What is round the corner?

Having glimpsed the light at the end of the COVID tunnel, many of us will have everything crossed that progress towards normality will continue. The winter months are not a brilliant time for infection and we should expect the usual rash of flu, and now COVID, cases to increase.

In the past two years words such as unprecedented and exceptional have become widely used. But do we need to redefine the new normal to include these uncertainties?

What is round the corner?

Government, apparently, is bending to medical opinion that the October, half-term break should be extended and compulsory mask wearing extended if, as is likely, infections rise and threaten the ability of the NHS to cope.

Regional variations will continue to plague a consistent approach even though the borders can be crossed with impunity.

Business owners – having spent the summer reasonably free of restrictions – will dread the thought that compulsory homeworking will return or that their last-ditch attempts to recover from lockdown closure are about to be reversed.

We live in uncertain times and to survive we need to react and reshape our business plans based on current challenges. Strategies need to be developed and implemented that acknowledge the disruption of the past two years and plan, albeit reluctantly, for their unwelcome return.

We recommend that business owners keep an eye on the following in order to minimise any exposure to these disruptive influences:

  • Staffing – now is not a good time to operate with surplus capacity.
  • Cash flow – you should have forecasts for at least six months to a year ahead so you can see when dips in funding require action.
  • Investment – are there investments in IT, software, equipment or other assets that will improve your ability to trade in a stressed market?
  • Financials – are you profitable? Can you sustain loss-making periods? If so for how long? Are you solvent? How long can you sustain loss-making activity before you become insolvent?

We can help you create and maintain vigilance in these areas. Call if you need more information.

Aside from COVID issues, supply lines continue to be stretched due to transport delays – not enough drivers – and locally grown crops may become food for the birds if “pickers” cannot be found at harvest time. The transfer of goods back and forth from the EU continues to be an issue as border controls struggle to deal with the Brexit enforced end of free movement.

There is much in the “uncertainty” pot to consider. To quote yet another cliché, we are not out of the woods, just yet.

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Hundreds of business names dismissed by Companies House during pandemic

Over the last two years, Companies House has disallowed more than 800 business names for being ‘too offensive’.

Building That Fought Hitler Limited, Cambridge Cannabis Club Limited, Fancy a Bomb Ltd and Fit as Fork Ltd are among the company names that have been rejected by the executive agency and trading fund for the government.

Other names to be turned down include Go Fudge Yaself Ltd, Just Weed Ltd, Meow Meow Cooking Studio Ltd, Pandemic19 Ltd and The Great Big Corrupt Company.

However, some of these rejected names can later be approved if an adequate explanation is given.

Some words that are deemed as ‘sensitive’ have to be authorised by the Secretary of State in the Department for Business, Energy and Industrial Strategy before an incorporation can use it in its name.

The approval list is made up of 134 words, such as benevolent, British, commission, inspectorate, licensing, parliamentary, Senedd, standards and Windsor.

Words that indicate a potential link with a government department, a devolved administration or a local authority also have to be checked.

Using certain words and phrases in a business name could be classed as a criminal offence.

Architect, building society, credit union, physician, social worker, solicitor, and surgeon are examples of words and expressions that are legally protected.

A representative for Companies House said: “It is important that the register is not abused by recording offensive names.

“We have a statutory responsibility to ensure that the names we register do not have the potential to offend. All applications are carefully considered but we will not register a name which is considered to be offensive.”

Companies House is responsible for manging the UK’s register of businesses, their executives and other stakeholders who help run the company.

  1. they analyse and record business information to then make it accessible for the public.

More than 500,000 limited businesses are newly registered each year, equalling around four million in total.

Between April and June 2021, 190,639 new companies and 115,554 dissolutions were recorded in the UK.

This data highlights that the number of new incorporations has continued to increase during the COVID-19 pandemic, when many businesses had to temporarily close.

Registrations for English and Welsh businesses take place in Cardiff, whereas Scottish and Northern Irish companies are listed in Edinburgh and Belfast.

