Tax Changes coming in Q1 2021
Given the year we have had in 2020, we decided it was best not to even attempt to predict tax changes over the coming 12 months. Instead, this sets out the big tax changes slated up to Spring 2021.
Tax planning is particularly difficult for businesses this year. The chancellor has yet to release his budget for 2021 which given the government's propensity for U-turns will probably change several times anyway. One thing we do know is that after 2020, the exchequer will need to raise funds.
Here are some of the tax changes slated for this year:
Brexit VAT and Customs Changes – January 1st
This is a big area. See our blog for some separate posts on VAT and Custom changes post-Brexit.
SEISS Deadline – January 29th
Self-employed traders who are eligible for coronavirus support need to apply before January 29th. Support will be based on your average annual profits for the tax years 2016/17 to 2018/19. A further SEISS grant covering the period from February to April 2021 has been promised by the government but as with a lot of things we are awaiting details on the fourth installment.
Construction VAT: Reverse Charge Introduction – March 1st
The introduction of a new construction VAT regime was delayed from 1 October 2019 to 1 October 2020. It was delayed again due to COVID-19 and is now due to be introduced from 1 March. The reverse charge will shift the liability for accounting for output VAT from the supplier to the customer. For more information about what you need to do, see our post on domestic reverse charge.
Spring Budget – March 3rd
Amidst coronavirus uncertainty, Rishi Sunak has yet to publish a budget for this year. He will be doing so on 3rd March which will only give businesses a month to prepare for any changes. It is widely accepted that the chancellor will need to increase taxes to plug the deficit left by corona and Brexit. What is still unknown is the timing and exactly which taxes he will raise.
Chancellor Philip Hammond believes that tax increases may initially be targeted at wealthy individuals and foreign businesses. This is consistent with recommendations made by the office of tax simplification to increase capital gains tax.
IR35 Changes – April 6th
It feels like these have been coming for years but we expect the changes to off-payroll working to come into effect as planned on April 6th. In summary, these changes move the responsibility for compliance to the company acquiring the service.
End of Coronavirus Support – April 30th
The coronavirus furlough scheme has been extended by Rishi Sunak up until 30th April. This was extended in December till April to avoid the high level of redundancies forced on employees around the last extension in October.
That all spells out a particularly busy Spring for HMRC and we would be surprised to see more change. The domestic reverse charge has been bumped twice already and could well be bumped again. Businesses will have had 12 months to prepare for changes to off-payroll working so this should go ahead. When will coronavirus reliefs end? God knows.
One thing however is that we should all be watching closely to Rishi Sunak’s budget on March 3rd. If you want to speak about CGT implications for any disposals you are thinking of making, then get in touch for more information.