WINTER ECONOMY PLAN – SEISS GRANTS, BOUNCE BACK LOAN SCHEME & VAT CHANGES

The Chancellor announced measures to help businesses through into 2021 with the “Winter Economy Plan.”  These are 3 of the 5 measures he has put in place.  Our further blog details the other areas.

SEISS grant

The second SEISS grant application closes on 19^th October with a third SEISS grant to be made available to cover 20% of the average monthly profits for three months.

Only those that were eligible for the first and second grants can apply, with it being capped at £1,875 per taxpayer.  This is not yet open for applications.

A fourth SEISS grant will be made available from February to April 2021.  This may be available for those self-employed taxpayers that were not able to claim under the first three.

Bounce Back Loan Scheme Upgraded to Pay as you Grow

All existing COVID-19 loan schemes have been extended; applications for the Coronavirus Business Interruption Loan Scheme (CBILS), the Bounce Back Loan Scheme (BBLS) and the Future Fund are open until 30 November.  31 December now the new deadline for approvals.

The CBILS and BBLS loans are extended to a 10 year repayment term.  The £50,000 BBLS has been rebranded as “Pay as you Grow.”  It offers borrowers a more flexible repayment schedule, starting with interest only repayments for up to six months.  Businesses who are struggling can also request a six month repayment holiday.

VAT changes

The VAT rate for the hospitality and tourism sector is to remain at 5% until 31 March 2021.

VAT payments due for the period 20 March to 30 June 2020 could be deferred until 31 March 2021.

Businesses that took advantage of this deferral will be able to spread the deferred VAT payment over 11 equal instalments between April 2021 and March 2022.

If you need help with this then please call us on 0113 2864486.

Source: Accounting Web

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The Chancellor announced measures to help businesses through into 2021 with the “Winter Economy Plan.”  These are 2 of the 5 measures he has put in place.  Our further blog details the other areas.

Job Support Scheme

The current furlough scheme ends on 31^st October and a new 6-month Job Support Scheme will begin on 1^st November.

The new scheme applies to any employees on your payroll on 23 September 2020 and is, therefore, not restricted to employees that had been on furlough between March and October.

To qualify employees must work for at least a third of their usual hours with the employer paying for all the hours.  It is assumed this will be at the employees’ usual hourly rate but it has not been confirmed.  Of the remaining “resting” hours, the Government and the employer will each pay a third at the employee’s usual wage rate.  The employer therefore pays 55% of the employee’s wages for a third of their normal working time.

The Government’s contribution is capped at 22% of usual wages and £697.22 per month.  The employer will need to pay the employer’s NI and pension contributions on all the employee’s pay.  There are no restrictions for SMEs using the new scheme.

Tax deferrals

The deferral of the payment on account (POA), was one of the first to be announced, and tax due on 31 July 2020 is now due on 31 January 2021.  No interest will be charged for late paid tax.

Individual taxpayers can have longer to pay all the taxes due by 31 January 2021.  These are made up of second POA 2019/20, balancing payments 2019/20, capital gains tax 2019/20 (if not paid under 30 day rule), first POA 2020/21.

The taxpayer will need to apply for time to pay to spread the tax due over 12 monthly instalments to January 2022.  If the total tax due does not exceed £30,000 the time to pay will be automatically agreed when completing the on-line form.

Where tax exceeds £30,000 or you need longer to pay, you will need to telephone HMRC to organise a bespoke payment plan.

Source: Accounting Web

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HMRC has increased the threshold for time to pay arrangements, for Self Assessment customers, to help ease the financial burden they may be experiencing due to the COVID-19 pandemic.

Previously the Time to Pay plan could be used to set up instalment arrangements for paying tax liabilities up to £10K. However, since 1 October it has been officially increased to £30K.

The increase aims to help individuals spread the cost of their tax bill into monthly payments. The deadline to complete Self-Assessment tax returns for 2019/20 is 31 January 2021.

