Latest Update on Tax & Business Support

It has been a week or so since our last update, and some developments have occurred.

These have been both concerning the COVID-19 business support measures and tax, and therefore whilst separate are also inextricably linked.

Both are key factors for taxpayers in planning, strategising and making commercial decisions over the next months, which is why we wanted to consolidate some of the important recent announcements into one update on this occasion.

Business Support Measures

Local Restrictions Support Grant Scheme

We have previously updated on the new business support grant scheme, being that:

“Businesses required to close in England due to local or national restrictions will be eligible for the following:

  • For properties with a rateable value of £15k or under, grants to be £1,334 per month, or £667 per two weeks;
  • For properties with a rateable value of between £15k-£51k grants to be £2,000 per month, or £1,000 per two weeks;
  • For properties with a rateable value of £51k or over grants to be £3,000 per month, or £1,500 per two weeks.”

Cornwall Council have provided further information and the application process on their website – here.

The site also explains that:

The government has also provided Cornwall with additional funds to provide support to businesses that;

  • do not pay business rates but are forced to close due to the national lockdown restrictions
  • businesses not required to close but severely impacted by these restrictions
  • or to provide additional support to larger local businesses important to the local economy during this national lockdown period.  

We will provide further information on eligible business and an application form as soon as possible.”

The Council of the Isles of Scilly have released similar information on their website – found here.

Tax Update

Capital Allowances – Annual Investment Allowance

No sooner than we had written a tax blog and sent a client email regarding the planned reduction of the capital allowances Annual Investment Allowance (AIA) from the temporary increased £1m limit to £200,000 on 31 December 2020 (see here), the Government announced that the £1m limit was to stay for another year, until 31 December 2021 (see here). Surely nothing more than coincidence!

The AIA is the amount of expenditure qualifying for capital allowances that business can claim 100% relief for in the period the expenditure is incurred.

As we said in our tax blog regarding the extension, it is obviously good news but it does highlight the issues with the constant changes being made to the AIA limit. The below shows how the AIA limit has changed since its inception (frankly ridiculous!):

AIASole traders/partnersLimited companies
1 million1 January 2019 – 31 December 20201 January 2019 – 31 December 2020
£200,0001 January 2016 – 31 December 20181 January 2016 – 31 December 2018
£500,0006 April 2014 – 31 December 20151 April 2014 – 31 December 2015
£250,0001 January 2013 – 5 April 20141 January 2013 – 31 March 2014
£25,0006 April 2012 – 31 December 20121 April 2012 – 31 December 2012
£100,0006 April 2010 – 5 April 20121 April 2010 – 31 March 2012
£50,0006 April 2008 – 5 April 20101 April 2008 – 31 March 2010

 

Capital gains tax changes are coming

Last week the Office for Tax Simplification (OTS) released its report following its review of capital gains tax, the review being requested by the Chancellor earlier in the year.

See our tax blog here for a useful summary.

Overall, whilst these are only recommendations, the recommendations of the OTS will carry significant weight. Consequently, changes will be coming and very likely from the next tax year onwards (following announcements in the next Budget).

Taxpayers concerned by the impact of these recommended changes need to consider taking urgent action.

Inheritance tax changes

The OTS released their reports following their review of inheritance tax last year, which, like the above capital gains tax report, contained a number of recommendations.

See our tax blog here for a useful summary.

Whilst the report was released a while ago, we have been expecting changes to be made in line with the OTS recommendations, however, COVID-19 clearly overshadowed this as a priority for the Government at the Budget in March.

As for capital gains tax, we are foreseeing changes to be made from the next tax year.

Again, taxpayers concerned by the impact of these recommended changes need to consider taking urgent action.

Tax changes – Live event

We are currently working with many clients by providing proactive advice and strategies around mitigating the impact of the above expected changes.

We intend to run a live event in December via Microsoft Teams to discuss these potential changes and some of our wider thinking around them.

Watch this space!

If we can help and advise you in any way, please get in touch with your usual RRL contact, we continue to largely work remotely. We will respond to emails as usual. We are conducting meetings virtually (using Microsoft Teams) whilst the current restrictions are in place.

We will provide further updates, as and when further announcements are made and detail/guidance released.