28.6.2021 | Tax

Royal Assent of Finance Act 2021 granted

Andrew Diver, Head of Taxation at Beatons Group, delves into the detail to explore what is included in the Act. 

Finance Act 2021 has received Royal Assent a month early, bringing a range of measures into force – including the extended loss carry-back and the super-deduction.

This key piece of legislation, announced in the Budget in March, was not expected to become law until July but has now been approved by Her Majesty The Queen.

Here, Andrew Diver, Head of Taxation at Beatons Group, delves into the detail to explore what is included in the Act.

Super-deduction
This was another big announcement in the Chancellor’s March budget.

The super deduction is a tax break for firms, allowing them to deduct 130% of the costs of buying assets against their profits.

This can be anything from new machinery or plant to office furniture and computers.

The deduction aims to encourage companies to invest in the future and promote business growth across the country as the UK fully reopens.

Both the extended loss carry-back and the super deduction took effect from April 2021.

Loss carry-back
One of the other big-ticket items from Rishi Sunak’s March budget was the announcement of loss carry-back extension.

Previously, if a company ends up experiencing a net loss, it can choose to apply that loss to the previous year’s tax return.

The new Act will extend this to three years for accounting periods ending between April 1, 2020, and March 31, 2022.

This means a potentially higher rebate for the business and the chance to reinvest and get the company back on track.

What else is included?
The Finance Act 2021 also brings changes to off-payroll working, bringing in a targeted anti-avoidance rule where arrangements seek to escape the rules and the Plastic Packaging Tax.

It also strengthens sanctions for promotors of tax avoidance schemes and extends the temporary 5% reduced rate of VAT for the hospitality sector until September 30, 2021 – and a new temporary rate of 12.5% until March 2022.

However, this just scratches the surface of everything in the new Act. Full details can be found here.

If you need advice on how the Finance Act 2021 will affect you and your business, visit beatons.co.uk or call them on 01473 659777