Bournemouth Chamber of Trade & Commerce

Bournemouth Chamber of Trade and Commerce

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Government announces National Insurance and dividend tax increases

The Government has announced a considerable investment in both the NHS and Social Care. To fund this investment, the Government have introduced the Health and Social Care Levy from April 2022.

The NHS and Social Care Levy will raise the additional tax as follows:

  • 1.25% increase in National Insurance Contributions from Employers;
  • 1.25% increase in National Insurance Contributions from Employees;
  • 1.25% increase in National Insurance Contributions from the Self-Employed;
  • 1.25% increase in taxation on dividends;
  • Those of pensionable age will also pay the increased 1.25% National Insurance Contribution on any earned income from April 2023.

These tax increases will hit a broad range of taxpayers, from businesses to employees to investors and pensioners. This increased tax will also catch business owners who usually draw their income in the form of dividends.
These changes will lead to higher future costs for all businesses and especially companies, when combined with the 6% increase in Corporation Tax from April 2023. As a result, businesses may need to reduce their payroll or costs elsewhere or consider increasing prices, while individuals will need to think about managing the impact on their personal finances.

As a TC client, you may wish to consider some of the following options:

  • Advice on enhanced tax deductions including:
    • Capital Allowances;
    • Research and Development claims;
    • Patent Box;
  • Drawing down income before April 2022;
  • Advice on HR compliance and taxation implications around redundancies;
  • Employee incentive arrangements and tax-efficient benefits;
    • Review of business costs to identify potential savings;
    • Review of your investment portfolio to non-share investments.

In a separate matter, the Pension Triple Lock has been suspended for one year, given the link with earnings, so there is a double lock on 2.5% and Inflation.

If you would like to speak to us about how best to respond to these changes, please contact Taylorcocks.

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TC Group: Detailed guidance on VAT deferral scheme

HMRC has now provided further detailed guidance notes on your payment options for VAT that was deferred in 2020.

The original deferral scheme was introduced to assist VAT registered businesses so that they did not have to make a payment with their VAT return during the VAT period ending between 20th March and 30th June 2020.

The VAT deferral new payment scheme extends the original deferral and will be open from 23rd February up to and including 21st June 2021. You will need to use your Government Gateway access to join the scheme – we cannot do this for you through our agent account.

Anyone on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme will be invited to join the new payment scheme later in March 2021.

The new scheme lets your business pay its deferred VAT in equal instalments, interest-free; and choose the number of instalments, from two to eleven (depending on when you join).

It is important to note that in order to use the online service, businesses and sole traders registered for VAT must:

  • join the scheme yourself;
  • still have deferred VAT to pay;
  • be up to date with your VAT returns;
  • join by 21st June 2021;
  • pay the first instalment when you join; and
  • pay instalments by direct debit (if want to use the scheme but cannot pay by direct debit, there’s an alternative entry route for you).

If you join the scheme, you may still have a Time to Pay arrangement for other HMRC debts and outstanding tax (subject to acceptance).

Please call your usual TC Group contact if you require further assistance on 0330 088 7111.

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Taylorcocks: Construction Industry Domestic Reverse Charge to apply from 1st March 2021

Taylorcocks has reported that the Domestic Reverse Charge due to be introduced in October 2019 but was twice delayed due to Brexit and Coronavirus, but will now come in from 1st March.

The charge will apply to all VAT registered construction businesses in the UK and effectively moves the VAT liability from the supplier to the customer. It does not apply on supplies made to non-VAT registered customers or the end-user of the property, such as a business who uses the property in their business. It also does not apply to zero-rated supplies, activities not covered by CIS or supplies of staff or workers.

All VAT-registered subcontractors who are supplying building and construction services to a VAT registered contractor, who is CIS registered, will need to inform the contractor on their invoices that Reverse Charge applies and the need to account for the VAT under the reverse charge rules.

The subcontractor will not charge VAT on their invoice and therefore will only include the amount charged for their service in box 6 of their VAT return. This differs from the current position where the sub-contractor has to include the VAT on their invoice and account for this to HMRC in their VAT return.

The contractor receiving the construction service will have to account for VAT by including it in both box 1 & 4 of their VAT return, rather than simply processing the sub-contractors VAT invoice.
If you require any assistance with this, please contact your local partner at Taylorcocks or on 0330 088 7111.