February 2021 News Update – featuring additional news developments from our newsletter series
Stay informed with the latest news in business support and financial affairs.
We eagerly await the forthcoming budget on 3 March. The latest budget speculation reported by the media is a potential ‘stealth’ tax rise, by freezing current thresholds, as opposed to raising them in line with inflation. For now we can only wait and see. We will keep you informed with emerging information as we receive it.
Prestige Business Management is proud to report 100% success once again with all of our self assessment and partnership tax returns submitted on time. A huge achievement after such a challenging year, all round.
New Guide to Self-Employment versus Limited Company
Prestige Business Management have published a new and improved Guide to Self-Employment versus Limited Company. Choosing the right business model will affect how your business will profit long term. In this guide we explain the differences between registering for self-employment, or a limited company, so you can select which is right for your business. This is a helpful guide for start-ups, but also contains important information for businesses considering the jump from self-employed to limited company any time soon.
Introducing our Latest Partnership with Tide
Prestige Business Management are delighted to announce our latest partnership programme with Tide! An award winning, smart, simple business account. Prestige Business Management clients will enjoy free sign up, no annual or monthly fees, free card usage – including abroad and free transfers to other Tide members. Sending or receiving money from a non-Tide account is 20p – but free for one year with our sign-up code. £1 ATM withdrawal, cash deposits: £1 at Post Office, 3% at PayPoint. Sign up for client benefits.
Earn a Cash Reward from our Client Referral Programme
We pride ourselves on how well we treat our loyal clients. Our referral programme is one way that we like to give back and reward you for your business with us. Recommend a friend to receive up to a £100 cash reward, per referral. All you have to do is recommend us. Make sure they tell us you sent them! We’ll take care of the rest. We all know how powerful word of mouth is, so please mention us to all your contacts, but you can spread the word on social media too. Get in touch to find out more.
What You Missed From Our Blog – Summary
Chancellors Centrist Approach Success
One year ago, Mr Sunak was yet to become a household name. He replaced Sajid Javid as chancellor in a last-minute, cabinet reshuffle, just weeks before the 2020 Budget. One year on Mr Sunak has one budget, with his second due on 3 March, two financial statements and several televised pandemic briefings under his belt, all of which has made him one of the most recognisable faces in British politics. The chancellor’s centrist approach has seen his treasury announce generous support packages for businesses and self-employed, to help them weather the financial climate brought home by lockdown restrictions. We have seen these regularly extended, as it has become apparent that the need for social restrictions would have to remain, in order to curb the various spikes in Covid cases. Despite shortcomings of the chancellor’s centrist approach for specific groups, and eligibility criteria hampering access for newcomers, he has overall managed to hold a popular centre position throughout the pandemic. Another challenge for his forthcoming budget will be retaining that good will, even when he has to announce tough moves such a dialling back of support schemes, it is expected that the pace of which will be the focus. Click here to read the article.
Budget Day Expectations
Budget day is usually highly anticipated with much speculation in the weeks leading up to it. This year we are witnessing an absolute clamour for information since there was little idea that the economy would still be feeling such intense pressure twelve months on from the start of the pandemic. So here is what to expect on budget day. Support packages will remain a hot topic. Last year’s budget on 11 March 2020, was dubbed ‘the coronavirus budget’, as the emerging pandemic took prominence over the ‘levelling up’ agenda the Conservatives promoted on the 2019 campaign trail. Within the latest budget speculation is Tax reform is one of the main areas where the government can focus with the aim of boosting the economy in the long term. Implementing sustainable improvements to the tax system should attract new International business and investment, encourage domestic entrepreneurship and productivity and eliminate costs that stifle growth. Mr Sunak may seek to replace council tax and stamp duty with a new property tax. The media has speculated that a rise in corporation tax could be expected on budget day, in a first step towards reducing the deficit. Budget day expectations could include measures such as increasing Class 4 National Insurance, raising fuel duty, cutting pension tax relief and changing capital gains tax have all been rumoured at various points, although so far nothing official has materialised. Click here to read the article.
