Rishi Sunak took to the Dispatch Box in Parliament to deliver the 2021 Spring Budget. His underlying promise was to deliver a fair and transparent budget in which he wants to ‘Build Back Better’
Headlines included an extension to the furlough scheme, the announcements of a number of Freeports around the UK and a new ‘Super deduction’ tax relief. The Chancellor also announced a significant increase to Corporation Tax and a freeze on the Income Tax thresholds with many economic commentators stating that the UK’s tax burden will now increase to its highest point since the 1960’s.
All the changes are detailed in the Carrington Budget Report which you can digest and form your own opinion. Certainly the Corporation tax changes will affect many clients and there will be a need to monitor much more closely the CT position of this as you go through your trading year. It will be possible to introduce some measures to mitigate this but planning in advance will be key.
One aspect that has largely gone under the radar is the notes buried in the pages of the budget about the new Financial Information Notice (FIN’s). For those of you that do not know, these new HMRC powers will allow them to obtain banking information without either the taxpayers or Tax Tribunals authority, in order to check a known persons tax position and (in the very small print) for the purposes of collecting a tax debt. It should be noted hat checking a tax position does not necessarily mean that a tax investigation has been opened. However this is a significant enhancement of HMRC’ s powers and is somewhat scary stuff in the realms of ‘Big Brother’.
On to other matters – if you still have any amount of VAT outstanding as a result of deferring it last year you will need to make arrangements with HMRC to repay this. HMRC has introduced automated process accessed through an online portal. This opened on 23 February and remain open until 21 June 2021. The company director or business owner must access this portal themselves, tax agents can’t use it to arrange a VAT payment plan on behalf of clients. This is because as part of the payment plan the business must set up a direct debit to make regular payments from their business bank account. Tax agents don’t have the authority to make payments out of clients’ bank accounts, so can’t enter the agreement on behalf of clients.
The good news is HMRC will allow businesses to arrange a payment plan for the deferred VAT even if they have already entered a time to pay arrangement for other taxes.
If you took a Bounce Back Loan (BBL) you can now opt out of making payments until 18 months after you originally took them out. The option to pause repayments will now be available to all from their first repayment, rather than after six repayments have been made.
Pay as You Grow now allows loan-holders to extend the length of BBLS loans from six to ten years, and reduce monthly repayments by nearly 50%. The updated scheme also means businesses can make interest-only payments for six months, in a bid to tailor the scheme to match individual business needs.
As always if you have any questions please don’t hesitate to contact us. We are all still working from home and the office phones are redirected.