Business Update

Business Update - March

Price Mann • March 17, 2021

Opt-in to VAT deferral new payment scheme by 31 March 2021

Businesses that deferred paying VAT between 20 March 2020 and 30 June 2020 do not need to pay the full amounts by the end of this month.

VAT-registered firms were not required to make VAT payments during this deferral period, and initially had until 31 March 2021 to pay any liabilities.

However, the Government’s winter economy plan offered these firms a chance to pay in small instalments over a longer period.

Instead of paying the full amount by the end of the month, VAT-registered firms can make up to 11 smaller interest-free payments until 31 March 2022.

Business groups welcomed this extra time to pay deferred VAT bills and said the move should ease the pressure on cashflow.

To spread these, a direct debit needs to be set up as part of a digital opt-in process to the VAT deferral new payment scheme.

To use the scheme, a business must have deferred VAT to pay, be up-to-date with their returns and be in a position to pay the first instalment.

Assuming they meet those criteria, they must complete the opt-in process through the Government Gateway before the end of this month.

If businesses can afford to pay their deferred VAT bill, they should still do so by 31 March 2021.

Alternatively, they can contact HMRC’s time-to-pay service if more help is needed to repay any deferred VAT from last year.

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Personal allowance and higher-rate threshold to increase 0.5%

A 0.5% increase to the personal allowance and higher-rate of income tax will be in place from 6 April 2021, according to the Treasury.

Both thresholds will increase in line with the Consumer Prices Index (CPI) rate of inflation figure for September 2020, which was 0.5%.

This means the personal allowance will increase from £12,500 to £12,570 and be in effect throughout the UK for 2021/22.

In every UK country except for Scotland, the basic-rate will kick in above £12,570 and apply on income of up to £50,270.

The higher-rate of income tax (40%) will kick in on any slice of income in 2021/22 exceeding £50,270 up to £150,000.

The additional rate (45%) and £150,000 threshold remains unchanged for the eighth consecutive year, going back to the 2013/14 tax year.

The Treasury also confirmed the September 2020 CPI rate of inflation figure will be used to increase the 2021/22 National Insurance limits and thresholds.

Jesse Norman, financial secretary at the Treasury, said: “The Government will use the September CPI figure (0.5%) as the basis for setting all National Insurance limits and thresholds, and the rates of class 2 and class 3 National Insurance contributions, for 2021/22.”

Norman confirmed this in a recent statement to the House of Commons after last autumn’s budget was postponed.

Get in touch for tax-planning advice.

Changes to prompt-payment code aim to end late payments

Thousands of small businesses that face severe cashflow problems due to late payments stand to benefit from changes to the prompt-payment code.

The Government has strengthened the prompt-payment code so that 95% of invoices from smaller suppliers must be paid within 30 days from 1 July 2021.

This has been halved from the current 60 days, although this remains the target to pay invoices from larger suppliers – defined as those with 50 or more employees. Directors, finance officers and chief executives will also need to personally sign the code to ensure they are accountable for making prompt payments.

Around 3,000 companies have signed up to the voluntary code, but more than £23.4 billion-worth of late payments are owed to smaller businesses in the UK.

Paul Scully, small business minister, said: “We are relieving some of the pressure on small business owners by introducing significant reforms to the UK payments regime — pushing big businesses to pay their suppliers on time.”

Late payments are nothing new for smaller businesses, but the COVID-19 pandemic and various lockdown restrictions have exacerbated the situation for many.

Mike Cherry, chair at the Federation of Small Businesses, said: “Sadly, some unscrupulous corporations are trying to inoculate themselves from the impacts of COVID-19 by withholding payments, or even freezing them at the expense of small firms. Cash is still very much king for small firms, and withholding it has pushed many to the brink at a time when they’re at their most vulnerable. If the small firms that make up 99% of our business community are to play the fundamental role in ending this recession, this behaviour must stop. Ending our pernicious poor payment culture for good over the coming months will be fundamental to turning our hopes of economic recovery into reality.”

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Record number miss filing self-assessment by the deadline due to COVID-19

Around 1.8 million taxpayers missed the 2019/20 deadline for self-assessment on 31 January 2021, according to figures published by HMRC.

The tax authority revealed 1,790,368 people failed to beat the midnight deadline, almost double last year’s total of 958,296.

