Coronavirus (COVID-19)

As the government continues to put measures in place to help protect individuals and businesses of all sizes, we will update you accordingly.

Paying wages
To protect jobs, the chancellor has announced that the government will step in and help pay wages, for the first time in UK history. It’s called the coronavirus job retention scheme.

Companies and organisations will be able to apply for a grant from HMRC to cover the wages of people who are not working due to coronavirus shutdowns, but who haven’t been laid off.

It will cover 80% of the salaries of the retained workers, up to £2,500 per month.

It is hoped that workers across the company can retain their jobs, even if their bosses can’t afford to pay them.  It has not yet been announced how this will work but we will be in touch as soon as we are able to provide you with more information.

VAT holiday

No business will pay VAT from now to June, and they’ll have until the end of the financial year to repay those bills. That should help companies struggling with a cash flow crisis.

The chancellor said this will injection £30bn into the economy.  HMRC are automating this process so you shouldn’t have to do anything apart from continue to process your returns as normal.

Business Rates

Businesses that pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief, may be eligible for a one-off grant of £10,000 to help meet their ongoing business costs.

If you are eligible, your local authority will write to you. You do not need to do anything to apply.

Support for retail, hospitality and leisure businesses that pay business rates

A business rates holiday has been introduced for the 2020 – 2021 tax year.

Eligible businesses are those who have properties mainly used:

  • As shops, restaurant, cafes, drinking establishments, cinemas and live music venues
  • For assembly and leisure
  • As hotels, guest and boarding premises and self-catering accommodation

If you are eligible, you do not need to do anything. This will be applied to your next council tax bill in April 2020

Cash grants for retail, hospitality and leisure businesses

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.

Businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000

Businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000

You do not need to do anything; your local authority will write to you if you are eligible for this grant.

Business loan scheme

The government is also extending its coronavirus business interruption loan scheme, to be interest free for 12 months (up from 6 months). Details of how the scheme will work are hopefully being released this week.

Deferring self-assessment deadline for taxes

The deadline for self-assessment of taxes will be extended to January 2021, meaning that self-employed people will have longer to pay their taxes.  You will not be required to make your July 2020 payment now until January 2021.

I hope you find this helpful, please feel free to contact me if you have any questions and I will do my best to answer, however this is very new news so the logistics of how these holidays, etc will be given/claimed is not yet clear. 

Here are a few links that you may also find helpful.  We will continue to send through updated information as and when we have it.

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-through-the-coronavirus-job-retention-scheme

Kind regards and stay safe!

Review confirms off-payroll working rules to go ahead from April 2020

The government has confirmed that reforms to off-payroll working rules for the private sector will go ahead from 6 April 2020.

The off-payroll rules have applied to the public sector since 2017 and the government has carried out a review of the roll-out to the private sector. The review has now concluded, and the changes will go ahead alongside the implementation of measures to support affected businesses and individuals.

From 6 April 2020, the new tax rules will use the 2017 changes as a starting point for the extension to medium and large organisations in the private sector. These reforms will shift the responsibility for assessing employment status to medium and large organisations engaging workers via an intermediary, typically a Personal Service Company (PSC).

HMRC said it will take a ‘light touch approach’ and businesses will not have to pay penalties for inaccuracies in the first year, except in cases of deliberate non-compliance.

The government will also introduce a legal obligation on organisations to respond to requested information about their size from the agency or worker, to make it clearer who is responsible for determining the worker’s tax status.

Commenting on the changes, Jesse Norman, Financial Secretary to the Treasury, said:

‘It is only right that the off-payroll rules are applied consistently across all sectors. Two people sitting side by side doing the same work for the same employer should be taxed in the same way.

‘Following a review, the government is announcing a package of measures to help individuals and businesses implement these changes smoothly.’

HMRC has now published draft secondary legislation for the off-payroll working rules that are due to come into force in April this year.

In 2017, HMRC introduced new off-payroll rules to the public sector, which saw some contractors’ net income cut significantly. HMRC also shifted the responsibility for compliance from individual contractors to public bodies or recruitment agencies.

From 6 April 2020, the new tax rules will use the 2017 changes as a starting point for the extension to medium and large organisations in the private sector. These reforms will shift the responsibility for assessing employment status to the medium and large organisations engaging the individual worker via and intermediary.

The new draft legislation is open for consultation until 19 February 2020.

