What’s changing for small businesses in the 2020/2021 tax year?

A new tax year is starting on April 6th, which will mean many of the changes announced in recent Budgets will come into effect. Before the 2020/2021 tax year kicks off, here’s a roundup of some of the key changes for small businesses.

If you’re looking for more info on the new measures the government has set out for the self-employed in response to the recent coronavirus outbreak, check out our small business coronavirus support hub.

Changes to some tax and National Insurance rates and bands

Some of the rates and bands have been frozen, while others have increased. Here are the rates and bands that will come into effect on 6th April:

England, Northern Ireland and Wales

& Scottish Tax rates and Bands

Please see attached document. Download here.

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.

Delays and cancellations to planned changes

Corporation Tax rate holds steady
The rate at which limited companies pay Corporation Tax was originally planned to decrease from 19% to 17% on 1st April but these plans have now been cancelled. 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.