11.1.2022 | Tax2021 – A year in review from a tax expert
From bumper pandemic budgets to freeports and the furlough scheme, it has been a busy year in the world of finance.
So, another pandemic year is behind us. 2021 has been a year of turbulence, for sure, but also one of resilience, of heart – of keeping (relatively) calm and carrying on.
Here, Andrew Diver, Head of Taxation at Beatons Group, takes a look back at the big financial goings-on of 2021.
This was a chaotic year for the freight and shipping industry as container chaos crossed the world.
From the Ever Given blocking the Suez Canal to a shortage of containers in Asia, this has been a turbulent time for the industry.
Although it was a turbulent time, it has left businesses with sky-high profits – and headaches over how to deal with higher tax liabilities, expansion to meet demand or whether to cash in their chips.
But it hasn’t all been plain sailing.
Brexit really does mean Brexit
While Brexit officially happened on January 31, 2020, the transition period meant the benefits of EU membership continued to apply throughout the year. But from December 31, that all came to an end.
More changes are now on the way from the New Year with the end of the delayed customs declarations period. All goods entering the UK from the EU will need a full declaration, meaning there will be more customs work for firms to manage.
The Spring Budget
In March, Rishi Sunak delivered his first budget since the pandemic began, with the Chancellor of the Exchequer committing an extra £65billion to protect jobs and livelihoods.
All eyes were on Mr Sunak ahead of the budget, with the locked-down nation clutching at straws over how it could recover the costs of the coronavirus.
The budget included the much-needed extension of the furlough scheme and introduced two new grants to help the more than 600,000 people who became self-employed in 2020.
The freight and logistics industry was also given a helping hand through the freezing of fuel tax, while the super deduction has and will continue to give businesses the ability to reinvest in their future while reducing tax.
One question many will hope the chancellor will address in his Spring budget is bounce-back loans and how businesses will repay them. Paying back these loans could put a lot of pressure on businesses as they look to recover post-pandemic.
The Spring budget also included some important news for Felixstowe…
Announced in Mr Sunak’s Spring Budget, the Port of Felixstowe and Harwich International Port are set to become the new Freeport East.
Goods arriving in the new economic zone will be exempt from tariffs unless moving elsewhere in the UK, while customs documentation is simplified.
The project is expected to create up to 13,500 jobs in the region over the next 10 years – and bring in an additional 1.3million tonnes of international trade volume.
Should things stay on track, the freeport is set to begin operations before the new year, while the poised Gateway 14 business park has also been given the green light.
Making Tax Digital
As well as affecting businesses through lockdown and restrictions, COVID-19 has also led to a delay in HMRC’s Making Tax Digital scheme for income self-assessment.
The initiative, outlined by George Osbourne in 2015, is part of the Government’s tax-modernisation programme and seeks to make tax reporting simpler and reduce errors.
Among those affected include self-employed workers such as freelancers and contractors, as well as landlords with rents totalling more than £10,000.
It was set to be implemented from April 2023, but due to the pandemic, it has now been put back by a year.
The Autumn Budget
While Mr Sunak announced a host of spending in October, there were no new big tax changes announced as he unveiled further plans to rebuild the UK economy through growth.
More positives were revealed for the freight and logistic sectors, including grants for improved lorry parks and the delay of the Heavy Goods Vehicle Levy until 2023.
Corporation Tax rates increases were announced to finance Mr Sunak’s plans, starting from April 2023. Likewise, a new health and social care levy from 2023 was unveiled to help fund the welfare state.
Before then, a 1.25% increase in National Insurance for employees and employers will come into force in April next year.
The year ahead
With the new Omicron Covid-19 variant sweeping across the globe, it can feel a little like we are back to step one going into 2022.
But with the booster campaign in full swing and the infrastructure necessary for handling the pandemic in better shape than it was a year ago, 2022 could be the year life gets back to some semblance of ‘normal’.
If you or your business needs guidance through any of the changes introduced this year, visit the Beatons website or call their friendly team on 01473 659777.