Jesse Norman, the Financial Secretary to the Treasury, said:

‘We recognise that concerns have been raised about the forthcoming reforms to the off-payroll working rules. The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.’

For all of your payroll needs, contact us on 01604 662670.

Brexit – transition period

The leaders of the UK and European Union signed the Withdrawal Agreement, and the UK left the EU on 31 January 2020. However the UK is now in the transition or implementation period during which time it is ‘business as usual’ as the UK is covered by EU rules until the end of the year. By 2021 the UK aims to have agreed a deal on future arrangements with the EU and the rest of the world.

HMRC has contacted businesses in the UK who may import and export between the UK and the EU to explain what they can do to prepare for changes to customs arrangements after the UK has left the EU.

No change during the implementation period

Between 1 February and 31 December 2020, there will be an implementation period. HMRC has confirmed that there will be no changes to the terms of trade with the EU or the rest of the world during this time.

From 1 January 2021, the way businesses trade with the EU will change and HMRC is reminding businesses that they should prepare for life outside the EU, including ensuring they are ready for customs arrangements.

HMRC is advising businesses to:

  • make sure they have a UK Economic Operator Registration and Identification (EORI) number
  • prepare to make customs declarations.

HMRC has posted letters to 220,000 VAT registered businesses advising them on the current position.

We will advise you on the progress of negotiations and what these will mean for your business.

Making sure gifts to employees are tax-free

Some employers may wish to give a small gift to their employees. As long as the employer meets the relevant conditions, no tax charge will arise on the employee.

A tax exemption is available which should help employers ensure that the benefits provided are exempt and do not result in a reportable employee benefit in kind. In order for the benefit to be exempt it must satisfy the following conditions:

  • the cost of providing the benefit does not exceed £50 per employee (or on average when gifts are made to multiple employees)
  • the benefit is not cash or a cash voucher
  • the employee is not entitled to the benefit as part of a contractual arrangement (including salary sacrifice)
  • the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties
  • where the employer is a ‘close’ company and the benefit is provided to an individual who is a director, an office holder or a member of their household or their family, then the exemption is capped at a total cost of £300 in a tax year.

If any of these conditions are not met then the benefit will be taxed in the normal way subject to any other exemptions or allowable deductions.

No more than £50 

One of the main conditions is that the cost of the benefit does not exceed £50. If the cost is above £50 the full amount is taxable, not just the excess over £50. The cost of providing the benefit to each employee and not the overall cost to the employer determines whether the benefit can be treated as a trivial benefit. So, a benefit costing up to £50 per employee whether provided to one or more employees can be treated as trivial. Where the individual cost for each employee cannot be established, an average could be used. HMRC examples consider various gifts including turkeys, bottles of wine and gift vouchers.

Further details on how the exemption works, including family member situations, are contained in the HMRC manual.

However if you are unsure please do get in touch before assuming the gift you are about to provide is covered by the exemption.

HMRC countdown: file your tax return

With less than 100 days until the self assessment tax return deadline of 31 January 2020, HMRC is urging taxpayers to complete their tax returns early, in order to avoid the last minute rush.

HMRC report that last year more than 2,000 people submitted their tax returns on Christmas Day. Taxpayers should consider submitting their returns early to avoid the stress of a last minute rush.

Angela MacDonald, HMRC’s Director General for Customer Services, said:

‘The deadline for completing Self Assessment tax returns is only 100 days away, yet, so many of us wait until January to start the process. Avoid the last minute rush by completing your tax returns on time and then enjoy the upcoming festive period.

We want to help people get their tax returns right – starting the process early and giving yourself time to gather all the information you need will help avoid that stressful, late rush to file.’

Not all taxpayers need to complete a tax return as tax is automatically deducted from the majority of UK taxpayers’ wages, pensions or savings. For people or businesses where tax is not automatically deducted, or when they may have earned additional untaxed income, they are required to complete a Self Assessment tax return each year.

HMRC is also reminding people who are liable for the High Income Child Benefit Charge that they may need to file a tax return before the deadline. Those with income over £50,000 who receive child benefit, or those whose partner gets it, are liable for the charge. Taxpayers can check their annual income via their P60 or Personal Tax Account, and use HMRC’s child benefit tax calculator.

The deadline for filing paper tax returns was 31 October 2019 and the deadline for online tax returns and paying any tax owed is 31 January 2020. If taxpayers miss the deadline, they face a minimum £100 penalty for late submission.

