Hello

All change in the world of tax this week as the Treasury reverts back to holding two Budgets in a year, and the Prime Minister announces election-manifesto-breaking tax rises.

It's very unusual for the PM to make tax announcements, but does this 'desensitise' when it comes to change and pave the way for Chancellor Rishi Sunak to make even further radical changes in his Autumn Budget? We will try not to guess what those are at this stage.

As tax geeks, we do feel a guilty pleasure whenever there are changes to tax: it's always good to have something new to write about. Our team were very quick to spot that there was a lot more to the PM's announcement of a 1.25% increase in National Insurance Contributions (NICs) and dividend tax. Both rises will hit far wider than was first indicated. The NICs changes extend to Employer's Class1A and 1B and dividend tax will have a particularly bad effect on Scottish taxpayers as well as directors and other participators who have overdrawn loan accounts.

Do book now for our Virtual Tax Partner Practical Tax Conference (October 12-13 2021). This is amazingly good value for money. 'Early birds' qualify for our free Tax Workouts and these are filling up fast. Our Workouts are small group, online workshops on a range of key topics held by different members of our team. They are a chance to get 'tax fit' by delving deeply into some topical tax issues.

Lots more news, updates and CPD below so do read on.

Back soon 

Nichola Ross Martin FCA CTA (Fellow)
Tax Director

www.rossmartin.co.uk

Your Virtual Tax Partner® online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.

Quick News (Freeview)

Ouch! NICs &  Dividend Tax rises hit wider than first thought
Earlier this week, the prime minister announced tax rises to fund the costs of Social Care and the NHS: a 1.25% rise in National Insurance Contributions (NICs) and dividend tax from 6 April 2022. As the dust on these announcements settles, it becomes clear they are wider-reaching measures than they first appeared. 

Build Back Better: the government's tax plans for Health & Social Care
The prime minister has announced tax rises to fund the costs of Social Care and the NHS. Breaking two election pledges, the government's paper, 'Build Back Better: Our Plan for Health and Social Care', reveals plans to raise the rates of both National Insurance Contributions (NICs) and Dividend tax by 1.25% from 6 April 2022.

Pension triple lock suspended
The government has suspended the triple lock formula for annual state pension increases, limiting this year's rise to 2.5%. Should the triple lock have been maintained, the post-pandemic rise in average earnings would have seen pensions increasing by 8%.

Autumn Budget 2021 date announced
The Treasury has announced that the Chancellor's Autumn 2021 Budget and Spending Review will take place on 27 October 2021. 

Consultation: Strengthening the Pensions Regulator's Powers 
The Department for Work and Pensions (DWP) have published a new consultation ‘Strengthening The Pensions Regulator's Powers: Notifiable Events (Amendments) Regulations 2021’ which seeks views on changes to the type of events that trustees and employers are required to notify to The Pensions Regulator (TPR). 

Associate Dentists to lose automatic trading status 
HMRC have decided to remove the current concession that treats all Associate Dentists as self-employed from 6 April 2023. Instead, they will have to use the ordinary tests for employment to decide whether they are employed or self-employed. 

Teenagers still missing out on Child Trust Fund cash 
HM Revenue and Customs (HMRC) has again made a call for parents and teenagers to check if they have cash in Child Trust Funds, saying thousands are missing out.

Editor's Pick (freeview)

Increases to National Insurance Rates
The government has announced its plan for funding the NHS and social care sector. This will include a new Health & Social Care Levy which will be delivered by a raise in Class 1 and Class 4 National Insurance Contributions (NICs) of 1.25%.

Increases to Dividend Tax Rates
The prime minister has announced a 1.25% increase to dividend tax rates from April 2022 as part of a package of measures to fund the costs of social care and the NHS.

Trusts and Estates What’s New? September 2021
HMRC's latest Trusts and Estates newsletter contains some useful information. Here is our enhanced version.

Guides and Updates (subscribers)  

Self Assessment

MTD: Toolkit for accountants
UPDATE: What is the current timetable for Making Tax Digital (MTD)? How will it work? Which clients will be excluded? What planning needs to be undertaken?  

Clothing and workwear
Is tax relief available on clothing bought for work? When might clothing costs be disallowed? What needs to be considered?

Devolved Taxes

Views sought on Scottish Framework for Tax  
The Scottish Government have announced a call for evidence seeking views on its draft Framework for Tax which explains the approach to tax policy for the new session of the Scottish Parliament.

