Archive for March, 2020

Tax Diary April/May 2020

Tuesday, March 31st, 2020

1 April 2020 – Due date for Corporation Tax due for the year ended 30 June 2019.

19 April 2020 – PAYE and NIC deductions due for month ended 5 April 2020. (If you pay your tax electronically the due date is 22 April 2020).

19 April 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2020.

19 April 2020 – CIS tax deducted for the month ended 5 April 2020 is payable by today.

30 April 2020 – 2018-19 tax returns filed after this date will be subject to an additional £10 per day late filing penalty.

`1 May 2020 – Due date for Corporation Tax due for the year ended 30 July 2019.

19 May 2020 – PAYE and NIC deductions due for month ended 5 May 2020. (If you pay your tax electronically the due date is 22 May 2020).

19 May 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2020.

19 May 2020 – CIS tax deducted for the month ended 5 May 2020 is payable by today.

31 May 2020 – Ensure all employees have been given their P60s for the 2019-20 tax year.

 

Changes to Entrepreneurs Relief

Tuesday, March 31st, 2020

Prior to 11 March 2020, business owners could sell multiple, qualifying businesses during their lifetime, and as long as the total chargeable gains did not exceed £10m, a reduced rate of Capital Gains Tax of just 10% would apply.

Since budget day, 11 March 2020, this lifetime allowance has been reduced to £1m.

Business owners who are contemplating a sale of their business after the March date may need to rethink their disposal strategies as this change could potentially double the amount of CGT payable on their sale.

Please contact us for more information on this topic.

Protecting cash flow – tax payments

Tuesday, March 31st, 2020

It is unlikely that our businesses will be unaffected by the inevitable slow-down in economic activity as the Coronavirus outbreak starts to bite.

Maintaining a strict control over your personal and business cash-flow is going to be a key decider in surviving this process.

A major expenditure item is taxation whether that be VAT, PAYE/NIC, self-assessed liabilities or Corporation Tax.

We suggest that all businesses rework their cash-flow forecasts based on the revised trading outlook post COVID-19. Be realistic and tend towards less optimistic scenarios. If the outcome requires support from your bank you may be eligible for a government backed Business Interruption Loan – the government will guarantee 80% of the loan – make your application now based on your revised cash-flow.

And finally, all businesses and self-employed people may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. You can contact HMRC’s new dedicated COVID-19 helpline for advice and support. To ensure ongoing support, HMRC has made a further 2,000 experienced call handlers available to support firms and individuals when needed. For Time to Pay support if you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.

And please call us if you need help reworking your cash-flow forecasts, negotiating loans with your bank or presenting tax payment deferment schemes to HMRC.

Business rates changes

Tuesday, March 31st, 2020

In England

The government will increase the Business Rates retail discount to 100% for one year, expand it to the leisure and hospitality sectors and increase the rates discount for qualifying pubs to £5,000. Taken together with existing small business rate relief (which provides full relief for businesses using a single property with a rateable value of £12,000 or less), an estimated 900,000 properties, or 45% of all properties in England, will receive 100% business rates relief in 2020-21:

  • Businesses that received the retail discount in 2019-20 will be rebilled by their local authority as soon as possible.
  • Those businesses eligible for the newly expanded retail discount and/or the new pubs discount may need to apply to their local authority to receive the discount.
  • Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority.

The government is also providing an additional £2.2 billion funding for local authorities to support small businesses that already pay little or no Business Rates because of Small Business Rate Relief (SBBR). This will provide a one-off grant of £3,000 to around 700,000 business currently eligible for SBRR or Rural Rate Relief, to help meet their ongoing business costs. For a property with a rateable value of £12,000, this is one quarter of their rateable value, or comparable to 3 months of rent.

Regional variations in Wales, Northern Ireland and Scotland may need to be considered. To find out what your position will be contact your local rating authority or council.

Statutory Sick Pay (SSP)

Tuesday, March 31st, 2020

Employers have been rightly worried about the cost of funding SSP for employees that are self-isolating or suffering from the COVID-19 virus. Especially as SSP is now due on day one of absences.

