General COVID Updates
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. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.
Further updates to follow once the details have been confirmed.
The previous loan schemes Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme closed as planned on 31 March 2021.
New ‘Restart Grants’ to help businesses in England reopen when lockdown begins to ease from April 2021 have been announced:
- Non-essential retail businesses will receive grants up to £6,000 per premises.
- Hospitality and leisure, including personal care and gyms, can each receive grants of up to £18,000.
There have been a number of HMRC scams in current months, but please be aware that HMRC has begun to contact those that it believes may have claimed support under the self-employment income support scheme (SEISS) to which they were not entitled. In the Budget, funds were set aside to assist HMRC in tackling COVID-19 support related fraud. If you receive any contact from HMRC, please do let you client manager know, so that we can confirm the validity of the correspondence.
Tax Efficient Renumeration 2021/2022
As we enter a new financial year the government have made some minor alterations to the income tax brackets which may slightly alter the tax on your renumeration packages:
- The personal allowance has increased from £12,500 to £12,570.
- The basic rate band has increased from £50,000 to £50,270.
- The primary national insurance threshold has increased from £9,500 to £9,568.
With this is mind sole director (no employee) company’s will likely see their salary set at £9,568 per annum, with multiple director/employee businesses having a slightly higher salary of £12,570 per annum. It is important to make this distinction as companies with only one director do not qualify for the employer’s annual allowance of £4,000 – meaning if their income exceeds £9,568 both employers and employees national insurance is payable.
Whilst this represents a minor change in the grand scheme of things it does allow taxpayers to earn slightly more before entering the higher rate band and gives some level of flexibility if there is uncertainty.
SEISS Fourth Grant
The fourth SEISS grant covers the period from 1 February 2021 to 30 April 2021 at 80% of trader’s average profits. The grant will be open to taxpayers that have traded in tax years 2018/19 to 2020/21 and self- employed workers will have until 1st June to make their claim.
The government has also confirmed there will be a fifth SEISS grant that will be payable for the three months to 31 July 2021 (up to a maximum of £7,500). The portal for the fifth grant is expected to open in late July 2021. For further information about qualifying criteria for the SEISS grant please feel free to contact your client manager to discuss.
Crypto Currency Tax Rules
With cryptocurrency becoming a mainstay in recent years there has been some confusion surrounding how this new asset should be taxed in the UK. HMRC have now sought to clarify this matter, confirming when both income and capital taxes may be due.
Currently cryptocurrency/assets are tax under capital gains tax in the UK, much as you would expect to pay tax on the sale of stocks and shares. There are specific criteria however that may see individuals classified as traders, in which case income tax would apply as any gain could be classified as personal income.
Whilst some may wish to be viewed as a trader of cryptoassets HMRC have confirmed their view that it is highly unlikely for anyone to become a cryptoasset trader merely for tax purposes. So in the future we are unlikely to see a large portion of taxpayers seeing this type of income taxed under income tax, opposed to capital gains tax.
An example of an individual being taxed under income tax would be where a taxpayer received renumeration in the form of cryptoassets from employment, in which case they would be liable to income tax and national insurance for any cash payments received. The same income tax treatment will apply to activities such as mining, transaction confirmation and airdrops.