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October 2021

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To October’s Business Companion News.

Personal Tax Return for 2020-21?
Do you need to do a personal tax return for 2020-21? Our guide explains who needs to complete a personal tax return. If you would like us to do yours we will need details of all your income for the 2020-21 tax year – our tax organiser will help you compile this. copies of your P60s and any pension statements. We also need details of self-employments and rental accounts for any rented properties.      

We include personal tax returns for Directors as part of our comprehensive Business Companion Service.
October 2021
· Latest news round-up
· Preserving FHL status for 2020/21
· Freeports – the tax breaks
· Business Loans to Directors
· October Questions and Answers
· October Key tax dates
Latest news round-up top
Health and Social Care Levy

Rumours of an imminent rise in NI rates started to circulate at the beginning of September, and were confirmed on 7 September with the publication of the government policy paper Build Back Better: Our Plan for Health and Social Care. The increase will initially take the form of a 1.25% increase on certain classes of National Insurance from April 2022, before becoming a separate ring-fenced charge from April 2023. The affected classes are:
Read More
Preserving FHL status for 2020/21 top
Freeports – the tax breaks top
A qualifying furnished holiday let (FHL) enjoys a number of favourable tax breaks – including business asset disposal relief, and the ability to claim capital allowances and rollover relief – when compared with non-qualifying properties.
Read More
Eight new Freeports were announced earlier this year, with each offering operators within the sites a number of tax incentives. The sites are:

– East Midlands Airport
Read More
Business Loans to Directors
Loans to directors can get pricey.  You have to pay a special 32.5% Corporation Tax surcharge on borrowings.  This is in addition to the 19% CT that you pay on the raw profits to create the cash to lend to yourself. 

Let us say that you borrowed £20,000 from your company a few years ago.  If your CT returns have been done properly you now have £6,500 of extra corp tax locked inside the HMRC until you repay the loan. (The calc is £20k multiplied by 32.5%).  This is something we can clear with an extra dividend in your latest accounts.  We make a reclaim in your company corporation tax return by resubmitting the return where the original special CT was declared.

The dividend will then attract 7.5% personal tax on the recipients.  Dividends falling within higher rate tax (Above £50,270 for 2021/22) are taxed at 32.5%.  Dividends falling within the additional rate of tax (£150k plus) are taxed at 38.1%.

As a general point borrowing from your company is a bad idea.  Borrowing money like this costs both 19% and 32.5% taxes.  If you borrow £1,000 from your company it costs the company £1,635 to lend it to you.
October Questions and Answers top
October Key tax dates top
Q1. I have been on the VAT flat rate scheme for several years. I have two business activities that fall into different categories with differing FRS percentages. I have apportioned VAT between the rates, but a chance conversation with an old colleague leads me to believe this is incorrect. What do I need to do?

Q2. I am preparing my tax return for 2020/21 using software. I have £10,000 of employer pension contributions as part of my remuneration annually. However, after realising some gains on investments in the year I also paid approximately £32,000 into a plan in the year. The return is showing an annual allowance charge of £4,000, but this looks excessive to me as I’ve only exceeded the allowance by £2,000! What’s going on?

Q3. I am buying some land in Shropshire. I am trying to understand the SDLT position, which is complicated due to the fact that some of the fields lie across the Welsh border. Most of the land is on the English side, so do I just file a return to the English authorities?
1 – Due date for payment of Corporation Tax for accounting periods ending 31 December 2020

5 – Deadline to notify HMRC of tax liability where not already in self-assessment

7 – Electronic VAT return and payment due for quarter ended 31 August 2021

14 – Claim deadline for employers for furlough days in September

14 – Quarterly CT61 form due

19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/10/2021

22 – Payment deadline for Class 1B NI on PAYE settlement agreements for 2020/21

31 – Paper self-assessment return filing deadline
Need Help? top
New Clients Welcome top
Please contact us if we can help you with these or any other tax or accounts matters.

In addition, if there’s anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list.
If you are not already a client and are interested in becoming one, we would love to discuss how we can help and provide you with a competitive quote for our services.

See details of our Business Companion Service.
About Us top
Simple Accounting Limited offers a cost effective Business Companion service to business owners who use MYOB, Acclivity, Mamut, Wave, Freeagent, or Quickbooks.

‘All clients using these software packages can benefit from our support. Visit our website for a look at the resource on offer.’

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95 Bridge Lanes, Hebden Bridge, Yorkshire, HX7 6AT
Simple Accounting is a trading name of Simple Accounting Limited
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