ofgem’s energy price cap increases by 54% from 1 April 2022, and paired with the ongoing fuel crisis that saw the price of petrol hit an all-time high this month, the cost of living for businesses and individuals alike is becoming increasingly burdensome.

Ahead of the Chancellor’s announcement, news also broke that inflation hit a 30-year high, with National Insurance Contributions (NIC) also set to rise from April 2022.

Sunak took to the podium to address the health of the UK economy and use the ‘mini-budget’ as a chance to clean up Covid-19 debts. As Government debt now stands at around 96% of GDP, from just over 80% of GDP pre-pandemic, Sunak’s plan signalled towards building the “security of more resilient public finances… [and] a faster growing economy”.

While we overcome the threat of Covid-19 on the UK economy, a new crisis awaits – the war in Ukraine. The Chancellor addressed the devastating war between Russia and Ukraine, and the domino effect this is having on the price of food and energy, pushing up the cost of living.

Here are the key measures announced in the Spring Statement that will affect businesses and individuals across the UK:

National Insurance Contributions rise (NIC) – National Insurance Contributions are set to rise by 1.25% from April 2022 and the earnings threshold has been raised to £12,570 to provide respite to low-income workers. Despite speculation that the hike may be delayed or scrapped, it is going ahead to raise money earmarked for the NHS and social care although the blow has been softened by the threshold change.

Fuel duty cut – Fuel duty, also known as fuel tax, will be cut by 5 pence to reduce the price of fuel per litre. This will come into effect from 6pm today until March 2023. Reducing the government levy on petrol and diesel will help bring down the cost of living for families and the cost of operating a business.

Business rates discount – A business rates discount is promised to come into effect in April 2022 for retail, hospitality, and leisure businesses. A typical pub will save around £5,000.

Income Tax threshold cut – The Chancellor promised to cut the basic rate threshold for income tax from 20p in the pound to 19p in the pound by 2024.

Employment Allowance – This will be increased to £5,000 from April 2022 for small businesses.

R&D Tax Credit reform – Research and Development (R&D) tax credits will be reformed, and R&D expenditure credit may be boosted, a decision he will make in autumn 2022.

Business investment rates cut – The Chancellor will cut rates on business investment this autumn 2022.

What else is in store?

Energy Bill Rebate – Households in council tax bands A to D will receive a £150 non-repayable Council Tax Rebate to offset rising energy bills.

Energy bill discounts – A £200 discount will also be applied to household electricity bills in autumn 2022, repayable over 5 years.

Income tax threshold freeze – The income tax personal allowance and the threshold for the higher rate will be frozen until 2026, as announced in the 2021 Spring Budget.

VAT cut on energy-efficient materials – 0% VAT on energy-saving materials, such as solar panels, to improve energy efficiency in homes.

If you or your clients have any concerns about the viability of their business, please do not hesitate to get in touch.

Directors using Trusts & The General Anti Abuse Rule

Mon, 26 Jul 2021 10:52:25 GMT

The General Anti Abuse Rule (GAAR) advisory panel has issued a ruling setting out its views on abuse of employee reward arrangements through trusts where loans are used to avoid income tax.

The opinion covers employee reward arrangements including contributions to a trust, a loan agreement under which the employee loans money to the manager of the trust and loans from the manager of the trust to the employee.

The GAAR advisory panel’s opinion states that entering into and carrying out the tax arrangements is not a reasonable course of action in relation to the relevant tax provisions.

To set out the facts, the company was incorporated in 2014, when X and Y were appointed directors and each held 50% of the share capital. The company’s business was software provision and development. The trust in question was set up separately on 15 December 2011, by settling the sum of £100 with an overseas resident company. The classes of beneficiary under the trust were individuals (providers) who provided finance to the founder, the trustee or any manager of the trust fund; and relatives of those providers.

