Tax E-News

Pre-budget edition

Content accurate as at 25 Feb 2021

Get ready for the "off-payroll" working rules

Where large or medium-sized organisations are paying workers via personal service companies (PSC) or agencies they will need to operate new procedures from 6 April 2021.

Would the worker be better off an employee?

The new "off-payroll" working rules mean that the worker pays the same amount of tax and national insurance as if they were an employee, but without the same employment rights.

End users can be liable for the tax not deducted

Where the agency or fee payer lower down the labour supply chain fails to deduct tax from payments to the worker’s company the liability passes up the supply chain such that the end user may be liable.

Current IR35 rules still apply where end user is "small"

The new "off-payroll" rules do not apply where the end user organization is “small” under the Companies Act rules.

Don't lose your 2020/21 personal allowance

For every £2 that your adjusted net income exceeds £100,000 the £12,500 personal allowance is reduced by £1.

VAT rules for construction sector started

The new "reverse charge" system of VAT accounting affects sub- contractors supplying their services to main contractors in the construction sector.

Buy new equipment before 6 April?

Your business year end, not 5 April, is relevant for capital allowances purposes. If however you are running a business and making up accounts to 31 March or 5 April you should consider buying plant and machinery to take advantage of the £1 million Annual Investment Allowance (AIA).

2021/22 National Insurance bands

The thresholds for employee and employer national insurance contributions (NICs) have been increased by £1 a week for the 2021/22 tax year.

Advisory fuel rate for company cars

These are the suggested reimbursement rates for employees' private mileage using their company car from 1 March 2021.

Diary of main tax events

March/April 2021

What if the worker disagrees?

Where the worker disagrees with the employment status determination they should contact the end user straight away setting out their grounds for disagreement.