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Tax-free childcare costs

Families are reminded that they may be able to claim for tax-free childcare costs to help pay for breakfast and after school clubs as children go back to school.

In a recent press release HMRC confirmed that Eligible families can save money on their childcare and benefit from a government top-up worth up to £2,000 every year, or up to £4,000 a year if a child is disabled. In June 2021, about 308,000 families across the UK benefited from using Tax-Free Childcare, but thousands are missing out on this opportunity.

Tax-Free Childcare is available to parents or carers who have children aged up to 11, or 17 if their child is disabled. For every £8 a parent or carer deposits into their account, they will receive a £2 top-up, up to the value of £500 every three months, or £1,000 if their child is disabled.

HMRC recognises that families’ personal circumstances have changed since March 2020 as more parents and carers are preparing to return to their workplaces. The 20% top-up is paid into the Tax-Free Childcare account and is ready to use almost instantly, meaning parents and carers can use the money towards the cost of childminders, breakfast and after school clubs, and approved play schemes.

Tax-Free Childcare is also available for pre-school aged children attending nurseries, childminders or other accredited childcare providers. Parents and carers, who are returning to work after parental leave, can apply for a Tax-Free Childcare account for that child before they need to start using it. Families can start depositing money 31 days before they return to work, maximising the potential government top-up saving.

Childcare providers can also sign up for a childcare provider account via GOV.UK to receive payments from parents and carers via the scheme.

Each eligible child requires their own Tax-Free Childcare account. If families have more than one eligible child, they will need to register an account for each child. The 20% government top-up is then applied to deposits made for each child, not household.

Account holders must confirm their details are up to date every 3 months to continue receiving the government top-up.

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SMEs can enhance business performance by joining Peer Network scheme

A government-funded Peer Networks scheme is offering support to small and medium-sized enterprises (SMEs) across the UK.

The programme, which is free to join, helps organisations tackle common business challenges through interactive action learning.

Additionally, the scheme’s trained mentors help small and medium-sized businesses handle new opportunities and build a strong support network.

Business leaders can learn from like-minded individuals on the scheme and put practical solutions into place together to overcome common issues.

Virtual workshops on the Peer Network scheme normally take place in small group sessions, but one to one mentoring and coaching is also available.

Trained facilitators are always on hand to help organisations develop and grow.

Head of Operations at Mastercall Healthcare said: “The one-to-one tutor session really helped me work on some long-standing obstacles.

“I’m so glad to have taken part and feel more confident in my own skills and attributes.”

SME leaders on the scheme can share their business concerns with fellow company owners who experience the same challenges.

Jason Thorpe, Managing Director at The Voiceover Gallery said: “By sharing experiences and issues, it enables you to step back from business, and look at things from a different perspective whilst benefitting from the experience of others that may have faced similar challenges.”

Founder and CEO at Datacentreplus, Mashukul Hoque said: “Engaging with other businesses through Peer Networks has been an invaluable experience for me.

“There is a lot to learn from other businesses, particularly in these challenging times.”

He added: “It is an opportunity to share ideas, tips and good practice that others can benefit from as well.”

Any SMEs that have been in business for at least 12 months, employ five or more staff members and make £100,000 or more in revenue can join the scheme.

The programme, which has been created by the Department for Business, Energy and Industrial Strategy, is held at local growth hubs across the UK.

 

 

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Supply chain issues gaining traction

News broke in recent days that McDonalds were running out of supplies. As a direct result of these supply chain issues their iconic milk shakes are being dropped from menus together with other bottled drinks. These particular shortages will apply to outlets in England, Scotland and Wales. Supplies in Northern Ireland are holding up, so far…

Is this further evidence that the delivery driver shortage is affecting retailers’ ability to supply goods to consumers?

According to the Road Hauliers Association, 30,000 HGV driving tests were unable to proceed last year and that the driver shortage was exacerbated by changes to the rules following Brexit.

Price inflation

One consequence of supply shortages – aside from goods being unavailable – is that if demand remains high, but in limited supply, prices tend to rise. Witness the incredible price rises in basic building materials in recent months.

