Our offices remain open but with reduced staffing levels. Due to government guidelines, some of our staff remain working from home. Even with these restrictions, we believe we can continue to offer the same service we have provided in the past.
To protect you and our staff, until further notice, we are not allowing access to the building other than our own staff or emergencies. This means we are not currently able to offer face to face client interviews in the office so you may find you are either emailed or telephoned in order to discuss matters arising.
When dropping off and picking up records, we will ask you to remain outside whilst the door is answered by a member of staff.
The government have introduced various initiatives to try and help small businesses. Please see below for the latest information on help for small businesses.
- If you have submitted all Tax Returns to 2019 you will be eligible for a taxable grant of 80% of 3 years taxable income to that date. Income will be averaged over shorter periods if 3 years are not available. The maximum grant is £2500 pcm.
- If you have other income, your self employed income must make up 50% of your total to claim.
- If you did not submit your 2019 return by 23 April 2020 you will not be entitled to a grant.
- If you commenced self employment after 5 April 2019, no grant is available. However, we recommend new clients complete their 2020 returns as soon as they are able because that could form the basis of negotiating a claim with HMRC.
- If your taxable income exceeds £50K no grant will be due
- You need to use your own personal tax account in order to make a claim. We are unable to make the claim on your behalf.
- It has recently been announced that taxpayers with up to £30,000 of self-assessment liabilities due on 31 January 2021, whether deferred from July 2020 or otherwise, can arrange a 12 monthly instalment plan under time to pay arrangements. In effect the final payment will not be due until January 2022. Unlike the postponement from July 2020, If advantage is taken of this arrangement, interest will be accruing from 1 February 2021 on amounts paid after this date.
- If you are VAT registered see below
- Loans – these are covered in the limited companies section.
- Unlike the self employed there is no grant scheme available based on taxable profits
- Certain loans are available, you will need to contact your bank, which are underwritten by HM Government. However, it is the bank who are being underwritten and not your business. We understand banks are under instructions not to ask for personal guarantees for loans up to £250,000. You should take legal advice before signing any guarantee if you think you need a loan.
- Loans will depend upon the viability of your business, involve the preparation and submission of management information etc at a time when funds are tight. We do not expect many clients to be able to apply for these.
- There are grants for smaller businesses, especially if you trade in retail, leisure or hospitality sectors and have property on which business rates are levied. Local authorities should be writing to you. For rateable values up to £15,000 the grant is £10,000; for larger RV’s up to £50,000 the loan is £25,000.
- Any dividends you pay yourself or fellow shareholders are not covered but see below for furloughed employees.
- Submission of accounts to Companies House were automatically delayed by 3 months for accounts years ending up 30 June 2020 Thereafter, the usual 9 months returns. Please note that any Corporation tax remains due nine months and one day after the accounting period. However, we understand HMRC will look sympathetically at any claims.
- The IR35 rules due to commence in April 2020 are delayed for 12 months.
Employees of Self Employed or Companies
- The employee retention scheme is due to finish on 31 October 2020.
- Under the scheme, employers could reduce gross pay by up to 20% when paying furloughed employees. Thus, effectively, HMRC reimbursed all net wages paid plus 80% of Employers NIC and their statutory Workplace pension contribution.
- From 1 September 2020 the percentage reimbursed by HMRC reduced to 70% and then down to 60% from 1 October 2020.
Working From Home Allowance
On 1 October, HMRC set up a new online portal which allows workers to claim tax relief for working at home. The service has been set up to process tax relief on additional expenses for employed workers who have been told to work from home by their employer to help curb the spread of Covid-19.
Since 6 April 2020, employers have been able to pay employees up to £6 a week tax-free to cover additional costs if they have had to work from home, eligible taxpayers can claim tax relief based on the rate at which they pay tax.
The government stated as an example that “if an employed worker pays the 20% basic rate of tax and claims tax relief on £6 a week, they would receive £1.20 a week in tax relief (20% of £6 a week) towards the cost of their household bills”.
- Business rates for some were postponed for a year. Local authorities should have contacted those eligible.
- Job retention bonus – This a one-off taxable payment to employers, for each eligible employee furloughed and kept continuously employed until 31 January 2021. The bonus is claimable between 15 February 2021 and 31 March 2021.
- VAT Help –
- No Vat that is due for the period from 20 March 2020 to 30 June 2020 needed to be paid to HMRC at that time. At present we understand any VAT postponed will be due before 5 April 2021.
- Any return due during the period had to be submitted as normal.
Construction Industry & VAT
A massive change is due to take place with regard to how VAT is collected and accounted for. A reverse charge will affect supplies of building and construction services subject to the CIS scheme involving labour, or materials and labour, at the standard or reduced VAT rates.