Fourth SEISS Grant Delay
It has been confirmed that self-employed workers will now be waiting until budget day on 3 March, to find out what to expect from the fourth SEISS grant. The fourth SEISS grant delay means that millions of self-employed workers will now face further financial uncertainty within the latest budget speculation. A fourth Self Employed Income Support Scheme (SEISS) grant has been expected since October from the Chancellor, to support self-employed workers through continuing disruption to their earnings, due to social restrictions imposed by the government to curb the spread of the virus. Originally this fourth SEISS grant was expected to arrive in order to support the financial survival of self-employed workers throughout the months of February until April 2021. A delay of the fourth SEISS grant, by opening the application portal as late as March, will leave many self-employed workers, without income in February, just after they have paid a potentially large income tax bill 31 January. This fourth SEISS grant delay is also a blow to annual fiscal planning for the self-employed, especially whilst experiencing rolling lockdown reviews, during the third official, national lockdown. Which measures were brought in following the discovery of variant strains of COVID-19 which have been causing a faster spread of the disease, thought to be chiefly responsible for the rise in cases following Christmas. It is also unknown when schools will reopen for most families, with a review expected by 8 March. Which is another challenge to the self-employed continuing to work from home. Further to the fourth SEISS grant delay, so far there has been no indication of how much the fourth, and potentially final, grant is expected to be, nor what trading period it will be based on. Plus most crucially, when the money is going to arrive. Click here to read the article.
Lockdown has Delayed Kickstart
The government launched its youth employment Scheme last September as part of their ‘Plan for Jobs’ worth £2bn, but lockdown has delayed Kickstart. The scheme aims to provide fully subsidised, six month job placements for 16 – 24 year olds, plus set-up costs, training and support to help young employees move into sustained employment. Since lockdown has delayed Kickstart, only 1,868 young people have begun their placements as of 15 January 2021, according to the Department of Work Pensions (DWP). The Chancellor insists that the government has moved at an “enormous pace” to set up the programme, which aims to help young people at risk of long-term unemployment, but admits lockdown has delayed Kickstart. The scheme claims to have created 120,000 temporary jobs to date, Chancellor Rishi Sunak told the BBC that coronavirus restrictions were making it harder for more young people to get started. However, he expected the number to rise once restrictions are lifted. Mr Sunak says “Obviously because of the lockdowns and restrictions, that hampers businesses’ ability to bring people into work.” Click here to read the article.
February Top Tips
IR35 comes into force in April, which was postponed for a year as part of the Government’s Coronavirus business support package, will now take effect from April 2021. IR35 is designed to assess whether a contractor is a genuine contractor rather than a ‘disguised’ employee, for the purposes of paying tax. Contractors who work through their limited company enjoy a level of tax efficiency. While they don’t usually get employee benefits (like holiday and sick pay), they have flexibility and control over their work. Some contractors and their clients try to take advantage of this tax efficiency by working as if they’re self-employed, when in practical terms they function more like an employee. for all intents and purposes they are employees.
IR35 Compliance Checklist
- Usually IR35 won’t apply to a contract for services rather than employment.
- Supervision, direction, control. Contractors that fall outside of IR35 have freedom over how they complete their work, including what hows they work and they could engage a substitute to complete the work.
- Mutuality of obligation (MOO) is a key test in working out self-employed status. If the client is obliged to offer work (and pay you) and you’re obliged to take it, this counts as employment.
- Self-employed contractors work on a project-by-project basis, once they complete a project, there is no obligation to work on further tasks.
- Self-employed contractors are expected to provide their own equipment.
- Self-employed contractors take on financial risk for the project, like any other business, they take responsibility for any errors made and rectify those.
- Typically the self-employed can work for multiple clients at once.
- The relationship between contractor and client is of supplier and customer by contract, this needs to be genuine.
- Clarify the relationship with the hirer before you start the contract by considering all of these principles.
- Seek expert IR35 advice from your trusted professional accounting service.
Prestige Business Management Works for You
Prestige Business Management can help both end-client businesses and contractors / consultants understand the dynamics of IR35 and associated impact to businesses and relative tax. Find out what we can do for you. Call us today on 0203 773 2927.