If these trends continue and prices for commodities start to rise inflation will rear its head.

The Bank of England are forecasting inflation at almost 4% at the start of next year. It will not require much in advance of this figure before the bank will need to increase interest rates in an attempt to take the heat out of future price increases.

It is difficult to see how these fiscal measures will impact McDonalds and many other retailers if their problem is delivery difficulties, not money supply.

 

What to do?

If your business is being affected by delivery problems you will be sympathetic to McDonalds’ plight.

Aside from the physical need to get goods delivered, affected businesses could consider increasing stocking levels in affected goods, if this is feasible. And then triggering reorder levels at an earlier point in the production process.

This would have the added advantage of buying at lower prices for longer production runs and keeping manufacturing costs down.

The difficulty is that firms are stripped of working capital in the past eighteen months and may be unable to find additional funding or storage space.

We may have to content ourselves with a brew to accompany our next take out. Unfortunately, the driver shortage may take longer to resolve as drivers point to bad working conditions and low pay as further issues facing their industry.

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HMRC discloses employer explanations for not paying legal minimum wage

‘She only makes the tea’ and ‘my employees are on standby’ are just some of the strange excuses used by businesses who have paid their workers under the National Minimum Wage, the UK tax office has revealed.

Every employed worker in Great Britain is legally entitled to the National Minimum Wage, but many employers tried cheating the pay system during the last financial year, according to a new Government report.

HM Revenue and Customs (HMRC) has released the most shameful excuses that employers have used for failing to pay their employees correctly, including ‘my workers like to think as themselves as being self-employed’ and ‘young workers have to prove their worth in the first three months’.

One company claimed their employee is ‘still learning so they are not entitled to minimum wage’, while another thought ‘the National Minimum Wage does not apply to their business’.

Other outrageous excuses for not paying employees the legal minimum wage include: ‘She only sweeps the floors’, ‘they weren’t a good worker’ and ‘I thought it was okay to pay young workers less if they are not British’.

During the last tax year, HMRC assisted around 155,000 ‘short-changed’ employees in the UK to retrieve more than £16 million which was owed to them. In addition, they also distributed more than £14 million in fines.

The Director of Individuals and Small Business Compliance, HMRC, Steve Timewell said: “The majority of UK employers pay their workers at least the National Minimum Wage, but this list shows some of the excuses provided to our enforcement officers by less scrupulous businesses.

“Being underpaid is no joke for workers, so we always apply the law and take action. Workers cannot be asked or told to sign away their rights.”

He added: “We are making sure that workers are being paid what they are entitled to and, as the economy reopens, reminding employers of the rules and the help that is available to them.

The national minimum wage differs for each individual as it is dependent on an employer’s age and experience, with under 23s receiving a lower rate than those older than 23.

The current hourly rates are:

  • £8.91 – Age 23 or over
  • £8.36 – Age 21 to 22
  • £6.56 – Age 18 to 20
  • £4.62 – Age under 18
  • £4.30 – Apprentice

As part of the government’s plan to bounce back from the pandemic, HMRC is encouraging employees to regularly monitor their pay, cash deductions and any unpaid working time.

To find out more about the National Minimum Wage, click here.

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Electric vehicles for company car drivers

As most drivers of a company car will be aware, if you have any private use of the vehicle this will result in a significant Income Tax charge. The benefit charge is the way that HMRC levy tax on this benefit in kind; and the higher the CO2 footprint of your company car, the higher the Income Tax charge.

Which is why many company car drivers are now looking at electric vehicles – either plug-ins or self-charging hybrids – as a tax efficient alternative.

For example, if you presently drive a gas-guzzling petrol driven car with a CO2 rating of 145g/km you could drastically reduce your benefit in kind tax charge by switching to a hybrid or fully electric car with a CO2 rating as low as 0g/km. There would still be a tax charge, even at 0g/km, but it would be based on a minimum 1% of the list price of the car when new, rather than 33% if rated at 145g/km.