HMRC attributed the spike in the number of personal taxpayers missing this year’s midnight deadline – about 15% of the 12.14m returns due – to the impact of COVID-19.

Karl Khan, interim director-general for customer services at HMRC, said officials knew that “many individuals and small firms found it harder to pay this year due to the pandemic”.

Unlike in previous years, HMRC waived the automatic £100 penalty on late tax returns until 28 February 2021.

However, 2.6% annual interest on those late payments kicked in from 1 February 2021.

Jim Harra, chief executive at HMRC, added: “Not charging late-filing penalties for late online tax returns submitted in February gave the breathing space required to complete and file tax returns, without customers worrying about receiving a penalty. We reasonably assumed most of these people had a valid reason for filing late, caused by the pandemic.”

HMRC had urged non-filers to pay any tax owed, or an estimated amount of tax, for 2019/20 by 31 January 2021 to minimise any interest and penalties. The time-to-pay service enables taxpayers to arrange payment plans, spreading the cost of paying their 2019/20 tax bill in up to 12 monthly instalments.

However, the tax authority said these payment plans need to be set up before 1 April 2021 to avoid a 5% late-payment penalty. Payment plans arranged after this date will incur this penalty as well as accruing interest.

Exactly 10,743,387 people filed their 2019/20 self-assessment tax returns on time – down from a record high of 11,122,967 submissions last year.

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Managing risk in your investment portfolio

