Tax and finance developments for 2020/21 – how to alert your clients

As we head into a new year, it’s worth noting a number of changes to taxation legislation that are due to be implemented this year. The 2020/21 tax year begins on April 6th, 2020, which is when changes to Inheritance Tax, Capital Gains Tax and more come into force.

National Insurance threshold

The Conservatives plan for NI, expected to be confirmed in the upcoming Budget, will raise the threshold from £8,632 currently to £9,500 in April 2020, which the party says represents a tax cut for 31m workers. The longer-term intention is to raise the threshold in line with the income tax personal allowance, currently at £12,500.

SMEs

At the 2018 Budget, the Chancellor announced that from April 2020 the amount of payable credit (14.5%) that a qualifying loss-making business can receive through R&D relief in any one year will be capped at three times their total PAYE and NICs liability for that year.

Companies will however be able to claim a full repayable tax credit where they have research & development (R&D) projects that start and have expenditure falling within the current tax year.

Capital Gains Tax

From April 6^th, any Capital Gains Tax (CGT) payable on property sales must be reported to HMRC within 30 days of the sale with an advance payment on the tax due at the same time.

Inheritance Tax

Changes to Inheritance Tax (IHT) thresholds are due to come into force in the 2020/21 tax year beginning April 6^th.

The Residence Nil Rate Band will be increased to £175,000, meaning taxpayers will be able to leave estates of up to £500,000 without being liable for inheritance taxes, in tandem with the existing IHT Nil Rate Band.

For estates over £2 million, this band is tapered at £1 for each £2 over the threshold – therefore the Residence Nil Rate Band won’t be available for estates over £2.35 million.

Other announcements

For non-resident UK companies, the UK property income currently under the Non-resident landlord’s scheme will move to the corporation tax regime from April 2020, rather than income tax at 20%.

Businesses should be preparing for a significant increase in the national minimum wage from April 2020. The Conservative Party have pledged to increase it in stages to £10.50 over five years (a 5% increase per year) – starting with an increase from £8.21 an hour to £8.72 from the start of April this year.

And finally – it’s worth remembering that the Conservative government recently announced it had shelved plans to drop the rate of corporation tax to 17% – therefore remaining at 19%. The cut was initially announced by former Chancellor Philip Hammond at Budget 2017; however, this decision has been made with the intention of generating a further £6bn to spend on priorities such as the NHS.

As their accountant and trusted tax advisor, it’s important that your clients are made aware of these changes so they can get in touch to schedule an appointment for any tax planning or support they may require.

How can you best alert clients to tax changes and developments for 2020/21?

An easy, effective way to send out tax changes and updates taking place from the 2020/21 tax year is by sending Push Notifications via your own branded App.

Push Notifications are five times more effective than email, and in this digital age they allow key information – such as tax changes and legislation updates, government policies, thresholds and other key issues affecting your client base – to be communicated to a group or specific set of users.

You can group your clients via your own Hub, meaning you can control the App with minimal hassle.  In there, you can split them into personal or business tax, or even message individual SME clients around changes regarding payable credit, for example.

You can also automate communications to clients – for example, MyFirmsApp delivers critical Budget content along with commentary to 1200 accounting firms in the UK – reaching more than a quarter of a million UK businesses and individuals on the home screens of their Smartphones and tablets. Other automated updates include legislation changes, topical announcements (Brexit / elections) and general tax updates – all complete on behalf of the accountant, saving time and money.

Download the App free and try it for yourself – just click the button below!