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We offer cloud-based accounting solutions. Using good technology saves time. With the power of cloud accounting in your hands, you can access accurate real-time data on the go, accept instant payments and even automate repetitive tasks like invoicing. Fast, easy, touch-of-a-button software can make a real difference to the way you run your business.
C-19 Grant funding for business
C-19 Time to pay
C-19 Loan Funding
C-19 VAT Payments
C-19 Business rates
C-19 Company Directors & Shareholders
C-19 IR35 & Off-payroll working
C-19 Insolvency & Directors
C-19 Statutory self-employment pay scheme (SEISS)
C-19 Landlords & tenants
C-19 Late payment interest rate
C-19 Reduced rate VAT
C-19 Job Support Scheme - on hold
C-19 Job Retention Bonus - on hold
Employer-provided PPE & testing
... a digital firm using the best tech to help our clients
Welcome to Adrian Mooy & Co Ltd
like yours grow and be more profitable.
We offer a personal service and welcome new clients.
We are a firm of Chartered Certified Accountants
and tax advisors in Derby helping businesses
From start-up to exit & everything in-between.
Whether you’re struggling with company formation,
Helping you grow your business
Helping you keep more of your income
We understand your needs
Call us on 01332 202660
annual accounts and taxation, payroll or VAT you can
count on us at every step of your business’s journey. For
VAT & payroll please contact us.
If you are looking for a Derby accountant then please contact us.
If you are starting your own business, running it as a sole trader is the quickest and easiest way to do it. However, you will have unlimited liability which means you are personally responsible for business debts.
Another important aspect is that you are taxed on all the profits with little opportunity for tax planning. This is why most businesses will incorporate as profits increase.
We can support you through business registration and provide advice on all aspects of tax including:
◦ Accounts for HMRC ◦ Self assessment ◦ VAT returns ◦
◦ Payroll services ◦ Tax planning ◦
Partnerships are similar to sole trades, except that they are used when more than one person owns the business.
Each profit share is determined by the partners and best practice is to record this in a partnership agreement.
With partnerships each partner has joint and several liability for the debts of the partnership, so that if one partner cannot pay their share of any business debts, the debt will fall on the other partners.
Setting up a partnership agreement from the outset is essential.
Corporate tax planning can result in significant improvements in your bottom line. Our services will help to minimise your corporate tax exposure.
We are a member firm of the Association of Chartered Certified Accountants.
Self assessment tax returns are becoming increasingly complex and failing to submit your return on time, or correctly, can result in substantial penalties.
We use the latest tax software to ensure that tax returns are completed efficiently, accurately and on-time.
Self assessment: Taking
away the hassles of tax
We provide a comprehensive personal tax compliance service for individuals that includes:
Invoicing your contracting work through a limited company is tax efficient. We will advise you on how to structure your contract to minimise IR35 risk. We will ensure you claim all the expenses that you are entitled to and work out if you can save money by joining the VAT Flat Rate Scheme. We will complete your accounts and tax returns and provide you with clarity over your tax payments.
Included in the service • IRIS KashFlow + Snap • Annual accounts • Corporate tax return • Personal tax return • Payroll • Dividend administration • VAT returns • Contract reviews • Dealing with HMRC
VAT • is one of the most complex tax regimes imposed on business. We provide a cost effective service including assistance with registration & completing your returns.
Payroll • Administering your payroll can be time consuming. We provide a comprehensive payroll service.
Your Payroll Solution
Construction Industry Scheme • CIS returns & payments
Book-keeping • Maintenance of accounting records
Provision of management accounts
For more about these services please contact us.
Keeping the Books
If your business does not require a statutory audit then our Assurance Service will provide reassurance that your accounts stand up to close scrutiny from your bank or other finance providers.
Work is tailored to your specific requirements and the level of confidence that you are looking to achieve and will provide credibility to your accounts by the issuing of an assurance review report.
Adrian Mooy & Co is a registered auditor with the Association of Chartered Certified Accountants.
We strive to provide an auditing service that adds more value than merely the statutory compliance requirement of an audit.
We tailor the audit to meet your circumstances and needs. Using the latest techniques and software we deliver a cost-effective audit that provides real value.
Before starting out you may need help with business planning, cash flow and profit & loss forecasts.
You may also want help identifying the best structure for your business. From sole trades and partnerships to limited companies and limited liability partnerships, we have the experience to advise on the best solution for you both operationally and from a tax point of view.
We also advise on accounting software selection, profit improvement, profit extraction & tax saving.
If you wish to know more about our Business Start-up service please contact us on 01332 202660.
Accountancy and taxation of property is a specialist area. We have the expertise and experience to work effectively with private landlords and property investors. We deal with self-assessment tax, accounts preparation & tax advice for all aspects of property portfolios.
Whether you are a first time buy to let landlord or a long established developer we will discuss and understand your situation in order to advise and recommend the most appropriate medium through which to carry out your property investments. We will guide you through the accounting and tax issues and help you to plan effectively.
We take the time to explain your accounts to you so that you understand what is going on in your business.
Up to date, relevant and quickly produced management information for better control.
As part of our accounts service we prepare your annual accounts and complete yearly personal and business tax returns.
As your year-end approaches we will agree a timetable with you for completion of the accounts that minimises disruption to your business and leaves no late surprises when it comes to your tax liabilities.
We can also prepare management accounts to help you run your business and make effective business decisions. Management accounts are also very useful when approaching lending institutions when no year end accounts are available. We offer:
For a meeting to discuss your requirements please call us on 01332 202660.
We understand the issues facing owner-managed businesses.
We provide advice on personal tax & planning opportunities.
Running a small business places many demands on your time. We can help lift the load with our complete payroll service.
Designed to ease your administrative burden, our service removes what is often a time consuming task, leaving you free to concentrate on managing your business.
We can also prepare your benefits and expenses forms and advise you of any filing requirements and national insurance due. Benefits and expenses can be a complicated area and knowing what to report can be tricky.