Contact us for help with your self assessment tax return.

HMRC collects record amounts of IHT

The government has announced that HMRC collected a record sum of £5.4 billion in inheritance tax (IHT) during the 2018/19 tax year.

The increase comes on the back of a 15% rise in the number of estates liable for IHT. Between 2015/16 and 2016/17, the number of estates paying IHT rose by 3,600 to 28,100.

Rising asset values, particularly in regard to properties in London and the South East of England, have been a key factor behind the increased number of estates falling into the IHT net. The freezing of the tax-free nil-rate band threshold also played a key role.

The residence nil-rate band (RNRB) gives an additional allowance to people leaving their family home to direct descendants, such as children or grandchildren. The amount of relief is £150,000 for 2019/20, rising to £175,000 for 2020/21.

Despite the increase in estates paying IHT, the tax only applies to 4.6% of deaths in the UK. The average amount of tax paid was £179,000.

Please contact us for advice on estate and IHT planning.

New £20 note – February 2020

The most commonly circulating banknote in Britain is the £20 note, with two billion of them in the system, double the number of £10 notes in circulation and far greater than the number of £5 notes (396 million) and £50 notes (344 million)

The popularity of the note is part of the reason for it also being the most likely to be forged.  The Bank discovered 228,000 counterfeit banknotes in the first half of the year, of which 201,000 were £20 notes.

It has easily been the most commonly forged Bank of England banknote in each of the past 10 years.

The new £20 note will be the first to feature the signature of Sarah John, the Bank’s chief cashier, who said: “The new £20 is an important part of our commitment to providing banknotes that people can use with confidence. Our polymer notes are much harder to counterfeit and, with the £20 being our most common note, this marks a big step forward in our fight against counterfeiting.”

The banknote will feature Turner’s self-portrait, from 1799, currently on display in the Tate Britain, and one of his most eminent paintings – The Fighting Temeraire – which can be seen in the National Gallery.

Others features include:

  • A large see-through window, based on the shape of the fountains in London’s Trafalgar Square, with a blue and gold foil on the front depicting Margate lighthouse and the Turner Contemporary gallery in the town
  • A smaller see-through window in the bottom corner of the note inspired by Tintern Abbey
  • A metallic hologram which changes between the words “Twenty” and “Pounds” when tilted
  • The Queen’s portrait in the see-through window with “£20 Bank of England” printed twice around the edge
  • A silver foil patch with the 3D image of the coronation crown
  • A purple foil patch containing the letter T, based on the staircase at the Tate Britain gallery.

The new notes should come into circulation in February 2020.

Kilby Fox joins leading Handpicked Accountants network

Kilby Fox is a Northampton-based accountancy practice and business consultancy which has been leading the way for over 100 years. As the longest established accountancy firm across Northampton, we have been recognised by the Handpicked Accountants team for our outstanding customer service and level of expertise. Following successful completion of the onboarding process, we have now been added to the Handpicked Accountants site.

We can assist SMEs, start-ups, larger companies and high net worth individuals, providing a bespoke service by tailoring the pricing accordingly to the needs of the business. We are an ICAEW and ACCA member accountancy firm so we can reassure you to our service is reliable and of the highest standard. Our chartered accountants are highly experienced and fully versed in using industry-standard accounting software, Xero and Sage.

Over the years, we have built our service model to exceed customer expectations and to constantly adapt to modern technology, a vision which has helped us stay in the lead for over a century. From submitting expense claims to managing cash flow, we can help simplify the process from start to finish.

David Tattersall, Head of Client Relations at Handpicked Accountants, said: “I am wholeheartedly delighted to welcome Kilby Fox to the Handpicked Accountants platform. We strive to connect businesses looking for accountants with only the best firms in their area and Kilby Fox is an ideal addition to our Northampton base.”

Handpicked Accountants is a matching platform for small business owners looking for an accountant in their local area. The team behind Handpicked Accountants travel across the country to handpick only the best-performing accountancy firms to join the network. The decision is based on trust factors, expertise levels and customer service standards, all of which should be outstanding to meet the joining criteria.

You can now view our profile on the Handpicked Accountants site, designed for contractors, freelancers and SMEs.

VAT changes may cause construction chaos

Update – This has been delayed until 1 October 2020.