Company car drivers whose private fuel is paid for by their employer will pay an additional Income Tax charge based on the Car Fuel Benefit charge. This charge is calculated by applying the above percentage rate (33% in our example above) to a fixed figure, £24,600 for 2021-22. Accordingly, the Car Fuel Benefit charge added to the driver’s taxable income would be £8,118.

Interestingly, since 6 April 2018, there is no taxable car fuel benefit where electricity is provided for an electric car. Legislation was included in the Finance Act 2019 with retrospective effect where the recharge facilities are made available to all employees at the workplace.

If an employee recharges a company vehicle at home and is then reimbursed for the cost of the electricity used, this may be challenged as earnings. However, the employee could then make a claim for the electric cost using the advisory rates. Currently this is 4p per mile for fully electric cars.

A final point, employers would also benefit from a shift to an all-electric company car fleet. They are obliged to pay a 13.8% National Insurance charge on the total value of benefits provided (car and car fuel benefits); in which case converting to electric would be an additional bonus.

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Can you claim the marriage allowance?

In a recent news story published on the GOV.UK website, HMRC confirmed that nearly 1.8 million married couples and those in civil partnerships are claiming the Marriage Allowance to save up to £252 a year in Income Tax.

The allowance enables married couples or those in civil partnerships to share their personal tax allowances if one partner earns an income under their Personal Allowance threshold of £12,570 and the other is a basic rate taxpayer.

They can transfer 10% of their tax-free allowance to their partner, which is £1,260 in the 2021-22 tax year. It means couples can reduce the tax they pay by up to £252 a year. Couples can also backdate their claims for any of the four previous tax years, which could be worth up to £1,220.

If you are eligible, and still not making a claim, you can complete an application online at https://www.gov.uk/apply-marriage-allowance.

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Furlough figures continue to fall

Almost three million people have moved off the furlough scheme since March as the economy began to bounce back and businesses reopened, according to new statistics.

This is unsurprising as employers are now expected to cover 20% of any hours not worked with government providing 60%.

It will be sobering to see how the final closing of the furlough scheme on 30 September will affect unemployment rates.

Readers who are still undecided how to respond to these changes will need to make possibly agonising decisions in the coming month.

We can help. Please call so we can help you consider your options.

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Tax collection options

If you do not pay your tax bill on time and cannot make an alternative arrangement to pay, HMRC can take ‘enforcement action’ to recover any tax you owe.

You can usually avoid enforcement action by contacting HMRC as soon as you know you have missed a tax payment or cannot pay on time.

They may agree to let you pay what you owe in instalments, or give you more time to pay.

Otherwise, there are a number of enforcement actions HMRC can take to get the tax you owe. They can:

  • collect what you owe through your earnings or pension
  • ask debt collection agencies to collect the money
  • take things you own and sell them (if you live in England, Wales or Northern Ireland)
  • take money directly from your bank account or building society (if you live in England, Wales or Northern Ireland)
  • take you to court
  • make you bankrupt
  • close down your business

If you do not pay your tax on time, you’ll probably have to pay interest on the outstanding amount. You may also have to pay a penalty or surcharge.

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Tax Diary September/October 2021

1 September 2021 – Due date for Corporation Tax due for the year ended 30 November 2020.

19 September 2021 – PAYE and NIC deductions due for month ended 5 September 2021. (If you pay your tax electronically the due date is 22 September 2021)

19 September 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2021.

19 September 2021 – CIS tax deducted for the month ended 5 September 2021 is payable by today.

1 October 2021 – Due date for Corporation Tax due for the year ended 31 December 2020.

19 October 2021 – PAYE and NIC deductions due for month ended 5 October 2021. (If you pay your tax electronically the due date is 22 October 2021.)

19 October 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2021.

19 October 2021 – CIS tax deducted for the month ended 5 October 2021 is payable by today.

31 October 2021 – Latest date you can file a paper version of your 2021 self-assessment tax return.

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More UK businesses join vaccine uptake drive

In a recent press release the government announced that more of the country’s leading businesses from a variety of industries have pledged their support for the UK’s world-leading COVID-19 vaccination programme by offering incentives to vaccinated customers.