We can file all your in-year and year end returns with HMRC and provide you with P60s to distribute to your employees at the year end.
We also offer a solution to meet your auto-enrolment obligations.
Businesses dealing with the requirements of VAT legislation will agree that this is often a complex area.
Our compliance services offer support for all stages of completing your VAT returns, whether you need advice on the treatment of specific transactions or have produced your records and would like verification that they are correct.
We can also advise on the pros and cons of voluntary registration, extracting maximum benefit from the rules on de-registration and the Flat rate VAT scheme.
Our consultancy service guides you through the intricacies of the legislation, pinpointing areas where you may be able to relieve or partly relieve the cost of VAT for your business, for example when purchasing new equipment or undertaking new projects such as property development.
For a meeting to discuss VAT and obtain further advice please call us on 01332 202660.
We can conduct a full tax review of your business and determine the most efficient tax structure for you.
We give personal tax advice to a wide variety of individuals, including higher rate tax payers, company directors & sole traders.
We can assist with:
For a meeting to discuss your requirements please call us on 01332 202660.
Understand your needs
Firstly we listen and gain an understanding of your business and what you are aiming to achieve.
We seek your opinions on the service we provide and respond to feedback in order to upgrade and improve what we do.
Build a relationship
Success in business is based around relationships and trust. Our objective is to develop and build strong relationships with our clients, based on two way trust and respect.
Confirm your expectations
Our aim is to help you maximise your business potential and we tailor our service to meet your requirements and agree a timetable for delivering them.
Communication is important to the success of any commercial venture. It is therefore a vital part of our work with you, sharing the knowledge and ideas that help you to realise your ambitions.
Understand your needs
Confirm your expectations
Build a relationship
Straightforward and easy to deal with Adrian Mooy & Co provide an efficient, friendly and professional service - payroll, tax returns, annual accounts and VAT returns are always done on time. Eddie Morris
Call us on 01332 202660
What are Super-deductions?
A new tax investment incentive for companies
Perhaps the most innovative give-away in the recent budget was “Super-deductions for investment expenditure”.
What does this mean?
Companies that invest in qualifying plant and machinery in the period from 1 April 2021 to 31 March 2023 will benefit from enhanced capital allowances. Investments in assets that qualify for the main rate of capital allowances of 18% will benefit from a 130% first-year allowance. This means that for every £100 that you spend, you can deduct £130 in computing your taxable profits. This is equivalent to a tax saving of 24.7%.
What this does not mean?
What this change does not mean is the notion that you can deduct 130% of the cost of a qualifying purchase from your tax bill. The deduction is made from your company’s taxable profits.
If your company invests say £5,000 in qualifying plant it will be able to write off £6,500 (£5,000 x 130%) against its taxable profits. If your company has taxable profits more than £6,500, it will save £1,235 (£6,500 x 19%) in corporation tax. Which means:
· Your tax saving is 24.7% (£1,235/£5,000) of your investment cost, and
· The net cost of your investment is effectively £3,765 (£5,000 - £1,235).
Beware the fine print
As you would expect, there will be circumstances – grey areas – where the legislation that maps out the do’s and don’ts to claiming this relief will deny you the 130% deduction. In their notes describing the proposed changes HMRC said:
“Certain expenditures will be excluded…, there will be exclusions for used and second-hand assets and expenditures on contracts entered into prior to 3 March 2021 even if expenditures are incurred after 1 April 2021. Plant and machinery expenditure which is incurred under a Hire Purchase or similar contract must also meet additional conditions to qualify for the super-deduction...”
And there are alternatives
Even if you cannot claim this 130% Super-deduction, your expenditure may qualify for the existing 100% Annual Investment Allowance, a 50% or 100% First Year allowance or a range of writing down allowances.
Check out if you could claim
However, this is a significant incentive to invest if your company is likely to be profitable from 1 April 2021. To ensure that any significant investment you may make will qualify for the Super-deduction or to discuss other tax options, please call.
New system for 2019/20 late filing penalty appeals
Due to the pandemic many taxpayers missed not only the usual 31 January 2021 deadline for submitting their 2019/20 self-assessment tax returns but the extended one of 28 February. To reduce admin for agents HMRC is introducing a simplified appeal process against the resulting penalties. How will it work?
Taxpayers who missed the 28 February deadline for filing their 2019/20 self-assessment will automatically be charged a late filing penalty of £100. They have the right to appeal against the penalty if they have a reasonable excuse for filing late. This includes being prevented from meeting the deadline because of direct or indirect effects of the pandemic. HMRC expects this will apply to many taxpayers who are represented by accountants.
HMRC is therefore providing a bulk appeal process which accountants can use to file appeals on behalf of their clients where coronavirus was the root cause their returns being late. The process will be available from 24 March for a period of six months.
There are conditions and exclusions for using the bulk service, for example accountants must use HMRC’s special template.
Electric cars from April 2021
For 2020/21, it was possible to enjoy an electric company car as a tax-free benefit. While this will no longer be the case for 2021/22, electric and low emission cars remain a tax-efficient benefit.
How are electric cars taxed? - Under the company car tax rules, a taxable benefit arises in respect of the private use of that car. The taxable amount (the cash equivalent value) is the ‘appropriate percentage’ of the list price of the car and optional accessories, after deducting any capital contribution made by the employee up to a maximum of £5,000. The amount is proportionately reduced where the car is not available throughout the tax year, and is further reduced to reflect any contributions required for private use.
The appropriate percentage - The appropriate percentage depends on the level of the car’s CO2 emissions. For zero emission cars, regardless of whether the car was first registered on or after 6 April 2020 or before that date, the appropriate percentage for electric cars is 1% for 2021/22. For 2020/21 it was set at 0%.
This means that the tax cost of an electric company car remains low in 2021/22.
Example - J has an electric car with a list price of £30,000. The car was first registered on 1 April 2020.