The increased self-serve Time to Pay limit of £30k follows chancellor Rishi Sunak’s announcement on 24 September to increase support for businesses and individuals through the fallout from the pandemic.

If you need help with this then please call us on 0113 2864486.

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A new fund for small and medium businesses (SMEs) has been announced by the Government.  It is to enable them to access specialist advice to further lessen the impact of COVID-19 or support potential new opportunities.

Grants of between £1000 – £3000 will be available for SMEs directly impacted by COVID-19 to access professional support e.g. digital, legal, HR, financial, health and safety or other consultancy advice,  and to purchase minor equipment to adapt or adopt new technology to enable businesses to continue or diversify.

The grants will cover 100% of the cost, excluding VAT.  SMEs will need their application approved before making a payment for the support or purchase.  They will then make a claim for the grant.

The funding is been allocated to Growth Hubs within each Local Enterprise Partnership (LEP) area.  The application process has not opened yet, but you can complete a “register your interest” form and further information will be forwarded in due course.

Source: LEP

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HMRC temporarily suspended tax investigations during lockdown.  However with public spending soaring due to Government schemes such as Furlough and SEISS, HMRC are expected to impose harsh penalties for underpayment of tax, as they did after the last financial crisis.

Tax collected and penalties imposed are an important source of revenue for HMRC and far outweigh any costs associated with investigations, so we should be prepared for activity in this area to ramp up.

50,567 penalties were levied last year on tax payers who failed to “take reasonable care”.  This includes accidental errors or not seeking the advice of a competent professional.  Penalties of up to 100% of the tax due can be issued against tax payers who HMRC believe to have deliberately given inaccurate information on their tax returns.

If you are unsure about what you can claim or anything else regarding tax, then always speak to your Accountant in the first instance.

We would also recommend taking out Tax Investigation Cover.  If one of our clients takes out this cover through us, we would then be able to support them, communicate with HMRC throughout and defend their position, without any invoice for our time, should they have a tax investigation or enquiry.

Call us on 0113 2864486 if we can help.

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Keeping business records digitally and submitting under Making Tax Digital (MTD) rules using MTD compliant software has been in place for VAT since April 2019.

The timescale for submitting self-assessment details using MTD compliant software and keeping all records digitally, has now been announced.

Under Making Tax Digital for Income Tax, updates need to be sent to HMRC using MTD compliant software each quarter.

It will affect all sole traders and landlords with total gross income above £10,000 per annum.

There is a voluntary trial taking place now, but you will be required to file under these new rules by 6^th April 2023.

We will be holding seminars and webinars on this subject, providing all the information required and giving an opportunity to ask questions on how this will affect you, nearer to the launch of this new legislation.

If you don’t already keep your records digitally, please speak to us about setting this up in advance, to ensure you are ready for this.  Call us on 0113 2864486 so we can help.

Further announcements in the Summer Budget 2020 was the reduction of VAT for certain sectors.

From 15 July until 12 January 2021, VAT is to be reduced from 20% to 5% on any eat-in or hot takeaway food and drinks from restaurants, cafes and pubs, excluding alcohol.

The reduction also applies to holiday accommodation in hotels, B&Bs, campsites and caravan sites as well as attractions e.g. cinemas, theme parks and zoos.

If we can help with this complex area of your business, then please contact us on 0113 2864486.

Source: GOV.UK

In the recent Summer Budget, the Chancellor announced the introduction of various measures aimed at helping businesses.

Job Retention Bonus

If you are an employer that has been claiming support under the Coronavirus Job Retention Scheme (CJRS) for any employees, then you may be able to claim a one-off payment of £1,000 per furloughed employee.

To be eligible, employees need to

• Earn at least £520 per month (above the Lower Earnings Limit) on average for November, December and January
• Been furloughed at any time since the scheme began and legitimately claimed for under the CJRS scheme.
• Been continuously employed until at least 31 January 2021

The bonus can be claimed from February 2021 once payroll information to 31 January has been provided to HMRC.

HMRC have stated that further information will be available on the scheme before the end of the month with full guidance available in the Autumn.

