Covid-19 and UK Tax Implications: An Overview
The coronavirus pandemic has caused unprecedented disruption to the global economy, with the UK being no exception. This article will provide an overview of the UK tax implications of Covid-19, including changes to income tax, VAT, corporation tax, and capital gains tax.
Income Tax: Relief for Self-Employed and Employees
The UK government has introduced a range of measures to provide relief from income tax for both self-employed individuals and employees. Self-employed individuals can benefit from the Self-Employment Income Support Scheme (SEISS), which provides a taxable grant of up to 80% of average monthly profits for three months. Employees can take advantage of the Coronavirus Job Retention Scheme, which allows employers to claim a grant to cover 80% of wages up to a maximum of £2,500 per month.
VAT: Temporary Reduction in Rate
The UK government has temporarily reduced the rate of Value Added Tax (VAT) from 20% to 5%, with effect from 15 July 2020. This measure is intended to provide relief to businesses affected by the pandemic, as well as providing a boost to consumer spending.
Corporation Tax: Deferment of Payments
In response to the coronavirus pandemic, the UK government has deferred the payment of corporation tax due on the profits of companies in the 2020/21 tax year. This measure allows companies to defer payment of up to £30,000 of corporation tax until 31 March 2021.
Capital Gains Tax: Relief for Investors
The UK government has introduced a range of measures to provide relief from capital gains tax for investors. These include a temporary increase in the annual exempt amount from £12,000 to £12,300, and a temporary reduction in the rate of capital gains tax from 20% to 10% for disposals of residential property.
The UK government has introduced a range of measures to provide relief from taxation for individuals and businesses affected by the coronavirus pandemic. These measures include relief from income tax, VAT, corporation tax, and capital gains tax. It is important to be aware of these measures and to take advantage of them where possible.