Some (potentially!) interesting tax updates

As of 6th April, we’re now into a new tax year and there are a few things to update you on. Most of these points we raised with you back in November 2019, so will just be reminders. We also know that the thought of reading a tax update might be the last thing you want to do today – however, this one may be interesting to you if:

• You pay yourself in a combination of salary and dividends
• You’ve been used to claiming the Employers Allowance (this is now unavailable for some businesses)
• You own rental properties 
• You’re interested in buying an electric car
• You previously claimed child benefit but stopped
• You either work as a contractor or employ contractors yourself

You pay yourself in a combination of salary and dividends

For most company directors, if you pay yourself in a combination of salary and dividends, the most tax-efficient salary from 6th April 2020 is £732 per month. This is unless you receive any P11D benefits or other income, then please speak to us about the most tax-efficient salary for you.

You’ve been used to claiming the Employers Allowance (this is now unavailable for some businesses)

From 6th April 2020, the Employment Allowance will only be available to smaller businesses who had an Employers’ National Insurance bill of £100,000 or less in the previous tax year. Businesses excluded will not be able to claim the £4,000 annual allowance. If you’re affected by this, be aware that your monthly PAYE bill will be higher and to include this in your budgets If we complete your payroll and/or forecasts, this will obviously be taken care of for you.

You’re considering selling rental properties in the near future

As we shared back in November 2019, rules around the tax on the sale of rental property have now changed, especially where that property used to be your main home. The deadline for paying the tax on the gains from property sales is also changing. From now on, if you’re selling a rental property that you own personally (ie. not through a Limited company), you could be paying more tax and have to pay that tax sooner (within 30 days of the sale). It may not be top of your ‘to-do’ list right now, but as and when you are considering selling a rental property please let us know as soon as possible to help you plan the most tax-efficient way to do this.

You’re interested in buying an electric car

Again, probably not top of your list right now, but if you are interested in buying an electric car through your business, the tax you pay personally will now be substantially reduced from April 2020. In some instances dropping down to no tax to pay. Remember, company cars that are fully electric cars are treated much more favourably than petrol, diesel or even hybrid cars. There’s more detail about this in our how to buy an electric car blog.

You previously claimed child benefit but stopped

If you stopped claiming the child benefit due to the higher rate income charge, now might be the time to look at applying again if your household income is due to fall. This is because you may now fall under the threshold (£50,000-£60,000 per person per year). It’s important to think about applying soon as it can’t be backdated more than three months. It’s better to put in a claim now and repay some of it than to miss out on it completely.

If you work as a contractor or employ contractors yourself

There’s been a lot of talk in the business press about changes to how contractors’ employment status is treated. You may have heard this being referred to as changes to ‘off-payroll working rules’ and ‘IR35’. Changes that were due to come in this month have now been delayed to April 2021. If you would like to know more about this, please get in touch.

If any of the points above have raised questions for you – or indeed you have any other questions to ask our tax experts at Wow, please get in touch.