Congratulations, another tax year has ended, and we begin anew with 2021/22! It is fair to say that 2020/21 was a most peculiar year and it’s likely that many of us are looking forward to a relaxation of restrictions, the ability to sit outside a pub beckons and it will soon be possible to venture into some of the non-essential retail outlets that will no doubt be relieved to reopen.

But what does the New Year herald for us all in tax?

Several changes have come into effect from April 2021, and its generally quite a busy month from a tax perspective anyway, so I thought I would share my top ten tax new year considerations with you:

  1. New year, new allowances – you now have a fresh ISA allowance that you can make use of if you want to put some cash into tax-free savings, why not start now rather than waiting until tax year-end? There is a new pension allowance too so, if maximising your pension is your goal, you can contribute again now that we are past 5 April.
  2. Scope to declare dividends – if you normally declare dividends to use up specific tax bands, it’s not necessary to wait until tax year-end to do so, get ahead of the game by declaring them now instead. If you want to see the tax allowances and bands that will apply for this new tax year, take a look at our tax facts
  3. New opportunities – pure electric cars and vans are tax-efficient and, with the rules for companies from 1 April meaning that there may be a 100% tax deduction for the cost of acquisition and a very low or even nil benefit in kind charge, perhaps now is the time to treat yourself to a new Tesla ? (other cars are available).
  4. Stamp Duty Land Tax (SDLT) holiday – there is potentially still time to buy a new house, whether to live in or as an investment and take advantage of the lower SDLT that applies until 30 June, (£500k SDLT free, assuming it’s not a second property, if it is you would still pay 3%) and 30 September where the limit reduces to £250k. Don’t forget, if you sell a property and Capital Gains Tax (CGT) is due, you have to report and pay the tax within 30 days of the sale.
  5. Getting ahead of the game – why not get started early with your tax return this year? Kick those January blues into touch by having it all done and dusted by the summer. We are always keen to get cracking on your return early in the year, because then we can give you advance warning of your tax liabilities.
  6. In the same vein, P11ds and employment-related securities returns can all be prepared and filed now – whilst the due date is 6 July, why not get them done and out of the way well ahead of the deadline?
  7. Loss carry back opportunities – in his Budget, the Chancellor announced scope for a 3 year carry back to get tax back from earlier periods, which may be beneficial if the 2020/21 year has been really bad for your business. It may be worth getting on with your accounts now so that you can get this claim in place.
  8. Annual Tax on Enveloped Dwellings (ATED) returns are due by 30 April – don’t worry if you’ve never heard of this before! ATED only applies if you are a company (or LLP with company member) that owns a residential property worth £500k or more, in which case you need to make a return to HMRC this month. There may be a tax liability if the property doesn’t meet exemptions, but a return is needed either way so don’t overlook this one!
  9. New IR35 rules – the changes to IR35 are now in force, for more details read my previous IR35 blog and if are facing any issues as a result then please get in touch.
  10. And finally, don’t forget the Super-deduction is now in place. If you missed my blog on this last week, catch up on Super-deduction here.

So here we are at the start of a fresh new tax year that brings opportunities and challenges, in which I hope you will benefit from these tax considerations. But more than anything, here’s to a happy, healthy and safe new year for us all. Cheers!

Kate Naylor
Kate Naylor
Tax Partner

Kate works with businesses and their owners on tax strategies and mitigation, looking at business and personal tax structures to achieve long term goals.

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