From May 2016, the owners of the company started making payments into the trust which amounted to £152,500 by August 2016. The directors X and Y then applied for a loan from the trust. The loans of £2,700 (described as ‘deep discount’) carried interest at LIBOR plus 2% and were not payable for 10 years. A further 13 loans were taken out from the trust with each director borrowing £68,625. Smaller loans were subsequently taken out and then the company claimed a corporation tax deduction of £152,500 in the accounting period to 30 September 2016 and of £50,700 in the accounting period to 30 September 2017.

Meanwhile funds were made available to X and Y in a way that did not carry any liability to income tax or NICs. Assuming that these funds derived from the profits of the company, they could have been paid to them as salaries (subject to income tax via PAYE and NICs) or dividends (subject to income tax).

HMRC did not expect that the loans would be repaid, contending that the arrangements are ineffective and that the result should be that amounts contributed by the company to the trust, which were then made available to X and Y by way of loans, should instead be regarded as payments subject to PAYE and NICs. This would mean PAYE and NICs applying to the total payments, over the two periods, of £203,200.

The GAAR advisory panel ruling stated: ‘8.2 In our view, the arrangements as a whole are contrived and abnormal and appear to us to serve no purpose other than to avoid tax. Had it not been desired to obtain a tax deduction for the company without any tax on the funds received by the individual much simpler means of extracting value could have been adopted.’

The Application Process for the - 5th Self SEISS

Mon, 19 Jul 2021 12:32:37 GMT

The application process for the fifth Self-Employment Income Support Scheme (SEISS) grant will depend on details of two years of turnover and losses resulting from the pandemic.

The scheme is due to open shortly and HMRC will be contacting self employed individuals directly advising them of their eligibility to apply for the scheme, which will be open from late July. There are some rule changes for the fifth grant which are important to take into account and also note that accountants are not allowed to apply directly on behalf of their clients.

HMRC has confirmed that ‘the fifth grant is different. In most cases, you’ll need to provide two turnover figures when you make your claim. We’ll use these to work out how much you’ll get’.

Claims must include information about turnover if you submitted a tax return for your business in 2019 to 2020 as well as any of the following tax years: 2018-19, 2017-18 and 2016-17. Turnover includes the takings, fees, sales or money earned or received by your business.

Turnover must be calculated for a 12-month period, starting on any day from 1 April 2020 to 6 April 2020.

Where to find turnover figures

Turnover figures can be obtained from the 2020-21 self assessment tax return, from accounting software, go through your bookkeeping or spreadsheet records that cover your self-employment invoices and payments received, check the bank account used for your business to account for money coming in from customers, or ask your accountant or tax adviser.

Claims must not include previous SEISS grants, Eat Out to Help Out payments and local authority or devolved administration grants.

In the case of partnerships, work out and include your percentage share of the partnership’s turnover, for each individual partnership. This will be the same as the percentage of profit taken from each partnership in your reference year, even if your profit share percentage changed in 2020 to 2021. You should add this to the turnover from your other businesses.

In most cases, you must use the turnover reported in your 2019 to 2020 tax return as a reference year. The figure needs to be based on a 12-month period and include the total turnover for all your businesses.

If 2019-20 was not a normal year for your business, you can use the turnover reported in your 2018-19 tax return. Your records should show how 2019-20 was not a normal year for you. For example, if you were on carers leave, long term sick leave or had a new child; carried out reservist duties; lost a large contract or are eligible for the fifth grant but did not submit a 2019 to 2020 return.

If your turnover is down by 30% or more, the grant will be:

worked out at 80% of three months’ average trading profits; and

capped at £7,500.

If your turnover is down by less than 30%, the grant will be:

worked out at 30% of three months’ average trading profits; and
capped at £2,850.

If you had a total turnover of £20,000 for 2019-20, which fell to £10,000 for April 2020 to April 2021, representing a 50% drop in revenue, you will get the higher grant amount which is worth 80% of three months’ average trading profits as turnover is down by 30% or more.

