- March 4, 2020
- Posted by: accountsh-admin
- Category: Newsletter
Our newsletter this month highlights: last minute planning options for 2019-20, budget predictions, changes to minimum wage rates and the recently announced rates reductions for High Street businesses and smaller pubs.
Last chance to consider tax planning options
In a month’s time, 5 April 2020, the 2019-20 tax year expires. After this date many of the options to utilise allowances and claim reliefs to reduce tax for 2019-20 will disappear.
A number of the reliefs to consider are listed below. This is by no means an exhaustive list. Any numbers quoted refer to the tax year 2019-20.
- Have you utilised your £12,000 tax-free allowance for Capital Gains Tax purposes?
- You are entitled to make a number of small gifts that will not be taxed under the Inheritance Tax rules.
- Have you reviewed your pension contributions for 2019-20? According to the pundits, higher rate tax relief may be reduced in the budget next week. In which case, 2019-20 may be the last year to claim those higher rate reliefs.
- If you and your married partner are basic rate tax payers and one of you has not earned enough to cover their basic Income Tax personal allowance – £12,500 for 2019-20 – it may be possible to transfer part of the unused allowance to their partner. Check out the Marriage Allowance.
- Do you have an opportunity to draw up to £2,000 tax-free from your company in dividends? No additional tax to pay. Only applies to the first £2,000 in dividends you take.
Budget predictions 11 March 2020
What can we expect from the budget next week?
On the expenditure side, infrastructure and the NHS seem to be the two major areas for investment. HS2 and other rail improvements in the North are likely to be beneficiaries as will carbon capture and other climate related projects, for example, improving the energy efficiency of homes, schools and hospitals.
During the last election, the government disclosed that it will not be increasing any of the major taxes and has recently published details of an increase in the NIC threshold, to £9,500.
Corporation tax was due to reduce to 17% (from the present 19%) from April 2020. However, Boris Johnson did state that this intended reduction would be dropped, and the rate maintained at 19%.
There is speculation that higher rate tax relief will be trimmed for contributions into private pension funds from April 2020. This does add weight to the planning option to review top-up payments this month if you pay Income Tax at the 40% or 45% rates.
A cross-party group of MPs has called for a reduction in the rate of Inheritance Tax, from 40% to 10%, together with a reduction in many of the Inheritance Tax allowances and reliefs.
Business rates are another target for relief in an attempt to support beleaguered High Street businesses. Additional support has already been announced for retailers and pubs.
Meanwhile, back at number 11 Downing Street, Rishi Sunak will be burning the midnight oil to prepare himself for his dispatch-box presentation on 11 March. We will be reporting on the outcome of his disclosures in due course.
Changes to minimum wage rates
From April 2020, the National Living Wage (NLW) and National Minimum Wage (NMW) pay rates will increase as set out below.
- NLW rates for workers aged 25 and over – from £8.21 to £8.72 per hour.
- NMW rates:
- workers aged 21-24 – from £7.70 to £8.20 per hour
- workers aged 18-20 – from £6.15 to £6.45 per hour
- workers aged 16-18 – from £4.35 to £4.55 per hour
- apprentice rate – from £3.90 to £4.15 per hour.
Workers must be at least school leaving age to get the NMW. They must be 25 or over to get the NLW.
Contracts for payments below the NLW and NMW rates are not legally binding. The worker is still entitled to the NMW or NLW. Workers are also entitled to the correct minimum wage if they are:
- casual labourers, for example someone hired for one day
- agency workers
- workers and homeworkers paid by the number of items they make
- trainees, workers on probation
- disabled workers
- agricultural workers
- foreign workers
- offshore workers
Employers are reminded that these rates are not optional. HMRC police the NMW and NLW regulations and employers found to be in breach will be subject to penalties and will be required to repay any arrears to affected employees.
Additional rates reduction for pubs
Pubs will benefit from £1,000 business rates discount from April 2020.
The cut is on top of previously announced plans to slash the bills of small shops by 50%.
In a fresh demonstration of the government’s support for communities up and down the country, a new Pubs Relief will be introduced in April, with £1,000 being taken off the business rates bills of small pubs who qualify.
As many as 18,000 pubs are expected to benefit from the discount.
The relief will come on top of an extended retail discount which smaller pubs are also eligible to claim. Those able to claim both reliefs will benefit from a possible £13,500 off their annual bills.
From April this year:
- small shops and cafes will see their bills halved as the retail discount, currently a third off, is extended to 50%
- music venues and cinemas will become eligible for the retail discount
- a £1,500 discount for local newspapers office space will be extended for a further five years
Tax Diary March/April 2020
1 March 2020 – Due date for Corporation Tax due for the year ended 31 May 2019.
2 March 2020 – Self assessment tax for 2019/19 paid after this date will incur a 5% surcharge.
19 March 2020 – PAYE and NIC deductions due for month ended 5 March 2020. (If you pay your tax electronically the due date is 22 March 2020)
19 March 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2020.
19 March 2020 – CIS tax deducted for the month ended 5 March 2020 is payable by today.
1 April 2020 – Due date for Corporation Tax due for the year ended 30 June 2019.
19 April 2020 – PAYE and NIC deductions due for month ended 5 April 2020. (If you pay your tax electronically the due date is 22 April 2020)
19 April 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2020.
19 April 2020 – CIS tax deducted for the month ended 5 April 2020 is payable by today.
30 April 2020 – 2018-19 tax returns filed after this date will be subject to an additional £10 per day late filing penalty.