For 2020/21, the appropriate percentage for an electric car was 0%, meaning that J was able to enjoy the benefit of the private use of the car tax-free.
For 2021/22, the appropriate percentage is 1%. Consequently, the taxable amount is £300 (1% of £30,000).
If Jaz is a higher rate taxpayer, he will only pay tax of £120 on the benefit of his company car. If he is a basic rate taxpayer, he will pay £60 in tax. This is a very good deal.
His employer will also pay Class 1A National Insurance of £41.40 (£300 @ 13.8%).
For 2022/23 the appropriate percentage will increase to 2%.
Low emission cars - If an electric car is not for you, it is still possible to have a tax efficient company car by choosing a low emission model.
The way in which CO2 emissions are measured changed from 6 April 2020. For 2020/21 and 2021/22, the appropriate percentage also depends on the date on which the car was first registered as well as its CO2 emissions. For low emission cars within the 1—50g/km band, there is a further factor to take into account – the car’s electric range (or zero emission mileage). This is the distance that the car can travel on a single charge.
The following table shows the appropriate percentages applying for low emission cars for 2021/22.
Appropriate percentage for 2021/22 for cars with CO2 emissions of 1—50g/km
Electric range Cars first registered Cars first registered
before 6.4.2020 on or after 6.42020
More than 130 miles 2% 1%
70—129 miles 5% 4%
40—69 miles 8% 7%
30 – 39 miles 12% 11%
Less than 30 miles 14% 13%
As seen from the table, choosing a car with a good electric range can dramatically reduce the tax charge. Assuming a list price of £30,000, the taxable amount for a car first registered on or after 6 April 2020 with an electric range of at least 130 miles is £300 (£30,000 @ 1%); by contrast, the taxable amount for a car with the same list price first registered before 6 April 2020 with an electric range of less than 30 miles is £4,200 (£30,000 @ 14%).
The moral is to choose a new greener model & you will be rewarded with a lower tax bill.
SEISS Action if claiming the 4th grant
Action to take if eligible for the 4th SEISS grant Feb-Apr 2021
Look out for communication from HMRC April 2021
HMRC will be contacting you in mid-April to let you know if you are eligible to claim the 4th SEISS grant for the quarter ending 30 April 2021.
This will be sent by letter, email or within HMRC’s online service and it will advise you of the earliest date you can make your claim.
Before making your claim
To make your claim you will need to gather together the following information:
• Your self-assessment unique taxpayer reference (UTR)
• National Insurance number
• Government Gateway user ID and password
• Your UK bank details including sort code, account number, name on the account and address linked to the account.
You may also need to answer questions about your passport, driving license or other information held on your credit file.
You may need to back up your claim
You will need to keep evidence that your business has suffered reduced activity. For example, business accounts show reduced activity, records of cancelled contracts or appointments, record of any dates you suffered reduced activity due to lockdown or similar government restrictions.
Additionally, you will need to keep details of the following:
• A record of dates you had to close due to government restrictions
• NHS Test and Trace instructions if self-isolating
• NHS instruction to shield
• Test results if diagnosed with coronavirus
• Letters from school regarding closures that required you take on additional child care
Making your claim
You can only apply online, and the online service is timed to open from late April 2021. Your letter from HMRC will advise you of the earliest date you can apply.
You must make the claim personally, we cannot do this for you.
Once you have completed the claims process you should receive your grant within 6 days.
We can help
Although we cannot directly make claims for clients we can help if you are unsure if you should make a claim or you are having difficulty completing the online application process.
Reporting Benefits in Kind (BiKs)
Filing deadlines and tax saving tips for 2020-21
At the end of each tax year, you will usually need to submit a P11D form to the tax office for each employee you have provided with expenses or benefits, for example, a company car.
The total taxable benefits you provide to all employees will also create a Class 1A employer’s NIC charge, and this will need to be reported to HMRC by filing a further return, P11D(b).
Note: If HMRC have asked you to submit a P11D(b), but you have no taxable benefits to report, you can tell them you do not owe Class 1A NIC by completing a formal declaration via your online government gateway account.
What are the filing deadlines for 2020-21?
What you need to doDeadline
Submit your P11D forms online to HMRC - 6 July 2021
Give your employees a copy of the information on your forms - 6 July 2021
Tell HMRC the total amount of Class 1A National Insurance you owe on form P11D(b) - 6 July 2021
Pay any Class 1A National Insurance owed on expenses or benefitsMust reach HMRC by 22 July 2021 (19 July 2021 if you pay by cheque)
Note: You will be charged a penalty of £100 per 50 employees for each month or part month your P11D(b) is late. You will also be charged penalties and interest if you are late paying HMRC.
Talk to us before you file your P11D returns
There may be tax saving opportunities you could discuss with employees that would save them income tax and you the additional NIC charge. We have outlined two ideas for company car drivers you could consider below.
Avoiding the car fuel benefit charge
Employees not only pay additional tax for the use of a company car, but they also pay a hefty additional tax charge if their employer pays for private fuel. The car fuel benefit charge can be avoided if the employee records actual private mileage and repays their employer based on an agreed rate per mile.
Were company car drivers furloughed during 2020-21?
If any of your employees that had the use of a company car were furloughed during 2020-21, and the car was not made available for private use during this period, you can advise HMRC of the “not available” period when you complete their P11D. This will reduce any benefit charges for 2020-21.
Let us help you crunch the numbers
Please call if you would like to discuss options to reduce BiK tax charges for your employees or prepare and file the necessary returns. And do not forget, if you can reduce income tax charges for employees you will not only boost their moral, but you will also lower the amount of Class 1A NIC that you will have to pay as their employer.
Doing up properties – Are you trading?
There can be money to be made buying a property in a dilapidated state, renovating it, and selling it for a profit. However, when it comes to tax, it is important to know whether the ‘profit’ element is a capital gain or a trading profit. This will determine how it is taxed and at what rate.
Trading or investment
The tax consequences will depend on whether the property is an investment or whether there is a trade. The question is whether you are a property developer or a property investor.