If turnover is down by 20% compared to 2019-20 you will get the lower grant amount which is worth 30% of three months’ average trading profits as turnover is down by less than 30%.

If 2019-20 was not a normal year for your business, due to the pandemic, SEISS applicants can use 2018-19 as the turnover reference year.

If you are currently trading but have reduced demand, you must keep any evidence that your business has had reduced activity, capacity or demand due to Covid-19 at the time you made your claim, such as:

business accounts showing reduction in activity compared to previous years;
records of reduced or cancelled contracts or appointments; and
a record of dates where you had reduced demand or capacity due to government restrictions.

Dissolution loophole set to be closed

Thu, 20 May 2021 12:26:35 GMT

New legislation, which aims to prevent company directors avoiding investigation into their conduct by informally striking off their company instead of entering an insolvency process, has had its first reading in Parliament and looks set to become law later this year.

The move has been driven, in part, by the fear that some directors will look to avoid repayment of government-backed funding, such as CBILS or Bounce Back Loans, by dissolving their company instead of placing it into a formal insolvency process such as liquidation.

Dissolution and avoiding investigation

Currently, only live companies, or those that enter a formal insolvency process, can be investigated by the Insolvency Service for allegations of fraudulent trading. Directors can face a number of penalties and sanctions if found guilty of misconduct, including being made liable for company debts or being disqualified from acting as the director of a limited company for up to 15 years.

Dissolving a company through the strike-off process is not classed as a formal insolvency procedure and, therefore, directors can avoid investigation if they can successfully close their company in this way. The dissolution process is designed for companies which are not threatened with an insolvency procedure and haven’t been trading for the preceding three months, some directors have been using this as an alternative to formally liquidating their company.

This law, if passed, will not only prevent directors from dissolving companies with active liabilities going forward, but it is also set to be retrospective. This means the Insolvency Service will have the power to investigate companies that have already been dissolved but with a government-backed coronavirus loan still outstanding.

Closure, rescue, and recovery options

For a company with existing liabilities – whether this is a government-backed Covid loan or not – formal liquidation is the optimal closure route for all concerned. Not only does liquidation ensure outstanding creditors are treated fairly, but it also demonstrates a desire on behalf of directors to adhere to their legal obligations once they become aware their company is insolvent.

If the company has a viable future despite any current challenges, there are a range of rescue and recovery processes which can be explored if there is a desire to turn around the company’s fortunes. This can take the form of a Company Voluntary Arrangement (CVA) which facilitates negotiation with outstanding creditors, or Administration, which provides breathing space while a restructuring of the business is executed.

Our Expert Associates can talk you through the options available to directors when they are faced with financial pressure.

Self Employment Income Support Scheme (SEISS) is open for claims

Wed, 14 Apr 2021 09:43:51 GMT

As the fourth Self Employment Income Support Scheme (SEISS) is due to open for claims, HMRC has confirmed that it will be contacting eligible self employed individuals based on their tax returns in mid-April to give a date for making applications.

Communications will be sent either by email, letter or within the online service.

The online service to claim the fourth grant will be available from late April 2021.

All claims must be made on or before 1 June 2021.

Claims must be made by the individual and cannot be processed by a tax agent or adviser to claim on your behalf as this will trigger a fraud alert, which will delay payment.

To be eligible for the fourth grant you must be a self-employed individual or a member of a partnership. Grants are not available if you trade through a limited company or a trust. Trading profits must be no more than £50,000 and at least equal to or more than your non-trading income.

Capped at £7,500 the fourth grant will be set at 80% of three months’ average trading profits. There will also be a fifth grant covering May to September 2021 and will take the individual’s trading position for 2020/2021.

The fifth grant will be worth 80% of three months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more; or 30% of three months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%.

There is no requirement that an earlier SEISS grant has been claimed in order to be able to claim the upcoming fourth grant.