The Chancellor has now confirmed that he will create a means for employers to recover any SSP paid for the first 14 days of sick leave.

Additionally, employees who are advised to self-isolate for COVID-19 will soon be able to obtain an alternative to the fit note to cover this by contacting NHS 111, rather than visiting a doctor. This can be used by employees where their employers require evidence.

Those who are not eligible for SSP, for example the self-employed or people earning below the Lower Earnings Limit of £118 per week (increasing to £120 from 6 April 2020), can now more easily make a claim for Universal Credit or Contributory Employment and Support Allowance.

GUIDANCE FOR OUR CLIENTS – CORONAVIRUS (COVID-19) – UPDATED 27 MARCH 2020


Monday, March 30th, 2020

As promised in our earlier guidance, here is an updated summary of the government announcements or “Ch-ch-ch-ch-changes” (thanks David Bowie):

Self-employed (new measures 26 March 2020)

  • Your 2018/19 tax return must have been filed (and there is an extension to 23 April if it hasn’t been done), and you were self-employed in that year, remain so now, and intend to continue into 2020/21.
  • You must have lost profits due to Covid-19.
  • Self-employed with profits under £50k will qualify, as long as self-employment income is more than half of your total income in either: (a) 2018/19 year, or (b) on average for the three years to 2018/19. This may be useful if you had fluctuating profits.
  • For self-employment starting after 6 April 2016, there will be a pro-rata adjustment.
  • The grants are similar to the Job Retention Scheme (see below) for those on PAYE, i.e. 80% of profits, with a maximum of £2500
  • Grants are taxable, and will be paid in one instalment direct to your bank account, probably in June.
  • The measures also apply to anyone in a trading partnership.
  • The option of a Universal Credit claim still remains.

Employment Support (Job Retention Scheme)

  • You can pay staff 80% of their wages, to a maximum of £2500, whilst furloughing them (essentially just telling them not to work), and reclaim this as a grant from HMRC.
  • This applies to all staff, including part-time, zero hours, and casual workers who were employed as at 29 February.
  • The grant will include employer national insurance and basic auto-enrolment pension contributions.
  • The grant is taxable, but the payments are deductible, meaning a net zero effect on profits.
  • Minimum furlough period is three weeks.
  • There is no mechanism in place for this yet, but we expect there to be more news on that in the next couple of days.
  • You may of course need to wait until you get the grant to pay the staff if you can’t access bank funding.
  • If you decide to pay some staff more than 80% you need to be able to justify this. Use the same criteria as you would for any standard lay-offs or redundancies.
  • You should obtain employee agreement to furloughing, ideally in writing or via email, and may wish to obtain legal advice.
  • Directors should also qualify, as long as they do no work. How HMRC would view doing a few minutes of (non-revenue generating) administration, is difficult to advise on.
  • You should probably hold off any possible redundancies, as you would not get any financial support for those payments.

VAT

  • HMRC has agreed to defer VAT for one quarter until March 2021.
  • HMRC has now advised that it cannot stop direct debits so you need to contact your bank to cancel it.
  • With little or no sales likely in the next quarter for some businesses (assuming a 3 month shutdown in many cases), you may be able to make a reclaim, and this will be paid back in the normal way.
  • You must still submit VAT returns on time, or the usual penalties will apply.

PAYE

  • There will obviously be some liability due in April for March wages and you may want to consider withholding this.
  • We suggest waiting on this, and not yet cancel any direct debit, in case this ties in with the Employment Support scheme.

Corporation Tax

  • This isn’t due until nine months after the last accounts year-end, but you may wish to would consider not paying it for now.
  • Again, you would probably need to contact the Time To Pay helpline.

Personal income tax

  • The 31 July instalment for self-employed has been deferred until 31 January 2021.
  • If you don’t qualify (e.g. you are company directors), you may want to contact the Time To Pay helpline on this in due course.
  • We expect HMRC to be sympathetic to requests, and there may be further announcements from the government on this.