Much of it comes down to your intention when you bought the property. If the aim was to buy the property, do it up and then let it out, the property will count as an investment property. However, if the intention is to buy, renovate and sell at a profit, HMRC may regard you as trading. However, an intention to sell at a profit at some point in the future does not automatically mean you are trading. Also plans change, and a property purchased as a long-term investment might be sold after a relatively short period of time as a result of a change in personal circumstances.
Badges of trade
The concept of the ‘badges of trade’ has been developed from case law and provides something of a checklist which can be used to determine whether an activity is a trade or an investment. The six badges of trade are as follows:
1. The subject matter of the transaction.
2. The length of the period of ownership.
3. The frequency or number of similar transactions.
4. Reasons for the sale.
5. Motive when acquiring the asset.
Where there is a trade, the property will only be held for as long as it takes to do up and sell. A property developer is likely to develop more than one property, either simultaneously or in succession. Where there is a trade, the property will be sold to realise a profit; for an investment property, the sale may be triggered by other factors.
Case study 1
Paul inherits some money and invests in a property, which he plans to do up and rent out. He completes the renovations and rents out the property for six years before selling it to enable him to buy a larger family home.
The property was purchased as an investment and would be regarded as an investment property. The gain on sale would be liable to capital gains tax.
Case study 2
Mark sees a run-down property on the market and spots the opportunity to make a profit. He buys the property, spends six months renovating it, selling once complete, making a profit of £40,000. He invests the proceeds in another property to renovate and sell.
Mark would be treated as trading. His aim is to sell the properties at a profit. Consequently, he would be liable to income tax rather than capital gains tax on the profit.
Bounce-Back loans - Pay as You Grow options
You may have received, or are about to receive, a letter from your bank if you took out a government-backed Bounce-Back Loan (BBL) last year. You may remember that in the first year of the BBL no repayments were required, and the government picked up the tab for any setup costs and interest charges.
Banks are therefore writing to remind account holders that BBL repayments are about to commence if the first year has expired. They are also including details of certain relaxations that are available following the Chancellor’s Pay as you Grow announcements last month.
Repayment options. Pay as you Grow (PAYG)
If you need to reduce your monthly repayments, you can advise your bank that you want to take advantage of one the following PAYG concessions:
• Reduce monthly payment for six months by paying interest only. This option is available up to three times during the course of your BBL.
• You could take a payment holiday for six months. This option is available once during the term of your BBL.
• You could request an extension of your BBL loan term from six to ten years. This would reduce your monthly repayments. For example, on a £5,000 loan, monthly repayments would drop from £88.74 per month to £51.75 per month.
You can use certain combinations of these options together, but as the banks will point out, all of these options will increase the overall interest costs of your loan.
How might this affect your credit score?
If you ultimately fail to meet your obligations to repay your BBL the government has fully guaranteed your loan. However, your bank will point out that failure to repay may affect your credit score.
Rather cryptically, correspondence from High Street banks we have seen regarding the take-up of PAYG options, also includes the following remark:
Using these options [PAYG] won’t affect your credit score, though it may influence how we assess your creditworthiness in the future…
You would be forgiven if you were confused by the two contradictory remarks in this sentence.
Should you take advantage of the PAYG options?
If you have concerns that you need all the help you can get in the coming months and yes, you would like to make the most of the PAYG options, please call so we can discuss your options including any likely consequences for your credit worthiness.
Reduced rate of VAT for hospitality and leisure
The hospitality and leisure industries have been severely affected by the Coronavirus pandemic. To help businesses in these sectors to get back on their feet, a reduced rate of VAT of 5% rather than the standard rate of 20% will apply to certain supplies for a limited period, from 15 July 2020 to 12 January 2021.
Food and drink supplied for consumption in the premises, for example by a restaurant or a bar, and hot takeaway food and beverages are normally liable for VAT at the standard rate of 20%. During the support period, the 5% rate will apply instead to:
• hot and cold food for consumption on the premises on which they are supplied;
• hot and cold non-alcoholic beverages for consumption on the premises on which they are supplied;
• hot takeaway food for consumption off the premises on which it is supplied;
• hot takeaway non-alcoholic beverages for consumption off the premises on which they are supplied.
Hotel and holiday accommodation
For businesses supplying hotel and holiday accommodation, the 5% rate VAT applies during the support period to:
• supplies of sleeping accommodation in a hotel or similar establishment;
• certain supplies of holiday accommodation;
• charge fees for caravan pitches and associated facilities;
• charge fees for tent pitches and camping facilities.
Meals provided to guests in long-term holiday accommodation (more than 28 days) will also benefit from the reduced rate, but the hire of motor caravans will not.
Admission to attractions
The reduced rate of 5% also applies during the support period in respect of admission to certain attractions which would normally be liable for VAT at the standard rate. However, if the admission fee is exempt from VAT, this will take precedence over the 5% charge and the admission charge will remain exempt.
The temporary reduction will apply to admissions to shows, theatre, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events where these are not included in the existing cultural exemption.
Impact on flat rate scheme
VAT registered businesses using the flat rate scheme should note that some of the flat rate percentages have been reduced to take account of the temporary reduction in the rate of VAT.
Personal and family companies – Optimal salary for 2021/22
A popular profit extraction strategy for shareholders in personal and family companies is to pay a small salary and to extract further profits as dividends. The optimal salary will depend on whether the employment allowance is available to shelter any employer’s National Insurance liability that may arise.
Preserving pension entitlement
One of the main advantages of paying a small salary is to ensure that the year remains a qualifying year for state pension and contributory benefit purposes. To qualify for a full state pension on retirement, an individual needs 35 qualifying years.
For the year to be a qualifying year, earnings must be at least equal to the lower earnings limit. A director has an annual earnings limit, and for 2021/22, the annual lower earnings limit is set at £6,240. Where the shareholder is not a director, earnings for each earnings period must be at least equal to the lower earnings limit. For 2021/22, the weekly and monthly thresholds are, respectively, £120 and £520.
