The Budget announcements were FAB in the sense that the Fizz of champagne would be taxed less, Airport passenger duty for domestic flights would be reduced and the tax on Banks effectively cut compared to other businesses.
Other main beneficiaries from the Budget were the NHS getting an additional £5.9 billion and individuals on income support by way of the universal credit taper.
Most of changes that will affect you next year and beyond had already been announced previously by way of additional 1.25% national insurance and dividend tax to take effect from April 2022 and the corporation tax rates increasing from 19% to 25% for investment companies from April 2023 and trading companies rate of corporation tax increasing from 19% to 25% in a step wise fashion as profits progress from £50,000 and under to £250,000 and over.
Thankfully, entrepreneurial relief for disposal of business assets and winding up of companies remains unaltered as do the rates of capital gains tax and inheritance tax.
In the run up to Christmas, thoughts will be diverted to obtaining presents that may be difficult to source what with lorry driver shortages and issues of containers ships unable to offload goods. Once the present list has all hopefully ticked off then some attention can be addressed to tax planning.
There are still plenty of tax planning opportunities ranging from:
- Electric vehicles and limited companies whereby there are tax advantages
- Setting up PAYE scheme for spouse and children who already undertake work for you. You never know furlough may be reintroduced but separate from that there are benefits from increasing State Pension entitlements and other benefits from such schemes
- Extracting dividends before the additional 1.25% additional tax kicks in next year
- New equipment may be entitled to super accelerated capital allowances of 130%
- If not already done so, you may look at incorporation of your private practice
- For those of you with limited companies, check if you have alphabet shares
Pensions - McCloud Remedy
No real changes to your pensions and how taxed by way of Annual or Lifetime Allowance, but many of you may not still be aware of the McCloud remedy whereby if you had been transferred into the 2015 Scheme, you will now be returned to the 1995/2008 Scheme up to 31 March 2022 and thereafter all NHS pension members will for future pensionable service, be in the 2015 Scheme.
This is important since if you had suffered an Annual Allowance tax charge in the past this will have to be recalculated and for most of you that this applies to, will be lower or extinguished.
This applies to all the nations of the United Kingdom.
Residential Sales – Reporting Deadline 60 days
If you sell your home or a second property that has been used as a residential property any capital gain has to be calculated, reported and where applicable tax paid to HMRC within 60 days. This applies to sales that complete on or after 27 October 2021. For sales prior to this date the deadline remains 30 days.
Solicitors for some reason fail to highlight this requirement that can lead to an accumulation of penalties and interest.
Most homes will be exempt but still best to consider if it had some alternative use or had gaps in occupancy for various reasons.
Applies to all nations of the United Kingdom.
Thursday the 9 December 2021 will be the date that the Scottish Budget for 2022/23 will be announced by the Finance Secretary Kate Forbes. Hopefully, with what we understand will be a record £41 billion from Westminster she will have more flexibility in her decisions.
England & Wales – Annual Allowance Compensation Scheme
If you had suffered an Annual Allowance tax charge for 2019/20 and submitted a Scheme Pay Election for the NHS Pensions to pay it to HMRC remember you are entitled to compensation and such claims must be made before 31 March 2022.
The form is the same for both clinicians and GP’s, but the method differs.
Any of the partners and associates are available to discuss any matters within this newsletter or indeed any aspect of your financial and tax affairs.