By Price Mann • September 17, 2025

Managing risk in your investment portfolio Tips for a balanced investment approach. Investment markets rise and fall, yet the goals that matter to you – retirement security, children’s education, a comfortable buffer against the unexpected – remain constant. Managing risk means giving each goal the best chance of success while avoiding avoidable shocks. You can do that by holding the right mix of assets for your timeframe, using tax wrappers efficiently, and controlling costs and emotions. The 2025/26 UK tax year brings unchanged ISA and pension allowances. This guide explains the key steps, such as diversifying sensibly, rebalancing with discipline, safeguarding cash, and monitoring allowances, so you can stay on track whatever the markets deliver. It is an information resource, not personal advice. Start with a clear plan Define goals and timeframes: Decide what each pot of money is for (for example: house deposit in three years, retirement in 20 years). Time horizon drives how much short-term volatility you can accept. Short-term goals usually need more cash and high-quality bonds; long-term goals can justify more equities. Set your risk level in advance: Ask yourself two questions. Risk capacity: How much loss could you absorb without derailing plans (linked to your time horizon, job security and other assets)? Risk tolerance: How do you feel about market swings? Use a more cautious mix if you are likely to sell in a downturn. Ring-fence cash needs: Keep 3-6 months’ essential spending in easy-access cash before you invest. This reduces the chance of selling investments at a low point to meet bills. Choose simple, diversified building blocks: Broad index funds and exchange-traded funds (ETFs) covering global equities and high-quality bonds provide instant diversification at low cost. Avoid concentration in a single share, sector or theme unless you are comfortable with higher risk. Diversification: Spread risk across assets, regions and issuers Diversification reduces the impact of any single holding. Practical ways to diversify include the following. Assets: Use both growth assets (equities) and defensive assets (investment-grade bonds, some cash). Regions: Combine UK and global holdings. Many UK investors hold too much domestically; global funds spread company and currency risk. Issuers: In bonds, mix UK gilts and investment-grade corporate bonds to diversify credit exposure. Currencies: Equity funds are commonly unhedged (currency moves add volatility but can offset local shocks). For bonds, many investors prefer sterling-hedged funds to lower currency risk. A diversified core helps the portfolio behave more predictably across different market conditions. You can add small “satellite” positions if you wish, but keep any higher-risk ideas to a modest percentage of the whole. Use tax wrappers to reduce avoidable tax and trading frictions Efficient use of ISAs and pensions is one of the most effective risk-management tools because it protects more of your return from tax. ISAs (individual savings accounts) Annual ISA allowance: £20,000 for 2025/26. You can split this across cash, stocks & shares and innovative finance ISAs. Lifetime ISAs (LISAs) are capped at £4,000 within the overall £20,000. Junior ISA (for children under 18): £9,000 for 2025/26 (unchanged). ISAs shield interest, dividends and capital gains from tax. Rebalancing inside an ISA does not create capital gains tax (CGT), which helps you maintain your chosen risk level at lower cost. Note: There has been public discussion about potential ISA reforms, but the current 2025/26 allowance is £20,000. If government policy changes later, we will let you know. Pensions (workplace pension, personal pension/SIPP) Annual allowance: £60,000 for 2025/26 (subject to tapering for higher incomes; see below). You may be able to carry forward unused annual allowance from the three previous years if eligible. Tapered annual allowance: If your adjusted income exceeds £260,000 and threshold income exceeds £200,000, the annual allowance tapers down (to a minimum of £10,000 for 2025/26). Money purchase annual allowance (MPAA): £10,000 for 2025/26 once you’ve flexibly accessed defined contribution benefits (for example, taking taxable drawdown income). Tax-free lump sum limits: The lifetime allowance has been replaced. From 6 April 2024, the lump sum allowance (LSA) caps total tax-free pension lump sums at £268,275 for most people, and the lump sum and death benefit allowance (LSDBA) is £1,073,100. Pensions are long-term wrappers designed for retirement. Contributions usually attract tax relief and investments grow free of UK income tax and capital gains tax while inside the pension. Personal savings: Interest allowances Personal savings allowance (PSA): Basic-rate taxpayers can earn up to £1,000 of bank/building society interest tax free; higher-rate taxpayers up to £500; additional-rate taxpayers do not receive a PSA. Starting rate for savings: Up to £5,000 of interest may be taxable at 0% if your other taxable non-savings income is below a set threshold. For 2025/26, that threshold is £17,570 (personal allowance of £12,570 plus the £5,000 starting rate band). Dividends and capital gains outside ISAs/pensions Dividend allowance: £500 for 2025/26 (unchanged from 2024/25). Dividend tax rates remain 8.75%, 33.75% and 39.35% for basic, higher and additional-rate bands, respectively. The annual capital gains tax (CGT) exempt amount , £3,000 for individuals (£1,500 for most trusts). CGT rates from 6 April 2025: For individuals, 18% within the basic-rate band and 24% above it, on gains from both residential property and other chargeable assets (carried interest has its rate). HMRC examples confirm the £37,700 basic-rate band figure used in CGT calculations for 2025/26. CGT reporting reminder: UK residents disposing of UK residential property with CGT to pay must report and pay within 60 days of completion. Other gains are reported via self assessment (online filing deadline is 31 January following the tax year; if you want HMRC to collect through your PAYE code, file online by 30 December; payments on account remain due 31 January and 31 July). Why this matters for risk: Using ISAs and pensions lowers the drag from tax, allowing you to rebalance and compound returns more effectively. Outside wrappers, plan disposals to use the £3,000 CGT allowance and each holder’s tax bands and consider transfer to a spouse/civil partner (no CGT on gifts between spouses) before selling where suitable. Bonds and cash: Interest-rate and inflation considerations Interest rates: The Bank of England reduced the Bank Rate to 4% at its August 2025 meeting. Bond prices can move meaningfully when rates are high or changing, especially for longer-dated bonds. Consider the duration of bond funds and whether a mix of short- and intermediate-duration exposure suits