Contributions are payable by the employee at a notional zero rate on earnings between the lower earnings limit and the primary thresholds. The employee starts paying contributions once earnings exceed the primary threshold.
Optimal salary – Employment allowance is not available
The employment allowance is not available to companies where the sole employee is also a director. This means that personal companies will generally be unable to claim the allowance.
For 2021/22, the primary threshold is set at £9,558 (£184 per week/£797 per month) and the secondary threshold is set at £8,840 (£170 per week, £737 per month).
Although the maximum salary that can be paid without paying any National Insurance is one equal to the secondary threshold of £8,840 for 2021/22, it is beneficial to pay a higher salary equal to the primary threshold of £9,568. Employer’s National Insurance will be payable on the salary to the extent that it exceeds £8,840 at a cost of £100.46 (13.8% (£9,568 - £8,840)), however, this is outweighed by the corporation tax deduction at 19% on the additional salary and the employer’s NIC.
Once the primary threshold is reached, employee contributions are payable at 12%. At this point, the combined National Insurance cost of 25.8% (13.8% + 12%) is more than the corporation tax saving and paying a salary in excess of the primary threshold is not worthwhile.
Thus, where the employment allowance is not available, the optimal salary is equal to the primary threshold for 2021/22 of £9,568 (£184 per week, £797 per month).
Optimal salary - Employment allowance is available
In a family company scenario, the employment allowance will be available if there is more than one employee on the payroll. As long as the employment allowance is available to shelter the employer’s National Insurance that would otherwise arise, the optimal salary is one equal to the personal allowance, set at £12,570 for 2021/22. No National Insurance is payable until the primary threshold is reached. Above this level, employee National Insurance is payable at the rate of 12%. However, the additional salary saves corporation tax at 19%. However, once the personal allowance has been used, tax at 20% is payable as well as employee’s National Insurance of 12%, which exceed the corporation tax deduction of 19%.
Thus, where the employment allowance is available, the optimal salary for 2021/22 is one equal to the personal allowance of £12,570 (£242 per week, £1,048 per month).
If you commenced self-employment after 5th April 2019
If you started your self-employment after 5 April 2019, you were initially denied support under the Self-Employed Income Support Scheme (SEISS) and the first three quarterly payouts to 31 January 2021.
Thanks to a change in the recent Budget, you may be eligible – for the first time – to grants that will be made available for the quarter end 30 April 2021 and a final period to 30 September 2021.
HMRC are adding a further security check
To counter fraudulent use of the SEISS scheme, HMRC have decided to contact taxpayers who became self-employed during 2019-20, and who submitted a self-assessment return for that period.
What will the letter say?
The letter will tell you to expect a telephone call on the number provided on your tax return. If our contact details were added to your return, HMRC will ask us to pass on your contact number.
On this occasion we cannot deal directly with HMRC and they will need to speak with you to obtain proof of identity and evidence of trade in the form of bank statements.
Why a letter and then a phone call?
Here’s what HMRC said:
We are aware of increased scam activity related to HMRC’s coronavirus support schemes. The purpose of the letter is to explain to you that this is a genuine call, and to give customers details on how to recognise it as such.
Worried about HMRC calling you?
HMRC’s reason for this added layer of security seems to be to exclude fraudsters from making claims. But if you have any concerns regarding this process, please call.
Can you claim SEISS 4th & 5th payouts during 2021?
If you commenced self-employment after 5th April 2019
If you started your self-employment after 5 April 2019, you were denied support under this scheme from the first three quarterly payouts to 31 January 2021.
The good news is that due to lobbying by tax professionals and self-employed support groups the SEISS is being opened to traders who commenced after 5 April 2019. However, there is an additional hurdle to jump before you can make a claim; your tax return for 2019-20 needs to have been filed by midnight 2 March 2021.
Additionally, your business must be adversely affected by the pandemic and your profits from self-employment must be at least 50% of your income and less than £50,000.
If you commenced self-employment on or before 5th April 2019
If you qualified for the first three grants, you should qualify for the further grants due this year unless your circumstances have changed, for example, if you are no longer adversely affected by COVID disruption.
For those of you who may be claiming for the first time, you will need to claim using your online tax account. HMRC should advise you when the claims process is open for business.
If claiming the fourth grant – 1 February 2021 to 30 April 2021
The fourth grant under the scheme covers February to April 2021. It is worth three months’ average profits capped at £7,500 and can be claimed from late April.
If claiming the fifth and final grant – 1 May 2021 to 30 September 2021
The fifth and final grant covers the period from May to September 2021. The amount of the grant will depend on the impact that Covid-19 disruption has had on your profits.
The final grant can be claimed from late July.
There is a potential misfit in this fifth grant. Although it covers a five-month period (May – September 2021) the actual payout for this period is based on three months. What about the other two months?
More time to pay back deferred VAT and tax
At the start of the pandemic, VAT registered businesses were given the option of deferring payment of any VAT that fell due in the period from 20 March 2020 to 30 June 2020. Self-assessment taxpayers were also given the option of delaying their second payment on account for 2019/20, which was due by 31 July 2020. In his Winter Economy Plan, the Chancellor extended the deadlines by which the deferred tax must be paid, giving further help to those struggling to pay their tax bills as a result of Coronavirus.
VAT-registered businesses which took advantage of the opportunity to delay paying VAT that fell due between 20 March 2020 and 30 June 2020 were originally required to pay the deferred VAT by 31 March 2021. However, there is now another option for those for whom this presents a challenge, and they can instead pay the deferred VAT in smaller equal instalments up to the end of March 2022. Those wishing to take advantage of the instalment option will need to opt into the scheme; failure to do this will mean that the VAT owed will need to be repaid by 31 March 2021. Where businesses are able, they can if they so wish pay the deferred VAT in full by 31 March 2021.