To make a claim, applicants will need the following:

Self Assessment Unique Taxpayer Reference (UTR);
National Insurance number;
Government Gateway user ID and password; and
UK bank details including account number, sort code, name on the account and address linked to the account.

Only provide bank account details where a Bacs payment can be accepted.

HMRC will check claims and take appropriate action to withhold or recover payments found to be dishonest or inaccurate with a penalty system in place.

If an amendment to a tax return on or after the 3 March 2021 lowers the amount you are eligible for, HMRC must be informed within 90 days.

For self employed people currently trading but have reduced demand, keep any evidence that your business has had reduced activity, capacity or demand due to coronavirus at the time you made your claim, such as business accounts showing reduction in activity compared to previous years, records of reduced or cancelled contracts or appointments, and a record of dates where you had reduced demand or capacity due to government restrictions.

Directors warned about the risk of paying illegal dividends

Fri, 26 Mar 2021 08:38:55 GMT

Directors need to be careful to avoid paying illegal dividends or they could become personally liable for company liabilities.

‘It’s common for directors of owner managed businesses to pay a portion of their income as dividends and with the end of the tax year fast approaching, directors will once again be turning their minds to declaring an annual payment.

‘The rules around dividends and distributions, governed by company law capital maintenance requirements and directors’ fiduciary duties, can be complex. If the requirements are not met such that the dividend is unlawful, the directors will need to act quickly.

‘A shareholder is required to repay an unlawful distribution if they know or have reasonable grounds for knowing that it was made unlawfully at the time of payment. In the case of a distribution made otherwise than in cash, the shareholder will have to pay the company a sum equal to the value of the distribution at that time.’

The capital maintenance requirements of the Companies Act 2006 require that any distribution can only be made where distributable profits exist and that is irrespective of the level of surplus cash in the business.

The determination of distributable profits is usually made by reference to the balance on retained earnings shown in the last set of financial statements. However, directors must consider changes in financial position and performance after the balance sheet date.

‘This is particularly relevant if the financial performance has deteriorated losses and reduced the level of the retained earnings balance. Directors may therefore need to draw up interim accounts to evaluate the position if a distribution is to be made many months after the year end.’

In view of the pandemic, care will need to be taken to ensure that appropriate accounting adjustments are made in any set of financial statements for matters such as:

bad and doubtful debts.
provisions for surplus or obsolete inventory.
impairment of site premises which are not being used.
provisions of onerous leases; and
early recognition of losses on contracts that will no longer be profitable.

‘The directors will need to consider whether adjustments for such matters need to be made in any interim accounts for dividends paid sometime after the year end.

Directors are also subject to fiduciary and other duties. These include the obligation to safeguard the company’s assets and take reasonable steps to ensure that the company is in a position to settle its debts as they fall due. Debts will include trade creditors and loan borrowings, but other factors may be important such as liabilities towards pension schemes.

‘Directors should consider both the immediate cash flow implications of a distribution and the continuing ability of the company to pay its debts as they fall due,’. ‘Directors must consider whether the company will still be solvent following a proposed distribution. Directors may be personally liable should the company become insolvent.’

Budget 2021

Mon, 08 Mar 2021 09:28:19 GMT

Budget 2021 - Key Updates

The Chancellor's full budget document can be downloaded on the link below.

Furlough

Coronavirus Job Retention Scheme (CJRS) – To support businesses and employees across the UK through the next stage of the pandemic, the government is extending the CJRS for a further five months from May until the end of September 2021.

Employees will continue to receive 80% of their current salary for hours not worked. There will be no employer contributions beyond National Insurance contributions (NICs) and pensions required in April, May and June.

From July, the government will introduce an employer contribution towards the cost of unworked hours of 10% in July, 20% in August and 20% in September, as the economy reopens.

Self - Employment

Self-Employment Income Support Scheme (SEISS) fourth grant – To support the self-employed across the UK through the next stage of the pandemic, the government confirms that the fourth SEISS grant will be worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total.

