Henry and Banwell Chartered Accountants > News > General News > Henry & Banwell Autumn Update 2020

Henry & Banwell Autumn Update 2020

  • Posted by: Michael Winkelmann

We cover the following points:

  1. Updates on BREXIT and COVID-19
  2. HMRC fee protection insurance – renewal 1 December 2020.
  3. Your 2019/20 tax returns will be due on 31 January 2021, so if we not have already received your information, we will need it as soon as possible.
  4. We’re introducing a new secure client portal called SENTA.
  5. Monthly payment is now possible for our services.
  6. Memorandum on Tax changes. 

1. Updates on BREXIT and COVID-19

We are approaching the end of the transition period and while it appears there will be a deal with the EU we recommend you prepare for No Deal.

Without a Deal there will be initial confusion which will affect movement of goods in and out of the UK accompanied by shortages in all market sectors, fluctuations in exchange rates and a shortage of capital finance.

The uncertainty arising will create a period of stasis while we all work out what to do next and over time ( how long?) markets will adjust.

How to prepare?

Stockpiling of cash, goods (for business and personal) and food/drink will be inevitable. 

From a business perspective we recommend you carry out a SWOT analysis this month:

  • Reinforce your strengths
  • Shore up your weaknesses
  • Act on the opportunities that you have identified
  • Counteract any threats

If there is a Deal we will be publishing update on the ‘news’ section of our website and sending out mailshots (via email only)  – https://henrybanwell.co.uk/news/

How can we help once there a Deal or No Deal has been confirmed?

We can

  • advise on VAT implications
  • advise and review tax implications for both individuals and Companies
  • review changes required to accounting systems
  • prepare cash flows and business plans

COVID-19 Relief information is summarised below but due to the detail and number of changes we will post updates on our news blog and send an update shortly.

What’s in:

SEISS 3rd Grant available 1 December 2020 ( 4th Grant details to follow).

Furlough Scheme continues until March 2021.

Bounce back loan scheme continues until January 2021.

Coronavirus Business Interruption Loan Scheme continues until January 2021.

VAT concession – supply of food and non-alcoholic beverages for consumption on your premises from 15 July 2020 until 12 January 2021 need only be charged at 5%.

Local Restriction Support Grants – you must own or lease a property and these grants are being administered by local Councils so you need to visit their websites. The level of grant depends on rateable value and whether the business was open or closed during lockdown.

What’s out

Job Support Scheme (for now)

Job Retention Bonus ( replaced by longer Furlough period)

VAT deferment scheme

Small Business Grant Fund

Please note the above lists are not comprehensive.

We have updated our website www.henrybanwell.co.uk and will continue improving it over the next year:

Please advise us of any change in your address or contact details (especially if you change email address).

2. HMRC fee protection insurance

Renewal of the above insurance takes place on 1 December 2020 and a brochure will be posted out shortly.

The fee (including VAT) to insure your Limited company (including Directors), business or Partnership for 12 months from 1 December 2020 are:

  • Limited company – £222.00
  • Partnership- £192.00
  • Individuals (including Landlords) – £156.00
  • Sole traders – £156.00

Discounts are available if you have multiple companies.

3. Tax Return 2019/20

You will have received your 2020 self-assessment tax return (income and any capital gains for the year ended 5 April 2020) or a Notice to deliver a return where we filed on your behalf electronically last year.

To achieve the filing deadline for 2020 returns and avoid penalties and interest all returns should be lodged with the Inspector on or before 31 January 2021.  Late filing penalties of £100 (increasing to a maximum of £1,600) will be levied by the Inspector in all cases, even where repayments are due or tax has been overpaid by the taxpayer, unless a taxpayer can show that they have a reasonable excuse.

Please note there is no extension to the above filing deadline ( at the time of writing this).

4. SENTA

We can now offer a new client service platform called SENTA, operated by an award winning Bristol based software firm, which will improve security when we ask you for information and send you documents such as Accounts and Tax returns .

In SENTA, you also get unlimited file storage and our user-friendly client portal at no extra cost. The client portal also prompts you as a client whenever we need something from you and securely facilitates electronic sign-off. It will also reduce the need to send physical records.

5. Monthly payment is now possible for our services

Should you wish to pay by Direct debit we can arrange for your 2020/21 bill to be paid monthly over a 12 month period from January 2021 using ‘Gocardless’.

Please contact Michael if you are interested (michael@henrybanwell.co.uk).

6. Memorandum on Tax changes

The following changes for 2020/21 may affect your future tax liabilities.

  1. For 2020/21 the tax free allowance for dividend income continues to be £2,000. Taxed dividend income in excess of this amount will attract tax at 7.5% for basic rate taxpayers and at 32.5% should you be in the higher tax band.The company corporation tax rate continues to be 19% with the promised reduction to 17% cancelled in the run up to the General Elections.
  2. Interest received is now paid gross. Everyone now has a personal savings allowance of £1,000 if a basic rate tax payer or £500 if a higher rate payer. Taxable interest income in excess of this amount will be taxed at 20% or 40%.
  3. Rent a room allowance remains at £7,500 per property.
  4. Class 2 NIC continues to be collected via self-assessment after delays in abolishing it. You do not need to pay any class 2 contributions if your net profit for 2020/21 does not exceed £6,475 but this may be voluntarily paid if you want to gain another qualifying year towards the state pension, cost of £158.60.
  5. Mortgage interest on rental property for 2019/20 is restricted to 25% offset against income and 75% relief at the basic rate of 20% through your tax return against your 20% rate tax due. For 2020/21 the four year transition is complete and all mortgage interest is now only available as a basic rate relief against your 20% rate tax due.
  6. The tax free personal allowance remains at £12,500 from April 2020 and the annual exemption for capital gains tax is £12,300 (2019/20 £12,000).
  7. Marriage/civil partnership allowance is unchanged and allows £1,250 of personal allowances to be transferred to the other partner where one partner earns less than the personal allowance of £12,500. This can save tax up to £250 at the basic rate. In order to use it the transferor has to go online and ask for it to be transferred.
  8. Making Tax Digital (MTD) came into operation from 6 April 2019 affecting businesses that are vat registered AND with turnover above £85,000. Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for MTD for Income Tax from their next accounting period starting on or after 6 April 2023. This will involve online bookkeeping and quarterly submissions which we can help with.
  9. Declaring Capital Gains tax on gains from Residential property from 6 April 2020 and payment of the tax liability, within 30 days of completion.
    • The new obligation applies to UK residential property transactions where:
      • the date of disposal (usually the date of exchange) is on or after 6 April 2020 and
      • CGT is due.

UK residents do not need to report transactions where no tax is due because of the availability of reliefs (eg, private residence relief, annual exempt amount). Non-UK residents continue to need to report transactions even if no tax is due.