Depending on the business’ VAT quarter dates, deferred VAT will relate to the quarter ending 29 February 2020, the quarter ending 31 March 2020 or the quarter ending 30 April 2020. VAT due after 30 June 2020 (i.e. for the quarter to 31 May 2020 and subsequent quarters) must be paid in full and on time. Where direct debits were cancelled, these should be reinstated if this has not already been done.
Regardless of whether the instalment option is chosen or not, the deferred VAT will need to be paid in addition to the usual VAT payments, and it is prudent to budget for this.
Under the original proposals, self-assessment taxpayers could delay paying their second payment on account for 2019/20 due by 31 July 2020 and instead pay it by 31 January 2021, along with any balancing payment due for 2019/20 and the first payment on account due for 2020/21. For some taxpayers who have been affected financially by the pandemic, this will be something of a stretch. In recognition of this, self-assessment taxpayers who are finding it difficult to pay what they owe can set up an automatic time to pay arrangement online, as long as they do not owe more than £30,000 in tax.
Running a car on the company - Benefit in kind
Despite successive Governments changing the rules to increase the tax take, the provision of company cars remains one of the more popular benefits an employer can give to an employee.
Benefit in kind
A director or employee who earns more than £8,500 is charged an amount as a benefit in kind (BIK) if the car is used by an employee but owned by the employer. The calculation is a percentage of the car's list price appropriate to the level of the car’s CO2 emissions, i.e. the higher the CO2, the higher the tax. An additional rate is charged in respect of car fuel provided for private use. With fully electric vehicles increasingly becoming the 'norm' 2020/21 saw the BIK charge reduce to 0% before rising to 1% in 2021/22 and then 2% through to April 2025. This massive reduction in percentage makes arguments for a company car alternative seem outdated. However, there is still a place for alternatives.
A company car allowance is a cash allowance added to the employees' salary allowing them to purchase or lease a vehicle privately. It offers the employee the perks of having a new vehicle without the employer having the hassle of running a car fleet. As the payment paid is part of the salary it is charged to tax at the usual income tax and NIC rates under PAYE.
There are no set rules as to the amount that the employer can pay as a company car allowance but it is generally assumed that the cash offered will be approximately the same amount as the employer would have paid to lease the company car.
Employees paid an allowance
Where an employee is paid an allowance for using a personally owned car on business, this is tax-free up to a certain point. Currently, if the payment made is 55p for example, for each business mile 45p of this can be claimed and paid tax-free; the balance of 10p being taxable. How the payment is made will determine whether an exemption is allowed for NI purposes. To avoid the NIC charge car allowances need to be paid in proportion to the amount of business travel and then the 45p per mile exemption can be claimed.
If directors or employees are paid a fixed allowance towards their car’s running costs, then the amount needs to be on a sliding scale linked to the expected business mileage (e.g. those who expect to travel up to 4,000 miles per year receive one set rate, up to 8,000 miles a different amount and above that another etc.) This way, initially NIC will be payable on the allowance and then, the NI-free element of the allowance can be calculated when the exact business mileage is known; any amount overpaid can be refunded.
Using your own car
Many employees use their own car for business purposes and pay for the fuel used via a company fuel card. For a car fuel tax charge to arise, the employee must first be chargeable to tax in respect of the car, which means it must be a company car and used by either a director or an employee. There will be a BIK charge on the cost of the private fuel obtained by using the company card unless the employee reimburses for the private fuel used.
To ensure that the rules are adhered to, the company should have a written policy in place as confirmation. In addition, procedures should be put in place to keep accurate mileage records and a monthly amount for private mileage can then be deducted from net salary.
CIS compliance for property developers
The Construction Industry Scheme (CIS) is a scheme whereby contractors of building firms are required to deduct tax at source from payments made to sub-contractors working for them. Some sub-contractors are entitled to be paid without any tax deduction, others at 30% as per HMRC's instructions but the majority have 20% tax withheld before payment. The scheme requires registration as a contractor and administration in the form of monthly submissions; the penalties for non and/or late submission can be severe.
The definition of 'contractor' is widely drawn - HMRC's Construction Industry Scheme guide CIS 340 defines a (mainstream) contractor as 'a business or other concern that pays subcontractors for construction work. Contractors may be construction companies and building firms, but may also be ... many other businesses.'
The definition of ‘construction work’ is again widely drawn to include the construction, alteration, repair, extension, demolition or dismantling of buildings and/or work - although there are exceptions. A business set up to undertake such construction work is obviously required to operate the scheme as would a property developer undertaking a trading business in construction of properties being developed for sale (even if just on one property). Private householders paying for work on their own homes will never fall within the CIS regime's scope.
Buying property as an investment
In comparison, someone who buys and rents out property typically does so as an investment; this would appear to be confirmed as under section 12080 of The Construction Industry Scheme Reform Manual it states that:
"A 'property investment business' is not the same thing as a 'property developer'. A property investment business acquires and disposes of buildings for capital gain or uses the buildings for rental.“
However, a problem arises when an investor landlord buys a property, doing it up intending to keep it as a rental property - is that person now a developer and therefore caught under the CIS rules? HMRC confirm that this is the case as further on in the CIS manual it states that:
"Where a business that is ordinarily a property investor, undertakes activities attributed to those of ‘property development’, they will be considered a mainstream contractor [caught for CIS] during the period of that development".
Therefore, the investor now becomes a developer liable to register as a contractor under the CIS regime even if just one property is renovated.
Wider scope for the CIS scheme
The system goes further because even where the landlord is predominantly a property investor and therefore not a construction business (e.g. a restaurant chain), they are deemed to be a contractor and subject to the CIS regime if they spend more than £1 million a year, on average, for three years on ‘construction operations’ (e.g. repairs, construction of extensions etc), on their premises or investment properties. There is a slight 'let out' in that such businesses can ignore expenditure on property such as offices or warehouses used by the business itself.