Scottish Income Tax: Am I a Scottish taxpayer?
Who does the Scottish Income Tax apply to? Am I resident in Scotland? What constitutes a residence and the 'main' residence?

Partnerships

Partnership agreements: What should be considered? 
Partnership agreements can be invaluable to clarify everyday matters and settle disputes within a partnership. What sort of things should be discussed for inclusion in a partnership agreement?

Directors & Companies 

Employee Ownership Trusts: An exit route for owner-managers
UPDATE: What is an Employee Ownership Trust? When are they a good exit route for owner-managers? What are the tax benefits? We have added more details about how to set up an EOT.

Selling the business: Deferred Consideration & Earn-Outs
When a company is sold via a share purchase the buyer may hold back or defer paying the whole of the purchase price until certain agreed conditions are satisfied or profit targets are met.

Employers

Company cars
UPDATE: Company car tax: How do you work out car benefit? How do you work out car fuel benefit? Are there savings for low-emissions vehicles? How do you reduce car benefit? Cars and the tax tribunals and Top Tax Tips.

Private Client & Estate Planning

State Pension Age
UPDATE: The state pension age is gradually being increased. What is the current state pension age? How often is it reviewed? 

Land & Property 

Adviser's Guide: Property Business: Profits and losses
UPDATE: What is property income? How is it taxed? How are profits calculated? How are losses relieved? Is NI paid on property income? Is property income classed as a business activity?

SDLT: Multiple Dwellings Relief & Annexes Tax Tool
UPDATE: When can you claim Multiple Dwellings Relief? Will a purchase of two such dwellings also result in a higher rate charge? Our SDLT MDR & Annexes Tool is based on the legislation and current case law: this will takes you over the key conditions that you will need to meet to enable you to decide which rate of SDLT applies to your transaction.

Tax Cases 

Successful valuation challenge on share gift to charity  
In Diane Nice and Ron Robinson v HMRC [2021] TC8228, the First Tier Tribunal (FTT) found that the market value of shares gifted to charity was 46.5p and not £1.05 per share (as claimed for Income Tax relief), after considering and dismissing conflicting expert witness statements.

Taxable benefits due on cars paid for by directors 
In Smallman & Sons Limited, Lisa Garrity & Brian Garrity v HMRC [2021] TC8242, the First Tier Tribunal (FTT) held that benefits tax charges were due on cars leased by the employer company but paid for by the directors using them. Finding no carelessness in the tax planning, the four-year time limit applied and some assessed liabilities and penalties fell out of charge.

HMRC offers settlement opportunity to Eclipse Film Partnership members
HMRC have announced that they will be issuing current and former members of the Eclipse Film Partnerships an opportunity to settle their outstanding tax issues without being pursued for additional dry tax.

VAT News & Guides

VAT rate change for hospitality businesses from 1 October 2021
The rate of VAT on food, accommodation and entry fees to attractions is scheduled to increase from 5% to 12.5% from 1 October 2021.

Tax Toolkits 

Tax Tools
Be a winner with our game-changing tax diagnostics tools for Business Asset Disposal Relief, SDLT & annexes/subsidiary properties, Company reorganisations, R & D Zone and TAAR on winding up. Sign up now!

Tax Queries?

Virtual Tax Partner© Support
Have a tax query? Need a second option? Open a ticket and ask a question. A team of tax experts with a very wide range of expertise: covering direct and indirect tax, as well as accounting, R&D claims, reorganisations and much more. 

CPD for lunch 

Byte-sized chunks of CPD for subscribers

More at CPD Index

Missed last time's Web-update?

Nichola's SME Tax W-update 2 September 2021 

  • Double relief danger with Employment Allowance and CJRS 
  • Scottish digital grant closes in hours
  • Trust Registration Service open for non-taxable trusts
  • Loan charge repayments stand, new loans are taxable 
  • Upper Tribunal allows professional fees on sale of Centrica subsidiary
  • VAT rate change for hospitality businesses from 1 October 2021
  • R & C Brief 12 (2021): VAT treatment of gaming machines: 6 December 2005 to 31 January 2013
  • EU VAT: No supply, no onward supply relief
  • Buy-to-let ownership: personal v. company? (Subscribers)
  • Non-resident Tax Toolkit
  • Trust Registration Service
  • Directors' Loan Account: Toolkit
  • When does a partnership exist?
  • Accounts: Tax health check (self-employed)
  • Landlords: Capital Allowances ...More

 

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