What's new for small businesses in the 20/21 tax year?

Can you believe it? We’re officially in to a new tax year. As of April 6th, we’re into a new tax year which means many of the changes announced in recent Budgets will come into effect.

Tax & National Insurance rates/bands from April 6th 2020:

England, Northern Ireland & Wales 2020/21 2019/20
Personal allowance
|
£12,500
£12,500
Employee's NI becomes due
+
£9,500
£8,632
Employer's NI becomes due
+
£8,788
£8,632
Higher rate tax becomes due
|
£50,000
£50,000
Class 2 NI becomes due when profits exceed
+
£6,475
£6,365
Class 2 NI per week
+
£3.05
£3.00
Class 4 NI becomes due when profits exceed
+
£9,500
£8,632

*Please note this does not include information re tax and NI bands and rates for payers in Scotland.

Student Loan Income thresholds

The levels of income above which student loan repayments are due will change on 6th April as follows:

2020/21 2019/20
Undergraduate loan: plan 1
+
£19,390
£18,935
Undergraduate loan: plan 2
+
£26,575
£25,725
Postgraduate loan
|
£21,000
£21,000

Employment Allowance from April 6th 2020

The Employment Allowance will increase from £3,000 to £4,000 on 6th April but from this date, only businesses with an employer’s NI liability of under £100,000 a year will be eligible to claim the allowance.

 

National Minimum Wage rates have been increased!

2020/21 2019/20
Employee's aged 25 and over: NLW
+
£8.72
£8.21
Employee's aged under 18: NMW
+
£4.55
£4.35
Employee's aged 18-20: NMW
+
£6.45
£6.15
Employee's aged 21-24: NMW
+
£8.20
£7.70

Working from home rate for employees increased

If you operate your business through your own limited company and claim costs for working from home, HMRC will ask you for proof of any working from home costs of over £6 (rather than £4) from 6th April 2020.

 

Here are some details of the planned delays and cancellations to previously announced changes for 2020/2021.

Corporation Tax rate remains the same

The rate at which limited companies pay Corporation Tax was originally planned to decrease from 19% to 17% on 1st April however, the rate of Corporation Tax will now remain at 19%.

 

IR35 changes delayed

Changes to the operation of IR35 legislation in the private sector that were due to take effect on 6th April 2020 have now been delayed until April 2021.

For more information, email: hello@codevelo.co.uk or call 0113 320 3959