Due to the latest government recommendations, we are closing our office for unarranged appointments. This will include dropping off books and records. So please contact us by email before visiting the office.
Most of our staff are working from home, so again if you need any help or guidance please contact us by email as we have remote access to our PCs.
If you prefer to telephone, the office number now diverts to one of our members of staff at home. This may be temporarily unattended at times, but if you leave a message we will call you back as soon as possible.
The restrictions placed on all of us and our businesses have seriously affected our day to day lives. 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 have not submitted your 2019 return you have until 23 April 2020 to file it to claim the grant.
- If you commenced self employment in the last year it appears no grant is due. 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
- HMRC will contact you or us
- July 2020 tax installment not due until January 2021
- 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.
- You can delay submission of accounts for 3 months by applying to Companies House and completing an on line form.
- The IR35 rules due to commence in April 2020 are delayed for 12 months.
- There has been no postponement of corporation tax due. However, we understand HMRC will look sympathetically at any claims.
Employees of Self Employed or Companies
- Amounts paid to employees, including directors, under PAYE are covered under the employee retention scheme.
- Employers can reduce gross pay by up to 20% when paying furloughed employees. Thus, effectively, HMRC will reimburse all net wages paid plus 80% of Employers NIC and their statutory Workplace pension contribution.
- Under the scheme the employee is placed on paid leave of absence, or furloughed, and is therefore not working. HMRC will pay the employer 80% of gross pay plus 80% of employers NI and workplace pensions up to a maximum gross pay figure of £2,500.
- The £2,500 refers to the maximum amount an employee can receive. So if an employee earns >£37,500 per ann. they will still only get £2,500
- Employees furloughed will have to be notified to HMRC via a new portal opening on 20 April. HMRC will refund the company.
- Business rates for some will be postponed for a year, local authorities will contact those eligible.
- Interestingly this applies to self catering holiday lets who pay business rates. If you are not already doing this and hold such property you should contact us.
- VAT Help –
- No Vat that is due for the period from 20 March 2020 to 30 June 2020 need be paid to HMRC.
- Any return due during the period has to be submitted as normal.
- You must ensure that any direct debit for VAT is cancelled Otherwise HMRC will take any amount due and not refund.
- Even if it appears you have sufficient funds our advice is to delay any VAT due.
- At present we understand any VAT postponed will be due before 5 April 2021.
Construction Industry & VAT
With effect from 1st October 2019, a massive change is taking 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 NOTE THIS HAS NOW BEEN DELAYED UNTIL OCTOBER 2020
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.