Asda, lastminute.com, National Express, FREE NOW taxis and Better leisure centres will be offering discounts to people who get a COVID-19 vaccine, joining the national effort to protect the country as it continues its cautious return to normality.

The companies will be joining Uber, Bolt and Deliveroo, which committed last month to backing the vaccination programme by providing exclusive offers to those who have received a jab.

The new businesses and rewards will include:

  • Asda – will offer £10 vouchers for their clothing brand George to 18- to 30-year-olds who spend over £20. These will be offered at the vaccine pop-up clinics located in Old Kent Road in London, Watford & Birmingham;
  • lastminute.com – will offer over-18s £30 gift cards towards holidays abroad to all young people getting vaccinated through their website;
  • Better leisure centres – will offer over 16s a £10 voucher to use on any Better membership and a free three-day pass at any of their 235 leisure facilities across the UK;
  • FREE NOW – will provide up to £1 million in free taxi rides for over-18s attending their vaccine appointment each way from today [Sunday 15 August] until the end of September; and
  • National Express Buses (Midlands) – will offer 1,000 people 5-day unlimited travel saver tickets which can be used within 90 days. Tickets can be claimed by sharing vaccine booking references in the company’s app.

Deliveroo has also revealed further details of their support, which will include thousands of £5 vouchers to those who get the vaccine, distributed in the coming weeks. Bolt will be offering £10 vouchers for 10,000 rides from next week in Birmingham and Leicester, and Uber will be announcing further details shortly around their drive to help students get vaccinated ahead of term time.

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Fewest number of people on furlough since the scheme began

Furlough numbers have recently fallen to a record-low since the beginning of the pandemic, government data has confirmed.

When businesses started reopening earlier this year, furlough numbers plunged by three million and have gradually declined ever since.

  1. records show that at the end of June 2021, nearly two million British workers were on furlough, dropping by nine million from the peak of the pandemic in May 2020.

Since June, it is also thought that furlough numbers have plummeted even further to around 1.5 million people, an ONS Business Insights and Conditions Survey reports.

Throughout the pandemic, 28% of employers had staff on the Coronavirus Job Retention Scheme.

Recruitment worker, Jane told HR magazine that being on furlough was challenging when more people were going back to work and her job was left hanging in the balance.

She said: “It felt like everyone around me was going back to normal.

“However, I've been grateful for the time to take a step back and look at what I like about my role, what I don't like, and kind of developing from there.”

  1. recent visits to Scotland, the Chancellor of the Exchequer, Rishi Sunak MP recognised the economic power of the union and applauded the Government’s Plan for Jobs, which will continue to help people and businesses once the furlough scheme ends.

He said: “It’s fantastic to see businesses across the UK open, employees returning to work and the numbers of furloughed jobs falling to their lowest levels since the scheme began.

“I’m proud our Plan for Jobs is working, and our support will continue in the months ahead.”

For the first time since furlough began, young people are no longer the biggest demographic signed onto the Coronavirus Job Retention Scheme.

The reopening of hospitality and retail led to more than a million people leaving the scheme, with younger people making up the majority of the workforce in these sectors.

Since April 2021, nearly 600,000 under 25s have come off furlough, double the amount of older people who have left the scheme.

Furlough has been prolonged several times, but it will finally come to an end in September.

Employers currently have to pay 20% of furlough payments until the scheme officially concludes.

According to The Office for Budget Responsibility, the entire furlough scheme will have cost £66 billion by the time it finishes.

To help people moving forward, the Government’s Plan for Jobs project will continue to assist people back into work as the economy starts to bounce back.

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Companies closed after abusing COVID loan support

In what is likely to be the tip of a significant ice-berg, two companies who fraudulently applied for thousands of pounds in grants and loans have been wound up in the courts.