your time horizon. Inflation: Headline Consumer Price Index (CPI) inflation was 3.6% in the 12 months to June 2025, while the CPI including owner occupiers’ housing costs (CPIH) rose by 4.1%. Inflation affects the real value of cash and bond coupons, and can influence central bank policy, affecting bond prices. Review whether your mix of cash, index-linked gilts and conventional bonds remains appropriate as inflation and interest-rate expectations evolve. Cash strategy: For short-term needs, spread deposits to respect Financial Services Compensation Scheme (FSCS) limits. For longer-term goals, excessive cash can increase the risk of falling behind inflation. Control costs and product risk Keep fees low: Ongoing charges figures (OCFs), platform fees and trading costs compound over time. Favour straightforward funds and avoid unnecessary expenses. Understand the product: Structured products, highly concentrated thematic funds or complex alternatives can behave unpredictably. If you use them, size them modestly within a diversified core. Use disciplined trading rules: Avoid frequent tinkering. Set rebalancing points (see below) and resist acting on short-term news. Rebalancing: Why, when and how Markets move at different speeds. Without rebalancing, a portfolio can “drift” to a higher or lower risk level than you intended. Follow this simple rebalancing framework. Invest in something that will rebalance automatically (i.e. certain ETFs) Frequency: Review at least annually. Thresholds: Rebalance when an asset class is 5 percentage points away from target (absolute) or 20% away (relative). Tax-aware execution: I prefer to rebalance inside ISAs and pensions. Outside wrappers, use new cash or dividends where possible; then consider selling gains up to the £3,000 CGT allowance and factoring in dividend and savings allowances. Implementation tip: If markets are volatile, use staged trades (for example, three equal tranches a few days apart) rather than one large order. Safeguard cash and investments with the right protections FSCS protection (cash deposits): Up to £85,000 per person, per authorised bank/building society group is protected. Temporary high balances from specific life events can be covered up to £1m for six months. The Prudential Regulation Authority has consulted on raising the standard deposit limit to £110,000 and the temporary high balance limit to £1.4m from 1 December 2025 (proposal stage at the time of writing). FSCS protection (investments): If a regulated investment firm fails and your assets are missing or there is a valid claim for bad advice/arranging, compensation may be available up to £85,000 per person, per firm. This does not protect you against normal market falls. Operational risk checks: Use Financial Conduct Authority authorised providers, check how your assets are held (client money and custody), enable multi-factor authentication, and keep beneficiary and contact details up to date. Currency risk: When to hedge For equities, many long-term investors accept currency fluctuations as part of the growth engine, since sterling often weakens when global equities are stressed, partly offsetting losses. For bonds, many prefer sterling-hedged funds to keep defensive holdings aligned with sterling cashflow needs. A blended approach works: unhedged global equities plus mostly hedged bonds. Behavioural risks: Keep decisions steady Common pitfalls include chasing recent winners, selling after falls or holding too much cash after a downturn. Tactics to keep you on track include: automate contributions (regular monthly investing), which spreads entry points write down rules (what you will do if markets fall 10%, 20%, 30%) separate spending cash from investments so you do not sell at weak prices to fund short-term needs use portfolio “buckets” in retirement. Retirement planning: Sequence-of-returns risk and withdrawals If you are drawing an income from investments consider the following. Hold a cash buffer (for example, 12–24 months of planned withdrawals) to avoid forced sales during sharp market falls. Be flexible with withdrawals: Pausing inflation-indexing or trimming withdrawals after a poor market year can help portfolios last longer. Use tax bands efficiently: Consider the order of withdrawals (pension, ISA, general investment account) to make use of personal allowance, PSA, dividend allowance and the CGT annual exempt amount. Take care around the MPAA if you are still contributing to pensions after accessing them. Putting it together: A repeatable checklist Confirm goals and time horizons. Check emergency cash (3-6 months). Map your target asset allocation. Use wrappers first: Fill ISAs and workplace/personal pensions as appropriate. Keep costs low: Prefer broad index funds/ETFs. Set rebalancing rules: Annual review + thresholds. Document tax items: Monitor dividend/CGT use; note 60-day property CGT rule; plan for 31 January/31 July self assessment dates if relevant. Review protection limits: Spread larger cash balances across institutions in line with FSCS; note proposed changes for late 2025. Schedule an annual review to update assumptions for interest rates, inflation and any rule changes. Get in touch if: you are unsure how to set or maintain an asset allocation you plan to draw income and want to coordinate wrappers and tax bands you expect large one-off gains or dividends and want to plan disposals or contributions you have concentrated positions (employer shares, single funds) and want to reduce single-asset risk tax-efficiently you are considering more complex investments. Wrapping up Risk management is not a one-off task but an ongoing discipline. By defining clear objectives, spreading investments across regions and asset classes, using ISAs and pensions to shelter returns, and reviewing allocations at least annually, you create a framework that limits surprises and keeps decisions rational. Document key dates – self assessment payments on 31 January and 31 July, the 60-day CGT rule for property, and the annual ISA reset on 6 April – so tax never forces a sale at the wrong time. Check deposit limits and platform safeguards for peace of mind, and keep a written record of your rebalancing rules to prevent knee-jerk trades. If life events or regulations change, revisit your plan promptly. A measured, systematic approach lets your portfolio work harder while you stay focused on the goals that matter most. Important information This guide is information only and does not account for your personal circumstances. Past performance is not a guide to future returns. The value of investments and income from them can fall as well as rise, and you may get back less than you invest. Tax rules can change and benefits depend on individual circumstances. If you need personalised advice, please contact a regulated financial adviser. If you’d like advice on managing your portfolio, get in touch.