The Federation of Master Builders (FMB) is warning that a major change in the way that VAT is accounted for in the building and construction sector which takes effect later this year may cause chaos.

The VAT domestic reverse charge for building and construction services applies from 1 October 2020. It is an anti-fraud measure – an administrative change, impacting invoicing and VAT return procedures. With a reverse charge, a VAT-registered recipient of services accounts for VAT, rather than the supplier.

The rules will apply to VAT-registered businesses where payments are required to be reported through the Construction Industry Scheme (CIS), the charge will be used along the supply chain, until the recipient is no longer a VAT-registered business making an onward supply of specified construction services.

With the new rules, suppliers (VAT-registered subcontractors), will state on their invoices that supplies are subject to the reverse charge. Contractors will then use their VAT returns to account for output VAT on supplies received, instead of paying output VAT to their suppliers. Subject to normal VAT rules, the contractor can reclaim VAT on supplies received as input tax, usually leaving no net tax payable on the transaction. Where there is an ‘end user’, it will be expected to provide notification of end user status to suppliers, signalling that a supplier should charge VAT as usual.

Reverse charge will not affect zero-rated supplies: nor some circumstances where suppliers are connected to end users, for example landlords and tenants. The reverse charge covers ‘specified services’ – essentially construction services as defined for CIS purposes. Where services – such as those of architects, surveyors and some consultants – are supplied on their own, they are not covered by the reverse charge. If supplied along with supplies subject to the charge, the whole supply will be subject to the charge. The reverse charge also includes goods, where supplied with specified services.

The FMB are warning that the government has not properly prepared the construction industry for this major VAT change. New data from FMB shows that:

  • over two-thirds of construction SMEs (69%) have not even heard of the reverse charge VAT and
  • of those who have, more than two-thirds (67%) have not prepared for the changes.

Brian Berry, Chief Executive of the FMB, said:

Construction companies are already struggling with Brexit uncertainty, sky-rocketing material price rises and skill shortages and reverse charge VAT is yet another thing for them to deal with. What makes things worse is that HMRC has failed to deliver on its promise to help the industry to prepare. The guidance is not user-friendly and even tax experts are scratching their heads over it.’

‘It’s therefore not surprising that the vast majority of construction SMEs are not aware of the impending changes, despite widespread promotion by the FMB. Small business owners are busy people and clearly they don’t have time to read everything we send them. For those who are aware, they haven’t had a chance to change their systems yet as they were waiting for guidance to be published that has only just emerged. That’s why we are calling on the Government to delay the changes by another six months and to use the extra time to improve the guidance and work with us to undertake a more intensive communications campaign. HMRC should also consider holding workshops across the country to explain the changes.’

Businesses affected by the new rules are recommended to plan now to adapt accounting and IT systems. The reverse charge may also impact business cash flow. Please do not hesitate to contact us for further advice.

Payment on account confusion

Under self assessment taxpayers are required to make payments on account of their tax liabilities. The payment on account instalments consist of two payments on account of equal amounts:
• the first on 31 January during the tax year and
• the second on 31 July following the end of the tax year.
These are set by reference to the previous year’s income tax liability and Class 4 NIC if any.
A final payment (or repayment) is due on 31 January following the tax year.
Payments are not due where the previous year’s liability is less than £1,000 or where 80% of the previous year’s bill was met by tax deductions at source.
The Association of Taxation Technicians (ATT) has warned that ‘some people may not receive the tax demands they expect by the end of July’ for their self assessment, even if it may be due.
ATT has issued a press release saying that the HMRC system did not correctly process all the payments on account information for 2018/19. As a consequence, the demand for the first payment on account for January 2019 may not have been issued.
Unless those taxpayers contacted HMRC, the next demand for payment on account, due on 31 July 2019, may also not be issued. HMRC has confirmed that if it has not issued a demand for payment on account, the full amount will be requested in January 2020.
Making a voluntary payment may not be processed correctly. If you want to make a payment on account that is due, then taxpayers or their agents are advised to contact HMRC.
Jon Stride, Co-Chair of the ATT’s Technical Steering Group, said:
‘If a taxpayer does not make any payments on account during 2019, then their tax bill in January 2020 could be significantly larger than they are expecting and could come as quite a shock. We are concerned that taxpayers may not realise what has happened and might not set aside enough money to meet their full tax bill in one amount next January.’

Contact us for all your Tax queries.

AAT press releaseGOV.UK self assessment bills

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