Some businesses commission construction firms to undertake work for them but if the work is for the business's own premises, used for that business, then the business itself is not obliged to register or act as a CIS contractor.
‘De minimus’ limit
There is a 'de minimus' limit in that on application, HMRC can authorise deemed contractors not to apply the scheme to small contracts for construction operations amounting to less than £1,000, excluding the cost of materials however this arrangement does not apply to mainstream contractors.
Temporary increase in SDLT residential property threshold
Stamp Duty Land Tax (SDLT) is payable where property is acquired in England and Northern Ireland. Land and Building Transaction Tax (LBTT) is payable in Scotland and Land Transaction Tax (LTT) is payable in Wales,
SDLT is payable where the chargeable consideration exceeds the relevant threshold at the rates applicable to each slice of the consideration. A supplement of 3% applies to second and subsequent residential properties where the consideration is more than £40,000. The supplement does not apply where the main residence is exchanged.
Temporary increase in residential threshold
The SDLT residential threshold was temporarily increased to £500,000 from 8 July 2020 to 31 March 2021. The thresholds applying for LBTT and LTT were also increased for a temporary period, but these are not considered here.
Property investors and those buying second homes also benefitted from the increase as the 3% supplement is applied to the rates, as reduced.
The residential threshold will remain at £500,000 beyond 31 March 2021 and will stay at this level until 30 June 2021. From 1 July 2021 until 30 September 2021 it will reduce to £250,000 returning to its normal level of £125,000 from 1 October 2021.
The first time buyer threshold will return to £300,000 for properties up to £500,000 from 1 July 2021.
Window of opportunity
The extension to the period for which the £500,000 threshold is in place provides an opportunity for investors to save money if they can complete by 30 June 2021. If this is not possible, there are still savings on offer where completion takes place by 30 September 2021.
NL Wage and NM Wage changes from April 2021
Under the minimum wage legislation, workers must be paid at least the statutory minimum wage for their age. There are two types of minimum wage – the National Living Wage (NLW) and the National Minimum Wage (NMW). From 1 April 2021, as well as the usual annual increases, the age threshold for the National Living Wage is reduced.
National Living Wage - The NLW is a higher statutory minimum wage payable to workers whose age is above NLW age threshold. Prior to 1 April 2021, it was payable to workers age 25 and above. From 1 April 2021, the NLW age threshold is reduced; from that date it must be paid to workers aged 23 and above.
National Minimum Wage - The NMW is payable to workers who are below the age of entitlement to the NLW. Prior to 1 April 2021, the NMW applied to workers above compulsory school leaving age and under the age of 25; from 1 April 2021, the NMW must be paid to workers under the age of 23 and over the school leaving age.
There are three NMW age bands:
Workers aged 21 and 22 (prior to 1 April 2021, workers aged 21 to 24).
Workers aged 18 to 20.
Workers aged 16 and 17.
Apprentices - There is also a separate NMW rate for apprentices. It is payable to apprentices under the age of 19 and also to those who are over the age of 19 and in the first year of their apprenticeship.
Accommodation offset - Employers who provide their workers with accommodation are able to pay a lower minimum wage to allow for the cost of the accommodation provided. The amount that you are obliged to pay is found by deducting the ‘accommodation offset’ from the appropriate minimum wage for the worker’s age. The daily accommodation offset rate can be deducted for each full day for which accommodation is provided. For these purposes, a day runs from midnight to midnight. The weekly accommodation offset rate is seven times the daily rate.
Rates from 1 April 2021
NLW: Workers aged 23 and above £8.91 per hour
NMW: Workers aged 21 and 22 £8.36 per hour
NMW: Workers aged 18 to 20 £6.56 per hour
NMW: Workers aged 16 and 17 £4.62 per hour
NMW: Apprentice rate £4.30 per hour
Accommodation offset £8.36 per day £58.52 per week
Check you are paying the correct rates
Employers should ensure that the amounts that they pay workers on the NLW or NMW from 1 April 2021 are in line with the new rates. They should also ensure that they have processes in place to identify when a worker moves into a new age bracket. From 1 April 2021, this will include workers aged 23 and 24 who will be entitled to the NLW from that date.
Statutory payments from April 2021
By law, there are various statutory payments that an employer must make to an employee while the employee is absent from work due to the birth, adoption or death of a child. The employer must pay employees who meet the qualifying conditions at least the statutory amount for the relevant pay period. The statutory payment rates are increased from April 2021 and apply for the 2021/22 tax year.
An employee is only entitled to statutory payments if their average earnings for the qualifying period are at least equal to the lower earnings limit for National Insurance purposes.
Statutory maternity pay
Statutory maternity pay (SMP) is payable to an employee who is on maternity leave. Although an employee can take up to 52 weeks’ statutory maternity leave, statutory maternity pay is only payable for 39 weeks. The payment ceases if the employee returns to work before the end of the maternity pay period (MPP).
For the first six weeks of the MPP, SMP is payable at the rate of 90% of the employee’s average earnings. For the remainder of the MPP, SMP is paid at the lower of 90% of the employee’s average earnings and the standard amount. For 2021/22, this is set at £151.97 (up from £151.20 for 2020/21).
Statutory adoption pay
Statutory adoption pay (SAP) is payable to one parent on the adoption of a child. The other parent may be entitled to claim statutory paternity pay. The provisions for adoption pay and leave largely mirror those for maternity pay and leave – the employee is entitled to take up 52 weeks’ leave, while the adoption pay period (APP) runs for 39 weeks, unless the employee returns to work before the end of this period.
As with SMP, SAP is payable at the rate of 90% of the employee’s average earnings for the first six weeks and at the standard amount, or 90% of the employee’s average earnings if lower, for the remainder of the adoption pay period. The standard amount is £151.97 per week for 2020/21.
Statutory paternity pay
Statutory paternity pay may be payable on the birth or the adoption of a child. The child’s father, mother’s partner or the adoptive parent who is not in receipt of SAP and leave may be entitled to statutory paternity leave and paternity pay. Eligible employees are entitled to two weeks’ statutory paternity leave which may be taken in a single block or in two one-week blocks.