Rates

  • If you pay little or no rates, due to Small Business Rate Relief (SBRR), there is a £10k grant available.
  • Those in retail, hospitality and leisure will have to pay no rates, and may be able to claim a £25k grant for larger premises (rateable value £15k to £51k).
  • This will be administered by the local authority who will contact eligible businesses shortly.

Rent

  • You should contact your landlord to discuss a rent holiday.
  • Eviction of non-paying tenants is not really an option for most landlords, as they wouldn’t be able to re-let the premises anyway, and would probably rather have a reliable tenant at the end of this.
  • For landlords on the receiving end of requests, you may be able to obtain mortgage repayment holidays for three months.

Discretionary spending

  • This could be the time to think about stopping your own pension payments, but you should discuss this with your financial advisers.

Grants

  • There were grants available for retail, hospitality and leisure businesses.
  • We are not sure if these will remain available now that businesses have been told to close, but you ought to check.
  • These are being administered by the local councils.

Banks & lending

  • The banks will have schemes in place for cheap or interest free loans, 80% guaranteed by the government.
  • They have been told to be sympathetic as a trade-off for the support they got in the 2008 financial crisis.
  • Mortgage lenders have been told to view requests for three month repayment holidays sympathetically.

Insurance

  • Although some insurers initially seemed to be doing their utmost to avoid paying out on claims for “pandemic” business closures, they have agreed with the government that they will meet their liabilities.
  • Unfortunately, most policies simply do not cover pandemics, but you should check the policy wording.
  • Business closures
  • The government announced further lockdown measures on Monday23rd March, and specified a list of businesses that MUST CLOSE, together with details of exceptions.

Company accounts

  • The filing date can now be extended by three months due to Covid19 issues.
  • The filing extension must be applied for online, so contact us if you wish to apply.

Helpful weblinks

Business support (grants; job retention scheme, etc):

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

  • Self-employment guidance:

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

Business closure list:

https://www.gov.uk/government/publications/further-businesses-and-premises-to-close/further-businesses-and-premises-to-close-guidance

Company accounts guidance: https://www.gov.uk/guidance/apply-for-more-time-to-file-your-companys-accounts

Best wishes, and stay safe and healthy

Andy, Simon, Jo, Hannah and the team 

Self-Employed Income Support Scheme

Friday, March 27th, 2020

The long-awaited statement from the Chancellor, Rishi Sunak regarding COVID-19 support for the self-employed has been announced. The Chancellor said that the scheme will benefit some 95% of people whose main income source is derived from self-employment.

A list of the scheme features as announced, and published, are as follows:

  • Those that qualify will receive a cash grant from HMRC based on 80% of profits, up to £2,500 per month,
  • The initial grant will be for the three months, from 1 March through to the end of May 2020, but could be extended for a longer period.

To be eligible, the following conditions will be taken into account:

  • Applicants must be self-employed or a member of a trading partnership,
  • Have lost trading profits due to COVID-19,
  • Have filed a tax return for 2018-19. Late filers will have four weeks from 26 March 2020 to do so,
  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID-19) and intend to continue to trade in the tax year 2020-21,
  • Have trading profits of less than £50,000 and more than half of total income from self-employment. This can be with reference to at least one of the following conditions:
    • Your trading profits and total income in 2018-19,
    • Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.

There is no need to apply to HMRC as they will contact you if you are eligible. HMRC will use existing data to make this judgement. The initial three-month grant will be paid directly to a nominated bank account in a single lump sum. The grants are expected to be paid out at the beginning of June. The reason for this delay is likely down to three main factors: the 4 weeks additional filing time for late filers, the requirement to set up a complex new system at the same time as the Coronavirus Job Retention Scheme and to reduce the risk of fraud.

It is assumed that those self-employed who have experienced a significant drop in income due to COVID-19 disruption will need to apply for Universal Credits or Business Continuity Loans to tide them over until June. This will be a challenging time for those affected as the demand for help will place significant challenges on the institutions charged with providing this support.