Traineeships

A new traineeship scheme was announced which will pay £1,000 cash bonus for every new work experience place a company provides, starting from September 2020.

Eligibility criteria:

• The scheme is for 16 to 24 year olds in England.
• The work experience must offer “a high-quality work placement of 60 to 90 hours.”
• To provide classroom-based lessons in Maths, English and CV writing, as well as up to 90 hours of unpaid work experience.
• The traineeships must last between 6 weeks up to 6 months.
• Employers are not required to pay trainees for a work placement.

Kickstart Jobs Scheme

A “kickstart jobs scheme” was also announced which will begin from August 2020 until December 2021, with an option for it to be extended

The eligibility is:

• The scheme is for 16 to 24 year olds on Universal Credit
• It will subsidise 6 month’s work placements
• For each “kickstarter job” the cost of 25 hours’ work per week will be covered at National Minimum Wage, though employers can make payments exceeding these if they wish. Current minimum wages are:
  • £4.55 for under 18s
  • £6.45 for 18 to 20 year olds
  • £8.20 for 21 to 24 year olds

Apprenticeships

Financial support for those companies in England that engage new apprentices from 1 August 2020 to 31 January 2021.  There are 2 levels:

• £2,000 for each new apprentice aged under 25
• £1,500 for those aged over 25

Employers in England are already receiving payments of £1,000 for new 16-18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan, where it applies.

It is assumed that payments will be paid via normal Apprenticeship payments as at present but no precise details on this as yet.

If you should need assistance around this area, then please call us on 0113 2864486.

Source: BDO

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The Coronavirus Job Retention Scheme (CJRS) can become more flexible from 1 July meaning that employees can be brought back to work part time and furloughed for the remainder of the days they would work.  You can still keep employees on full furlough if needed.

The furlough scheme closed to new entrants from 30 June.  Going forward the employer can only furlough an employee (either fully or part time) if they have previously been furloughed for a complete 3 weeks’ period prior to 30 June.

For those employees that you wish to bring back under the new flexible furloughing employers will need to report and claim for a minimum period of a week.  During this time the Government will continue to contribute up to 80% of pay, subject to a cap of £2,500.

From August the scheme will slowly be reduced over a period of a few months.  The Government will continue to pay up to 80% of pay, subject to the £2,500 cap but the employer will need to begin paying the national insurance and pension contributions.

As of September the Government contribution will reduce to 70% with a cap of £2,187.50.  The employer will need to pay the additional 10% plus the national insurance and pension contributions.  The percentage the Government will pay from October will be 60%, subject to a cap of £1,875.  Again the employer will need to make up the additional 20% together with national insurance and pension contributions.

If you need any help and support with your pay roll then call us on 0113 2864486

Source : GOV.UK

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HMRC have announced that due to the impact of COVID-19, the introduction of the domestic reverse charge for the construction sector and the VAT change will not now be implemented until 1 March 2021.

The new rules were an overhaul of the way that VAT is payable on building and construction invoices, to reduce fraud around this area.  The new domestic reverse charge will see the customer who is receiving the service paying the VAT owed direct to HMRC as opposed to at present where the supplier was paid the VAT if they report under the Construction Industry Scheme (CIS).

The changes to the rules were originally to start in October 2019 but these were put back for a year due to concerns of the lack of preparation and impact of the changes on businesses.  With the present times it has been further put back to March 2021.

An amendment to the original legislation ensures that if a business is to be excluded from the reverse charge because they are end users or intermediary suppliers, they must ensure they notify the sub-contractors in writing of this position.  HMRC have said that this will ensure that both parties are clear whether the supply is excluded from the reverse charge.

However, with the date put back of these changes HMRC will still focus on identifying and tackling fraud in the construction supply chain.  In addition will closely work with the sector to raise awareness plus provide additional guidance and support to ensure all businesses implement the new changes next March.

If you should need assistance around this area, then please call us on 0113 2864486.

Source: Accountancy Daily

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