Newsletter issue - March 2021
Covid-19
There have been relatively few announcements related to Covid-19 support this month. The only real announcement of note was an amendment to the terms of the Pay As You Grow scheme for repaying Bounce Back loans. Under the revised rules, a borrower will be able to take a six-month repayment holiday without needing to have made any previous instalments. Before the amendment, they would have needed to have made at least six payments before this was an option. Full details are available here.
Self-assessment
A welcome announcement in February confirmed that there would be a relaxation of the self-assessment filing penalties for the 2019-20 round of tax returns. Usually, a 5% tax-geared penalty applies where the tax owed under self-assessment remains unpaid 30 days after the 31 January due date. This year, no penalty will be charged as long as the taxpayer has either:
- Paid the tax due; or
- Agree a time-to-pay plan
by the end of the day on 1 April 2021. However, interest will still apply from 1 February at 2.6%.
This follows on from the earlier announcement that late filing penalties would be waived if returns were filed no later than 28 February.
Budget and 2021-22 tax data
The delayed budget will take place on 3 March 2021. The lack of publication of the 2021-22 rates and thresholds has frustrated accountants and tax advisers (and their software providers) across the country. However, there have been at least some confirmations to allow preparation for the new fiscal year. These are all subject to parliamentary approval at the time of writing.
Tax rates and thresholds
The personal allowance will increase in line with CPI inflation - to £12,570. The basic rate band will increase from £37,500 to £37,700 for taxpayers in England, Wales and Northern Ireland. This means the higher rate kicks in at £50,270 accordingly. The personal allowance abatement threshold and additional rate threshold both remain unchanged.
For Scottish taxpayers, there are no significant changes to the tax rates or bands - merely a slight uplift to reflect inflation.
The rates and bands for 2021-22 for Scottish taxpayers are as follows:
|
Scottish starter tax rate |
19% on annual earnings above the PAYE tax threshold and up to £2,097 |
|
Scottish basic tax rate |
20% on annual earnings from £2,098 to £12,726 |
|
Scottish intermediate tax rate |
21% on annual earnings from £12,727 to £31,092 |
|
Scottish higher tax rate |
41% on annual earnings from £31,093 to £150,000 |
|
Scottish top tax rate |
46% on annual earnings above £150,000 |
National Insurance
The government has confirmed that the Class 1 National Insurance thresholds will also change. The relevant figures for 2021-22 will be as follows:
|
Lower earnings limit |
£120 per week |
|
Primary threshold |
£184 per week |
|
Secondary threshold |
£170 per week |
|
Upper secondary threshold (under 21) |
£967 per week |
|
Apprentice upper secondary threshold (apprentice under 25) |
£967 per week |
|
Upper earnings limit |
£967 per week |
Further information relevant to employers, for example for payments made under Statutory Sick/Maternity/Paternity Pay rules can be found here.
Self-employed and voluntary NI
The draft regulations governing NI also confirm the proposed rates and thresholds for Classes 2, 3 and 4 NI.
Class 2 will remain at £3.05 per week, but the small profits threshold will increase to £6,515 (up by £40).
Class 3 voluntary contributions will increase to £15.40 (an increase of 10p).
For Class 4, there is no change to the applicable rates. However, the lower and upper profit limits will increase - to £9,568 and £50,270 respectively.
Taxable benefits
The fixed multipliers for company vans and fuel provided for company vans, as well as the fixed multiplier for fuel provided for company cars have also been confirmed as follows:
|
Company van benefit |
£3,500 |
|
Company van fuel benefit |
£669 |
|
Company car fuel multiplier |
£24,600 |