If a contractor receives a service subject to the VAT reverse charge from it’s subcontractor, it must account for the VAT in box 1 of it’s VAT return and also recover it simultaneously on the same return in box 4, subject to the normal rules for input tax deduction. The subcontractor will no longer be required to charge VAT but will in future inform the contractor of the amount of the VAT reverse charge applicable. The subcontractor will also inform the contractor that the invoice is subject to the reverse charge and that the contractor is required to account for the VAT. The final contractor in the chain will be required to account for and pay VAT on their service.
If you are affected by the reverse charge scheme you will need to keep separate records. We have prepared pro forma spreadsheets to assist you if required. Please contact us if you wish to take advantage of these or if you require further details on your future responsibilities.
Please follow the links below for the HMRC flowcharts showing the steps to be taken by both suppliers and buyers
PLEASE NOTE THIS HAS BEEN FURTHER POSTPONED UNTIL MARCH 2021
Job Support Scheme
The scheme will open on 1 November 2020 and run for 6 months.
The company will continue to pay its employee for time worked, but the cost of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job.
The Government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.
Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
Employees who work for UK firms forced to shut by law because of coronavirus restrictions are to get two-thirds of their wages paid for by the government, up to a maximum of £2,100 a month.
Firms whose premises are legally required to shut for some period over winter as part of local or national restrictions will receive grants of up to £3,000 per month to pay the wages of staff who cannot work.
2020/21 personal allowance remains at £12,500 and the higher rate threshold stays at £50,000.
Corporation tax rate will remain at 19% in 2021.
Annual investment allowance (AIA) on qualifying investments in plant & machinery will revert back from £1 million to £200,000 in January 2021.
VAT taxable turnover threshold for registration will remain at £85,000 until April 2022.
Deregistration threshold to remain at £83,000 up until the same date.
Capital Gains Tax
Annual exempt amount to increase to £12,300 per annum from 2020/21, (trusts £6,150 per annum).
Private residence relief from April 2020 will only apply where the owner of the property is in shared occupancy with the tenant. Final period exemption has been reduced from 18 months to 9 months.
With effect from 6th April 2020, gains arising on the disposal of residential property will need to be declared and any tax arising paid within 30 days of the disposal.
Inheritance tax nil rate band to remain at £325,000 for 2020/21.
Employment allowance will increase from £3000 to £4000 per annum in April 2020.
Lower earnings limit to increase to £120 per week from 6th April 2020. Primary threshold to increase to £183 per week.
National Minimum Wage and National Living Wage rates
The table below gives the current rates and those applicable from April 2020.
|Year||25 and over||21 to 24||18 to 20||Under 18||Apprentice|
|April 2020 (current rate)||£8.72||£8.20||£6.45||£4.55||£4.15|
Personal Service Companies (PSC)
Where a PSC provides the services of a worker to a public body, such as a government department, NHS Trust or local authority, the public body should be responsible for deciding where the intermediaries legislation (also known as IR35) should apply. If it finds that the rules should apply then it would also have to pay HMRC the tax and National Insurance on the deemed employment payment, deducting those amounts from the amount it pays to the PSC.
The public body should not deduct the normal 5% flat rate deduction from payments for the workers services in computing the deemed employment payment. With effect from April 2020, the above regulations will apply to larger private companies.
For further details on the 2020 Budget please visit: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/871802/Budget_2020_Print.pdf
Making Tax Digital for VAT
Businesses whose taxable turnover exceeds the VAT registration threshold will need to keep their records digitally, using Making Tax Digital (MTD) functional compatible software, and create the VAT return from that (or a combination of) software, for return periods starting on or after 1 April 2019.
Digital records must be maintained in what is defined as “functional compatible software” i.e. software or spreadsheets (or combination of both), which will connect to HMRC via an Application Programming Interface (API). These records must be digitally maintained for 6 years.
Changes to VAT Return Submission
VAT returns must be submitted to HMRC by means of a business’s functional compatible software communication digitally via HMRC’s API platform. Businesses will no longer be able to manually enter figures onto the HMRC portal.
“Soft Landing Period”
For VAT return periods commencing between 1 April 2019 and 31 March 2020, HMRC will not enforce the requirements to have digital links between software programmes. This is known as the “soft landing period”. After this period, all transfers of data between digital records must be transferred digitally.
There is no “soft landing period” for the digital submission of the VAT return.
Submission of VAT Returns under MTD
We have obtained VAT filing software that enables us to file VAT returns online. If you are unable to file using an API, we will be able to do so on your behalf, should you wish to use this service.
National Insurance and the Higher Income Child Benefit Charge (HICBC)
Higher rate tax payers should beware that failure to claim the HICBC could result in the spouse not obtaining child benefit credits. It may well be beneficial to claim the benefit but to elect not to receive the payments.
Please contact us if you wish to discuss further.