• Business losses may be carried forward to set against the profits of future years but not carried back or set off ‘sideways’ against other sources of income. Do get in touch if you would like us to consider if this optional scheme is appropriate for you and your business. Capital allowances When assets are purchased for the business, such as machinery, office equipment or motor vehicles, capital allowances are available. As with expenses, these are deducted from income to calculate taxable profit. Plant andmachinery - Annual Investment Allowance (AIA) The AIA from 1 January 2019 gives a 100% write off on most types of plant and machinery costs, but not cars, of up to £1,000,000 per annum (reducing to £200,000 from 1 January 2022). Special rules apply to accounting periods which straddle these dates. Any costs incurred in excess of the AIA will attract an annual ongoing allowance of 6% or 18% depending upon the type of asset. Businesses are eligible for a 100% allowance, on certain energy efficient plant and new zero emission cars. Plant andmachinery - Super-deduction Between 1 April 2021 and 31 March 2023, companies investing in qualifying new plant and machinery will benefit from new first year capital allowances.
In certain circumstances, the first two payments can be waived. Because of the COVID-19 outbreak, you may have deferred some of your payments and would have been liable to make three payments on 31 January 2021: • your deferred July 2020 payment on account (if it remains unpaid) • any 2019/20 balancing payment • your first 2020/21 payment on account. Taxpayers were able to set up a Time to Pay instalment arrangement with HMRC to spread the cost however late payment interest applies to these payments. Employer obligations As an employer you will have many responsibilities. These will include employment law requirements which are not covered in this guide and HMRC requirements to report pay and benefits. Two other requirements place a further burden on employers. Real Time Information Real Time Information (RTI) reporting is mandatory for broadly all employers. Under RTI, employers or their agents are required to make regular payroll submissions for each pay period during the year. The submissions detail payments made to and deductions made from employees. These submissions must generally be made on or before the date the amounts are paid to the employees. The RTI submission details payments made which include salary, overtime and statutory payments
Under this measure a company will be allowed to claim: • a super-deduction providing allowances of 130% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances • a first year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances. This relief is not available for unincorporated businesses. Motor cars The tax allowance on a car purchase depends on CO 2 emissions. From April 2021 purchases of cars with emissions of up to 50g/km attract an 18% allowance and those in excess of 50g/km are only eligible for a 6% allowance. Structures and Buildings Allowance (SBA) The SBA gives an annual rate of capital allowances to qualifying investments incurred on or after 29 October 2018 to construct new, or renovate old, non-residential structures and buildings. The rate of the allowance is 3% from 1 April 2020 for corporation tax and 6 April 2020 for income tax. Paying the tax The self-employed may have to pay tax and NICs
three times a year, namely: • 31 January in the tax year • 31 July following the tax year • 31 January following the tax year.
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Running a Business
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