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Newsletter issue - March 2021

Covid-19

There have been relatively few announcements related to Covid-19 support this month. The only real announcement of note was an amendment to the terms of the Pay As You Grow scheme for repaying Bounce Back loans. Under the revised rules, a borrower will be able to take a six-month repayment holiday without needing to have made any previous instalments. Before the amendment, they would have needed to have made at least six payments before this was an option. Full details are available here.

Self-assessment

A welcome announcement in February confirmed that there would be a relaxation of the self-assessment filing penalties for the 2019-20 round of tax returns. Usually, a 5% tax-geared penalty applies where the tax owed under self-assessment remains unpaid 30 days after the 31 January due date. This year, no penalty will be charged as long as the taxpayer has either:

  • Paid the tax due; or
  • Agree a time-to-pay plan

by the end of the day on 1 April 2021. However, interest will still apply from 1 February at 2.6%.

This follows on from the earlier announcement that late filing penalties would be waived if returns were filed no later than 28 February.

Budget and 2021-22 tax data

The delayed budget will take place on 3 March 2021. The lack of publication of the 2021-22 rates and thresholds has frustrated accountants and tax advisers (and their software providers) across the country. However, there have been at least some confirmations to allow preparation for the new fiscal year. These are all subject to parliamentary approval at the time of writing.

Tax rates and thresholds

The personal allowance will increase in line with CPI inflation - to £12,570. The basic rate band will increase from £37,500 to £37,700 for taxpayers in England, Wales and Northern Ireland. This means the higher rate kicks in at £50,270 accordingly. The personal allowance abatement threshold and additional rate threshold both remain unchanged.

For Scottish taxpayers, there are no significant changes to the tax rates or bands - merely a slight uplift to reflect inflation.

The rates and bands for 2021-22 for Scottish taxpayers are as follows:

Scottish starter tax rate

19% on annual earnings above the PAYE tax threshold and up to £2,097

Scottish basic tax rate

20% on annual earnings from £2,098 to £12,726

Scottish intermediate tax rate

21% on annual earnings from £12,727 to £31,092

Scottish higher tax rate

41% on annual earnings from £31,093 to £150,000

Scottish top tax rate

46% on annual earnings above £150,000

National Insurance

The government has confirmed that the Class 1 National Insurance thresholds will also change. The relevant figures for 2021-22 will be as follows:

Lower earnings limit

£120 per week
£520 per month
£6,240 per year

Primary threshold

£184 per week
£797 per month
£9,568 per year

Secondary threshold

£170 per week
£737 per month
£8,840 per year

Upper secondary threshold (under 21)

£967 per week
£4,189 per month
£50,270 per year

Apprentice upper secondary threshold (apprentice under 25)

£967 per week
£4,189 per month
£50,270 per year

Upper earnings limit

£967 per week
£4,189 per month
£50,270 per year

Further information relevant to employers, for example for payments made under Statutory Sick/Maternity/Paternity Pay rules can be found here.

Self-employed and voluntary NI

The draft regulations governing NI also confirm the proposed rates and thresholds for Classes 2, 3 and 4 NI.

Class 2 will remain at £3.05 per week, but the small profits threshold will increase to £6,515 (up by £40).

Class 3 voluntary contributions will increase to £15.40 (an increase of 10p).

For Class 4, there is no change to the applicable rates. However, the lower and upper profit limits will increase - to £9,568 and £50,270 respectively.

Taxable benefits

The fixed multipliers for company vans and fuel provided for company vans, as well as the fixed multiplier for fuel provided for company cars have also been confirmed as follows:

Company van benefit

£3,500

Company van fuel benefit

£669

Company car fuel multiplier

£24,600