CORONAVIRUS JOB RETENTION SCHEME (CJRS) – update for director shareholders

There has been uncertainty as to the position of director/shareholders claiming under the CJRS as their income is usually taken from their company as a combination of a low salary and dividends. In the news story published following the Chancellor’s statement on 26 March (regarding the Self-employed scheme) is a telling paragraph. It says:

Those who pay themselves a salary and dividends through their own company are not covered by the scheme (the Self-employed Scheme) but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.

This infers that directors will only be eligible for the CJRS based on their salary alone, and only if there is a proven PAYE record.

Further details of the CJRS are due to be published imminently and will be added to our newsfeed as soon as they are available.

Support with paying your taxes

Thursday, March 26th, 2020

Further support to businesses and the self-employed, to delay the payment of various taxes was announced last week. They include:

VAT

Any VAT that falls due for payment in the period from 20 March 2020 to 30 June 2020 can be deferred until the end of the 2020-21 tax year.

This is not a cancellation of any liability that falls due in this period, merely a deferral. Businesses will need to ensure that they have funds to settle any arrears on or before the end of March 2021 (5 April 2021).

Any refunds due from HMRC will be paid as usual.

 

Second payment on account due 31 July 2020

It has been confirmed that self-employed persons’ self-assessment, second payment on account for 2019-20, due 31 July 2020, can be deferred until 31 January 2021.

Tax payers should be aware that as with the VAT offer, this is a deferral, not a cancellation of tax due. Those who take advantage will need to pay their second payment on account and any balancing payment for 2019-20 and any first payment on account – if any is due – for 2020-21.

Please call if you need to clarify which VAT payments can be deferred and the likely longer term cash flow effects if you defer the self-assessment payment on account in July.

In both cases there is no need to apply to HMRC to defer payments.

80 percent of your staff wages paid by government?

Tuesday, March 24th, 2020

As one of the additional measures to support businesses affected by the Coronavirus outbreak, Rishi Sunak announced last week that HMRC is to step in and pay up to 80% of furloughed staff wages up to a monthly maximum of £2,500 per employee.

Initially, this sounded as if HMRC was going to underwrite 80% of our salaries bill; let’s be clear, this is not what is on offer. What is on offer is the Coronavirus Job Retention Scheme. (CJRS) The following notes cover the basic terms and conditions.

What does “furloughed” mean?

Our first observation is that the word furlough has no legal significance. After reading the GOV.UK notes it is clear that this refers to staff that are laid-off as they cannot work during the current disruption to trade.

Ordinarily, business owners would probably be faced with offering these staff redundancy.

A furloughed worker is not someone who has been directed to work from home.

Furloughed can be defined, therefore, as an employee that is retained on your payroll but is unable to undertake any productive work.

What is on offer?

As noted above, HMRC will reimburse 80% of furloughed employees’ wages costs up to a maximum of £2,500 a month – this is the level of the national median wage.

Employers can make up any differential at their discretion, this is not compulsory.

The aim is to provide a basic income such that, when matters return to normal, staff can be recalled, resuming their normal duties.

How do we claim?

HMRC are building an online portal where employers can disclose the details of furloughed employees and make a claim under the CJRS scheme.

This is not presently available and best guess is payment will not be forthcoming from HMRC until towards the end of April 2020.

Action to take now

This scheme is a welcome addition to the other supportive grants and reliefs announced by the Chancellor in the past two weeks.

Business owners that were considering redundancies or more drastic measures may be able to use CJRS to retain their staff until the worst of the COVID-19 disruption has passed.

A word of caution. The details about the way in which the scheme will operate are sketchy at the time this update was written. As more information becomes available you will be the first to know. In the meantime, please call if you need our support to work through your options.

GUIDANCE FOR OUR CLIENTS – CORONAVIRUS (COVID-19) – UPDATED 23 MARCH 2020

Monday, March 23rd, 2020

To quote Bob Dylan (sorry to anyone under 50): “the times they are a changin’, but I doubt even he thought they would be changing this fast.

Disclaimer: other, more modern, artists may have uttered similar sentiments!