The grant will cover the period February to April and can be claimed from late April. Self-employed individuals must have filed a 2019-20 Self-Assessment tax return to be eligible for the fourth grant.

This means that over 600,000 individuals may be newly eligible for SEISS, including many new to self-employment in 2019- 20. All other eligibility criteria will remain the same as the third grant.

SEISS fifth grant – The government announces that there will be a fifth and final SEISS grant covering May to September. The value of the grant will be determined by a turnover test, to ensure that support is targeted at those who need it the most as the economy reopens.

People whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500. People whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850. The final grant can be claimed from late July.

Apprenticeships

High quality traineeships for young people – The government will provide an additional £126 million in England for high quality work placements and training for 16–24-year-olds in the 2021/22 academic year. Employers who provide trainees with work experience will continue to be funded at a rate of £1,000 per trainee.

Payments for employers who hire new apprentices – The government will extend and increase the payments made to employers in England who hire new apprentices. Employers who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire (or £2,000 for those aged 24 and under) under the previous scheme. This is in addition to the existing £1,000 payment the government provides for all new 16–18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan, where that applies.

Supporting apprenticeships across different employers – The government will introduce a £7 million fund from July 2021 to help employers in England set up and expand portable apprenticeships.

This will enable people who need to work across multiple projects with different employers to benefit from the high-quality long-term training that an apprenticeship provides.

Employers themselves will also benefit from access to a diverse apprenticeship talent pipeline.

Tax Thresholds Frozen

The income tax personal allowance and higher rate threshold will be uprated in line with CPI as planned in April 2021, then maintained at that level until April 2026. This decision will not reduce take-home pay and the highest income households will continue to contribute more. This will take effect in April 2022.

This will see the basic rate personal allowance rise as planned to £12,570 from the new tax year in April 2021 and will remain at this level until April 2026. The income tax higher rate threshold will rise to £50,270 from April 2021 and again this will be frozen until April 2026.

in 2021-22 NICs thresholds will rise with CPI, bringing the NICs primary threshold/lower profits limit to £9,568 and the upper earnings limit (UEL)/upper profits limit (UPL) to £50,270, in line with the income tax higher rate threshold. The UEL/UPL will then remain aligned with the higher rate threshold at £50,270 until April 2026.

Loans & Grants

From 6 April 2021 the Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to give them confidence in continuing to provide finance to UK businesses. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.

Restart Grants – The government will provide ‘Restart Grants’ in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses, giving them the cash certainty, they need to plan ahead and safely relaunch trading over the coming months.

The government is also providing all local authorities in England with an additional £425 million of discretionary business grant funding, on top of the £1.6 billion already allocated.

VAT

The government will extend the temporary reduced rate of 5% VAT for goods and services supplied by the tourism and hospitality sector until 30 September 2021. To help businesses manage the transition back to the standard 20% rate, a 12.5% rate will apply for the subsequent six months until 31 March 2022.

VAT Deferral New Payment Scheme – Any business that took advantage of the original VAT deferral on VAT returns from 20 March through to the end of June 2020 can now opt to use the VAT Deferral New Payment Scheme to pay that deferred VAT in up to eleven equal payments from March 2021, rather than one larger payment due by 31 March 2021, as originally announced.

Business Rates

The government will continue to provide eligible retail, hospitality and leisure properties in England with 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £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. When combined with Small Business Rates Relief, this means 750,000 retail, hospitality and leisure properties in England will pay no business rates for 3 months from 1 April 2021, with the vast majority of eligible businesses receiving 75% relief across the year.

The government will legislate to ensure that the business rates relief repayments that have been made by certain businesses are deductible for corporation tax and income tax purposes. This will ensure that these businesses are no worse off from a tax perspective than if they had paid the business rates in the first place. This will apply for repayments made to the devolved administrations as well as to those made in relation to England.