According to a recent government press release the two separate companies submitted false documents to at least 41 local authorities and the Government’s Bounce Back Loan scheme to secure £230,000 worth of grants; grants that were offered to support businesses across the UK during the pandemic.

The Insolvency Service proved that neither company ever traded.

Investigators uncovered that one company had registered their offices in Whitchurch, Shropshire, but had provided false lease documents and utility bills to 14 different local authorities to fraudulently claim they traded out of premises in their respective areas.

The companies fraudulently secured business grants from local authorities, as well as Bounce Back Loans. Investigators uncovered that the premises that the companies falsely claimed to operate from were either unoccupied, up for rent or occupied by a different company.

Small Business Minister Paul Scully said:

“This decisive enforcement action shows that we will not tolerate shameless attempts to defraud the taxpayer and falsely claim public money intended to help businesses through the pandemic.

“We are cracking down on Covid fraud across the board and those who have tried to take support they were not entitled to, which was given in response to the worst crisis of our lifetimes, can expect to face heavy consequences.

“The lengths that fraudsters went to as they tried to falsely claim grants surprised even our most experienced staff, but by using national counter fraud networks, concerns could be raised quickly and trends and patterns were shared with other authorities.

“We are very proud of the way our teams supported so many businesses in extraordinary circumstances, and we are also pleased that they foiled attempts by a small minority to exploit the misery that Covid-19 has brought to so many.”

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Could you benefit from additional tax relief?

Couples may be eligible to reduce their Income Tax by up to £252 a year by sharing their Personal Allowances.

HMRC has announced that nearly 1.8 million married couples and those in civil partnership are using Marriage Allowance to save up to £252 a year in Income Tax.

Marriage Allowance allows married couples, or those in civil partnerships, to share their Personal Tax Allowances if one partner earns below £12,570 a year, and the other is a basic rate taxpayer.

Couples can transfer 10% of their tax-free allowance to their partner (£1,260 for 2021 – 2022 tax year), significantly reducing the amount of annual tax they pay. They can also backdate their claims for the past four tax years, potentially receiving up to £1,220.

Angela MacDonald, HMRC’s Deputy Chief Executive and Second Permanent Secretary said: “Marriage Allowance lets eligible couples share their Personal Allowances and reduce their tax by up to £252 a year. Nearly 1.8 million couples are already using the service – it is free, quick and easy to apply.”

If a married couple have experienced a change in their circumstances, it may mean they are now eligible for Marriage Allowance. This includes:

  • A recent marriage or civil partnership
  • One partner has retired and the other remains working
  • A change in employment due to COVID-19
  • A reduction in working hours which means their earnings fall below their Personal Allowance
  • Unpaid leave or a career break
  • One partner is studying or in education and not earning above their Personal Allowance

If a spouse or civil partner has died since April 5th 2017, their partner can still claim by contacting the Income Tax helpline.

While Marriage Allowance claims are usually automatically renewed each year, couples should notify HMRC if their circumstances change.

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Are your Child Benefits under threat?

For some time now, HMRC have had the power to claw back some or all of the Child Benefits you receive if either parent’s income exceeds £50,000.

The benefit is recovered by the High Income Child Benefit Charge (HICBC). This states that if either parent had income over £50,000 and:

  • either partner received Child Benefit, or
  • someone else received Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep.

Then part or all of the Child Benefit received may need to be paid back to HMRC. It doesn’t matter if the child living with you is not your own child.

You may not have considered the HICBC before if your incomes were below the £50,000 cap, but if your income for 2020-21 exceeded this amount you should be aware of the following.

  • The parent with the higher income for 2020-21 (more than £50,000) will need to register to submit a self-assessment tax return and pay any HICBC due – unless they are already registered in which case, they will need to enter the amount of Child Benefit received on their return and pay any tax due.
  • The parent with the higher income, even if they were not the person claiming the Child Benefit, will need to make this declaration.

How will benefits be paid back?

1% of the Child Benefit received will be recovered by HMRC’s HICBC for every £100 the highest earner’s income exceeds £50,000. Accordingly, once the highest income exceeds £60,000 all the Child Benefits received will be reclaimed.

