How can the Chancellor limit tax increases after lockdown ends?
While it is too early to predict what the UK tax system will look like after the coronavirus has passed, one thing is clear: much more tax will be paid by fewer companies and individuals. If temporary tax measures are required to achieve this, we strongly recommend that they have sunset clauses, limiting their imposition to a defined term of years.
We are all homeworkers now
Rachel De Souza
Working arrangements abruptly changed on 23 March for millions of people when the country went into lockdown and we were all told we must work from home where possible. Our tax system has found ways of providing relief for certain costs incurred by homeworkers. But, as is often the case, the rules are complicated and can easily trip up the unwary.
Opportunity to enshrine carbon targets in any airline bailout package
The UK Government bailout of banks after the 2008 financial crisis was followed by stringent regulations and additional bank levies. If the Government decides to help airlines after Covid-19, there is a golden opportunity to impose tough new conditions to help meet the UK’s net-zero carbon commitment.
Some welcome support for executors
For current or recently former executors, there are rules that could be helpful in either reducing the IHT due or reclaiming tax to give more funds to legatees and beneficiaries of estates.
Plunging asset prices – should grandchildren be cheering?
Rachel De Souza
The stock market has nose-dived, which could well mean a bonanza for children and grandchildren who may benefit from the generosity of other family members.
Don’t be caught out by the changes in pension annual allowance from 6 April 2020
With changes to the pension allowance it’s a good idea to review pension payments as soon as possible; leaving it until the tax year end may mean incurring an unexpected tax charge. Whilst the changes will benefit many high earners, there is a sting in the tail for some
And finally…. welcome clarification on tax for furloughed staff
Payments received by the business under the scheme should be included as taxable income. Employees will still be required to pay the taxes they normally pay out of wages, so PAYE must be applied to the wages received, whether this is 80 per cent up to a maximum of £2,500 per month, ie the Government grant, or 100 per cent in the event the employer chooses to top up the payment to full wages. It has also been confirmed that businesses can deduct employment costs of furloughed staff as normal when calculating taxable profits for tax purposes. Therefore, whilst the benefit to businesses is less than the 80 per cent staff, NIC and pension costs, the confirmation that the costs associated with furloughed staff will be tax-deductible will significantly increase the benefit to employers. Without this, if the costs of furloughed staff are not tax-deductible then the tax cost of furloughing high-paid staff paid on full wages could outweigh any income receivable on the scheme.