July Newsletter

July Newsletter

Pension contribution is tax efficient for both employee and employer

Pension contributions to approved pension funds on behalf of employees and directors continue to be a tax-free benefit provided the annual input limit is not breached.

The contributions are also deductible for the employer provided  incurred wholly and exclusively for the purposes of the trade  and paid before the end of the accounting period of the business.

For most taxpayers the annual input limit is £40,000 and this overall limit applies to contributions by the employee plus contributions made by the employer on the employee’s behalf. It is also possible to take advantage of unused relief  from the previous three fiscal years.

Payments into the pension fund by the employing business will be deductible against business profits. Currently this will only save 19% corporation tax but from 1 April 2023 will save 25% where profits exceed £250,000 and 26.5% where profits are between £50,000 and £250,000.

Note that these limits are divided by the number of associated companies, i.e. under common control.

Although the contribution on behalf of the employee or director may be tax-free they are generally not able to access the fund until age 55.

There have been a number of “schemes” devised over the years to exploit the pension rules.

 

Furlough grant reduces to 70% from this month

For the month of July the CJRS Furlough grant support from the government via HMRC reduces to 70% of the employee’s usual pay for hours not worked.

This is despite the fact that “Freedom Day” in England has been delayed four weeks to 19 July 2021, and now called “Terminus Day”. The government support to employers will then reduce to 60% in August and September.

 

Fletcher Thompson team news

June saw our young apprentice (and part-time DJ) James leave us for Bristol University to study Music Business. James found accountancy far too exciting and opted for a far more boring career as a superstar DJ!

As with any departure, when one door closes, another opens; and ours opened to Ella Andronic. Ella joins us with a First-Class Honours degree in Accounting and Finance. Ella has a Jack Russell called Jack and if she could have dinner with anyone dead or alive, she would choose Celine Dion. Ella lives by the motto ‘Life without friends, is like life without money’. We are really excited for Ella to join the team!

 

English school children to receive 100million extra hours of tuition in coronavirus catch-up plan

Schools will be able to provide additional tutoring support using locally employed tutors. A total of £1.4 billion is being invested as part of the governments plans to boost education recovery.The government are going to be offering up to 100 million hours of free tuition to children & young people across England to help them catch up on learning lost during the pandemic.

The government expects the investment to transform the availability & approach to tuition in every school and college over the next three years.

               

DIARY OF MAIN TAX EVENTS

JULY/ AUGUST 2021 

Date

What’s Due

19/07

PAYE & NIC deductions, and CIS return and tax, for month to 5/7/21 (due 22/07 if you pay electronically)

31/07

50% payment on account of 2021/22 tax liability due.

01/08

Corporation tax for year to 31/10/20 (unless pay quarterly)

19/08

PAYE & NIC deductions, and CIS return and tax, for month to 5/8/21 (due 22/08 if you pay electronically)