Trade Credit Reinsurance scheme

The Trade Credit Reinsurance scheme has successfully maintained the vast majority of trade credit insurance coverage across the market throughout the pandemic, across the whole of the UK. Up to £190 billion of cover on around half a million businesses has been provided under the scheme.

The government will continue to review the impacts of the scheme to assess whether there is a case for further interventions beyond the scheduled end date of 30 June 2021, in order to minimise disruptions in insurance coverage as the economy recovers.

Extended loss carry back for businesses

To help otherwise-viable UK businesses which have been pushed into a loss-making position, the trading loss carry-back rule will be temporarily extended from the existing one year to three years.

This will be available for both incorporated and unincorporated businesses.
Unincorporated businesses and companies that are not members of a corporate group will be able to obtain relief for up to £2 million of losses in each of 2020-21 and 2021-22.
Companies that are members of a corporate group will be able to obtain relief for up to £200,000 of losses in each of 2020-21 and 2021-22 without any group limitations.
Companies that are members of a corporate group will be able to obtain relief for up to £2 million of losses in each of 2020-21 and 2021-22, but subject to a £2 million cap across the group as a whole.

This will be legislated in the forthcoming Finance Bill.

Corporation Tax

To balance the need to raise revenue with the objective of having an internationally competitive tax system, the rate of corporation tax will increase from April 2023 to 25% on profits over £250,000.

The rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000 so that they pay less than the main rate.

In line with the increase in the main rate, the Diverted Profits Tax rate will rise to 31% from April 2023 so that it remains an effective deterrent against diverting profits out of the UK.

Alcohol duty

To further support the hospitality industry and its suppliers, the duty rates on beer, cider, wine and spirits will be frozen for another year.

Super-deduction

From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will benefit from a 130% first-year capital allowance.

This upfront 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. Investing companies will also benefit from a 50% first-year allowance for qualifying special rate (including long life) assets.

Community Ownership Fund

The government will create a new £150 million Community Ownership Fund to help ensure that communities across the UK can continue to benefit from the local facilities and amenities that are most important to them.

From the summer, community groups will be able to bid for up to £250,000 matched funding to help them to buy local assets to run as community-owned businesses. In exceptional cases up to £1 million of matched funding will be available to help establish a community-owned sports club or buy a sports ground at risk of loss from the community.

This will help ensure that important parts of the social fabric – like pubs, sports clubs, theatres and post office buildings – can continue to play a central role in towns and villages across the UK.

Help to Grow: Management

The government will offer a new UK-wide management programme to upskill 30,000 SMEs in the UK over three years.

Developed in partnership with industry, the programme will combine a national curriculum delivered through business schools with practical case studies and mentoring from experienced business professionals.

Over 12 weeks, and 90% subsidised by government, this programme will equip SMEs with the tools to grow their businesses and thrive.

Help to Grow: Digital

The government will launch a new UK-wide scheme in the autumn to help 100,000 SMEs save time and money by adopting productivity-enhancing software, transforming the way they do business. This will combine a voucher covering up to half of the costs of approved software up to a maximum of £5,000, and free impartial advice, delivered through an online platform.

Stamp Duty & Help to buy.

The nil rate stamp duty land tax on sales up to £500,000 will be removed at the end of June 2021 while the Chancellor acknowledged that buyers still needed help, despite substantial house price rises over the last year, and confirmed that there would a tapered end to the scheme.

From 1 July 2021, the nil rate band will reduce to £250,000 until 30 September 2021 before returning to the usual £125,000 on 1 October 2021. This means that nearly nine out of 10 people buying a new home currently pay no SDLT at all.

He also announced a new mortgage guarantee scheme to enable homebuyers to secure a mortgage up to £600,000 with a 5% deposit.

This scheme will provide a guarantee to lenders across the UK who offer mortgages to people with a deposit of just 5% on homes with a value of up to £600,000. Under the scheme all buyers will have the opportunity to fix their initial mortgage rate for at least five years should they wish to.