Statutory paternity pay is payable while the employee is on statutory paternity leave (as long as the eligible conditions are met) at the standard rate (£151.97 for 2021/22) or, if lower, at the rate of 90% of the employee’s average earnings.
Shared parental pay
The shared parental pay (ShPP) and leave provisions allow parents to share leave and pay following the birth or adoption of a child. Where an employee returns to work before the end of the MPP or APP, the employee can share the remaining leave and pay with their partner. Shared parental pay is payable at the standard amount, set at £151.97 for 2021/22, or where lower, at 90% of the employee’s average earnings.
Statutory parental bereavement pay
Parents are entitled to statutory parental bereavement leave following the death of a child under the age of 18 or a still birth after 24 weeks where this occurs on or after 6 April 2020. Bereaved parents are able to take two weeks’ parental bereavement leave, either in a single block or as two separate weeks. Eligible employees are also entitled to statutory parental bereavement pay (SPBP) at the standard amount (£151.97 for 2021/22) or, if less, at 90% of their average earnings.
Residence nil rate band frozen until April 2026
The residence nil rate band (RNRB) is an additional nil rate band that is available for inheritance tax purposes when a main residence is left to a direct descendant, such as a child or grandchild. Adopted children, stepchildren, children fostered at any time by the deceased and a child for whom the deceased was appointed a guardian or special guardian when the child was under 18 all count equally as direct descendants.
As with the nil rate band, it can be transferred to the surviving spouse or civil partner. Like the nil rate band, the surviving partner inherits the unused percentage of the deceased’s RNRB. However, this must be claimed by their executor on their death.
High value estates
The RNRB is available in full where the value of the estate is £2 million or less. For estates valued at more than £2 million, the RNRB is reduced by £1 for every £2 by which the value of the estate exceeds £2 million.
RNRB for 2021/22
The RNRB remains at its 2020/21 level of £175,000 for 2021/22. With a nil rate band of £325,000, a married couple or civil partners can pass on £1 million free of IHT as long as a main residence worth at least £350,000 is left to a direct descendant. They each have nil rate bands totalling £500,000 available to them. Special provisions apply to preserve the availability of the RNRB where the deceased has downsized or gone into care.
For 2021/22, the RNRB is not available to estates valued at more than £2.35 million.
RNRB frozen until April 2026
In common with many other thresholds, the RNRB is frozen until April 2026, remaining at its 2021/22 level of £175,000 for 2022/23, 2023/24 and 2025/26.
The lack of inflationary rises in the RNRB and the nil rate band may necessitate some forward planning if the value of the estate is likely to exceed the available nil rate bands. Giving away property in advance will not only open up the possibility of taking it outside the charge to inheritance tax if the deceased survives seven years and reducing the charge if the deceased survives at least three years from the date of the gift, it also protects against inflationary increases.
Where the main residence is owned as tenants in common, consideration could be given to each spouse/civil partner leaving their share to their children or grandchildren on their death, rather than to the surviving spouse/civil partner as this will offer some protection against rising property values.
Auto-enrolment - Re-enrolment & re-declaration
The Covid-19 pandemic has introduced many challenges for employers. However, despite the pandemic, their responsibilities in relation to auto-enrolment remain the same. The employer’s on-going duties include their re-enrolment and re-declaration obligations.
Every 3 years, the employer must put certain members of staff back into their auto-enrolment pension scheme and complete a declaration to tell the Pensions Regulator that they have done so. This is known as re-enrolment and re-declaration.
The key date is the third anniversary of the employer’s staging date or start date. Thereafter, the re-enrolment and re-declaration processes must be undertaken at three-year intervals.
Under re-enrolment, the employer must check:
whether they have staff to put back into the pension scheme and re-enrol them; and
write to staff who have been re-enrolled.
To do this, the employer will need to assess staff who have left the scheme or who have reduced their contributions.
Staff must be enrolled in a pension scheme automatically if:
they are aged between 22 and State Pension Age.
they earn over £10,000 a year (£833 a month, £192 a week).
If staff who meet the above criteria have previously opted out, they need to be re-enrolled.
Staff who need to be re-enrolled should be put back into the pension scheme within 6 weeks of the re-enrolment date. If this date is missed, it should be done within 6 weeks of the date on which staff were assessed.
If an employee does not want to be a member of the scheme, they can opt out. However, they must be re-enrolled if they are eligible at the re-enrolment date; once re-enrolled they can opt out. Opting out lasts only until the next re-enrolment date, at which time they must be put back in (but can then opt out again if they want to). Employers must re-enrol eligible staff even if they know they want to opt out.
Once staff have been re-enrolled, the employer must deduct employee contributions from their pay and pay them over to the scheme with the employer contributions.
The employer must write to staff who have been re-enrolled to let them know, and also to inform them of the contributions that will be paid and that they can opt out if they want to.
The final stage of the re-enrolment and re-declaration process is to submit the re-declaration of compliance. This has to be done regardless of whether or not staff have been put back into the pension scheme.
The re-declaration of compliance is an online form which confirms to the Pensions Regulator the employer has met their legal obligations in relation to auto-enrolment. The re-declaration of compliance must be filed no later than 5 months from the third anniversary of the duties start date, or staging date, as appropriate. The deadline is the same regardless of whether staff within 6 weeks are assessed within of the re-enrolment date, or at a later date.
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Adrian Mooy & Co Ltd - 61 Friar Gate Derby DE1 1DJ - firstname.lastname@example.org
Adrian Mooy & Co is the trading name of Adrian Mooy & Co Ltd. Registered in England No. 05770414.
Registered to carry out audit work in the UK by The Association of Chartered Certified Accountants.
Details of audit registration can be viewed at www.auditregister.org.uk under number 8011438.
Registered office: 61 Friar Gate, Derby, Derbyshire, DE1 1DJ