As the impact of COVID-19 continues to create unprecedented challenges for the UK economy, taxpayers are advised to keep their accounts up to date. It is more important than ever to plan ahead and make sure you are using the reliefs available to you.
Our latest tax and financial planning strategies 2020/21 website pages are designed to help you to make the most of your business and your personal finances by highlighting the main tax allowances and incentives and suggesting strategies that you might wish to incorporate into your own financial planning.
Of course, minimising your tax liability represents just one element of your overall planning strategy. Every individual and business situation is very different, and your needs will vary according to your own specific circumstances. We recommend that you use these webpages as a starting point, and contact us for expert, tailored advice on any areas which apply to you.
To discuss your personal circumstances and your goals in order to develop a longterm financial plan, please do get in touch with the DRG team – we would be delighted to hear from you.
The impact of the COVID-19 pandemic has presented the UK with major challenges, which continue to unfold in terms of both scale and complexity. Against this backdrop the government has introduced a number of short-term measures to help businesses.
These measures, being temporary in nature, are not covered here. In this summary we focus on the other tax measures which may assist you, your family and your business when looking at longer term prudent financial planning.
Structure and Buildings Allowance
The rate of Structure and Buildings Allowance available on qualifying investments to construct new, or renovate old, non-residential structures and buildings increases to 3% from April 2020 and results in a welcome reduction of up to 17 years in the write-off period for this capital expenditure.
Business Asset Disposal Relief (formally known as Entrepreneurs’ Relief)- Lifetime Limit
Further reform to this relief was not unexpected in the March 2020 Budget. The lifetime limit was reduced from £10 million to £1 million for qualifying disposals made on or after 11 March 2020. Although the relief was reduced, this was welcomed as there was the possibility for the complete abolition of this valuable relief. No further consultations are expected on further changes to Business Asset Disposal Relief in the coming year
Relief for gains made on private residences
There have been a number of changes made to the Private Residence Relief (PRR) from April 2020.
When the property has been let or empty for a period of time, the final period of ownership, which can be counted towards the relief due to reduce the Capital Gains Tax (CGT), has been decreased from 18 months to nine months. Together with the abolishment of the relief due for periods when the property has been let, for all bar those residing with their lodgers, could result in a higher CGT liability for those selling properties.
Changes have also been made to the relief available when one spouse transfers the ownership of a property to the other spouse, when they do not reside in the property at the time of the transfer. Should the couple subsequently choose to reside in the property, this small change could potentially result in the property qualifying for full PPR relief for the full period of ownership.
Off-payroll working in the private sector
It was the government's intention that from April 2020 the off-payroll working rules, which currently apply to those contracting to public bodies, should also apply to contractors operating through personal services companies or intermediaries working within the private sector.
These rules can have the effect of subjecting the profits made by the intermediary in respect of the engagement (the ‘deemed payment’) to PAYE and NICs as if the contractor was an employee.
Plans have been delayed until April 2021 as a result of the COVID-19 pandemic, giving contractors more time to review contracts and working arrangements with their clients.
Your financial planning strategy
In the face of ongoing change, it is more important than ever to have a robust business and personal financial planning strategy in place, to help ensure that you and your family are financially secure and on course to achieve your long-term goals.
For further information, please take a look at our other Tax and financial strategies 2020/21 website pages.
Personal tax essentials - Tax and financial strategies 2020/21
Business tax strategies - Tax and financial strategies 2020/21
Tax and employment - Tax and financial strategies 2020/21
Personal and family financial strategies - Tax and financial strategies 2020/21
Retirement planning strategies - Tax and financial strategies 2020/21
Savings and Investment strategies - Tax and financial strategies 2020/21
Tax efficient estate planning - Tax and financial strategies 2020/21
To discuss your personal circumstances and possible tax and financial strategies for you and your business, please do get in touch with the team at DRG Chartered Accountants. We would be delighted to hear from you.
DISCLAIMER: This information is for guidance only, and professional advice should be obtained before acting on any information contained herein. We will not accept any responsibility for loss to any person as a result of action taken or refrained from in consequence of the contents of this publication.