There seem to be almost daily proposals announced by the government to try to steer us through this crisis, and those announced on Friday (20th) are the most radical yet, with a broad swathe of measures to help businesses and employees. It is hoped that these will keep businesses from failing and leave the economy in a position to restart activity quickly when the virus is under control.

Employment Support

  • You can pay staff 80% of their wages whilst furloughing them (essentially just telling them not to work), and reclaim this as a grant from HMRC.
  • There is no mechanism in place for this yet, but we expect there to be more news on that in the next couple of days
  • You may of course need to wait until you get the grant to pay the staff if you can’t access bank funding.
  • If you decide to pay some staff more than 80% you need to be able to justify this. Use the same criteria as you would for any standard lay-offs or redundancies.
  • You should probably hold off any possible redundancies, as you would not get any financial support for those payments.

VAT

  • This will not be collected for the current quarter.
  • With little or no sales likely in the next quarter for some businesses (assuming a 3 month shutdown in many cases), you may be able to make a reclaim, and this will be paid back in the normal way.
  • If you do have VAT liabilities in future quarters, and there has been no further deferral announcement (although we expect there to be), you ought to cancel the direct debit and contact the HMRC Time To Pay helpline. Expect long waits!
  • You must still submit VAT returns on time, or the usual penalties will apply.

PAYE

  • There will obviously be some liability due in April for March wages and you may want to consider withholding this.
  • We suggest waiting on this, and not yet cancel any direct debit, in case this ties in with the Employment Support scheme.

Corporation Tax

  • This isn’t due until nine months after the last accounts year-end, but you may wish to would consider not paying it for now.
  • Again, you would probably need to contact the Time To Pay helpline.

Personal income tax

  • The 31 July instalment for self-employed has been deferred until 31 January 2021.
  • If you don’t qualify (e.g. you are company directors), you may want to contact the Time To Pay helpline on this in due course.
  • We expect HMRC to be sympathetic to requests, and there may be further announcements from the government on this.

Rates

  • If you pay little or no rates, due to Small Business Rate Relief (SBRR), there is a £10k grant available.
  • Those in retail, hospitality and leisure will have to pay no rates, and may be able to claim a £25k grant for larger premises (rateable value £15k to £51k).
  • This will be administered by the local authority who will contact eligible businesses shortly.

Rent

  • You should contact your landlord to discuss a rent holiday.
  • Eviction of non-paying tenants is not really an option for most landlords, as they wouldn’t be able to re-let the premises anyway, and would probably rather have a reliable tenant at the end of this.
  • For landlords on the receiving end of requests, you may be able to obtain mortgage repayment holidays for three months.

Discretionary spending

  • This could be the time to think about stopping your own pension payments, but you should discuss this with your financial advisers.

Grants

  • There were grants available for retail, hospitality and leisure businesses.
  • We are not sure if these will remain available now that businesses have been told to close, but you ought to check.
  • These are being administered by the local councils.

Banks & lending

  • The banks will have schemes in place for cheap or interest free loans, 80% guaranteed by the government.
  • They have been told to be sympathetic as a trade-off for the support they got in the 2008 financial crisis.
  • Mortgage lenders have been told to view requests for three month repayment holidays sympathetically.

Insurance

  • Although some insurers initially seemed to be doing their utmost to avoid paying out on claims for “pandemic” business closures, they have agreed with the government that they will meet their liabilities.
  • Unfortunately, most policies simply do not cover pandemics, but you should check the policy wording.

Self-employed

  • Apart from the deferment of the July tax instalment, there has been little additional support to date.
  • You may be able to claim sick pay via the Universal Credit route.
  • There is pressure from many trade bodies on your behalf, so expect an announcement soon.

Useful HMRC weblinks

  • Business support: https://www.gov.uk/government/publications/guidance-to-employers-and- businesses-about-covid-19/covid-19-support-for-businesses
  • Employee guidance (that you may want to send to staff): https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid- 19/covid-19-guidance-for-employees

Best wishes, and stay safe and healthy

Andy, Simon, Jo, Hannah and the team

Switch to our mobile site