To avoid the charge, it is possible to decline receipt of Child Benefits. Care should be taken in triggering this option as it can have roll-on disadvantages when claiming future State Benefits or obtaining a National Insurance number for children.

To summarise:

  • Parents where the highest income is below £50,000 will not be affected and can continue to claim Child Benefit with no tax claw back.
  • Parents where the highest income is above £50,000 but below £60,000 will be affected and will need to pay the appropriate HICBC.

There are strategies that you could use to reduce your taxable income below the £50,000 or £60,000 thresholds as these are calculated net of any allowable deductions.

Please call if you would like more advice regarding these deductions or dealing with your registration for self-assessment, if required.

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Data Protection obligations

Everyone in business that handles personal data must register for data protection purposes with the Information Commissioners Office.

Most business will need to pay an annual fee of £40 or £60 but this can rise to £2,900. Some organisations only pay £40 regardless of their size and turnover. These are: charities and small occupational pension schemes.

If you need to register, there is an online process you can use at https://ico.org.uk/for-organisations/data-protection-fee/self-assessment/.

What is personal data?

Understanding whether you are processing personal data is critical to understanding whether the UK GDPR applies to your activities. Generally speaking, personal data is information that relates to an identified or identifiable individual. The following additional definitions are reproduced from the ICO website:

  • What identifies an individual could be as simple as a name or a number or could include other identifiers such as an IP address or a cookie identifier, or other factors.
  • If it is possible to identify an individual directly from the information you are processing, then that information may be personal data.
  • If you cannot directly identify an individual from that information, then you need to consider whether the individual is still identifiable. You should consider the information you are processing together with all the means reasonably likely to be used by either you or any other person to identify that individual.
  • Even if an individual is identified or identifiable, directly or indirectly, from the data you are processing, it is not personal data unless it ‘relates to’ the individual.
  • When considering whether information ‘relates to’ an individual, you need to consider a range of factors, including the content of the information, the purpose or purposes for which you are processing it and the likely impact or effect of that processing on the individual.
  • It is possible that the same information is personal data for one controller’s purposes but is not personal data for the purposes of another controller.
  • Information which has had identifiers removed or replaced in order to pseudonymise the data is still personal data for the purposes of UK GDPR.
  • Information which is truly anonymous is not covered by the UK GDPR.
  • If information that seems to relate to a particular individual is inaccurate (i.e., it is factually incorrect or is about a different individual), the information is still personal data, as it relates to that individual.
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A new government-backed loan scheme

A new Recovery Loan Scheme was launched 6 April 2021, to provide much needed liquidity to businesses affected by COVID lockdown measures. Under the scheme, loans of up to £10m are available. The minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts.
Potentially, these loans will be attractive to businesses in retail and hospitality that are gradually being allowed to reopen.
As with the Bounce-Back Loans, the government is providing lenders – the high street banks – with a measure of guarantee to underwrite their risks.
In a recent press release government confirmed:
The scheme, which was announced at budget and runs until 31 December 2021, will be administered by the British Business Bank, with loans available through a diverse network of accredited commercial lenders. 
26 lenders have already been accredited for day one of the scheme, with more to come shortly, and the government will provide an 80% guarantee for all loans. Interest rates have been capped at 14.99% and are expected to be much lower than that in the vast majority of cases, and Ministers are urging lenders to ensure they keep rates down to help protect jobs. 
The Recovery Loan Scheme can be used as an additional loan on top of support received from the emergency schemes – such as the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme – put into place last year.
Business owners who are considering a recovery loan should apply the usual considerations. i.e., can they afford the interest and capital repayments.
Please call if you would like help considering your options.

 

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Charity – using a subsidiary trading company

One or more charities can set up a subsidiary trading company to trade on their behalf. This may be a useful strategy if your charity:

  • makes profits on trading that is not linked to its primary purpose
  • makes a profit that comes close to or is higher than the small trading tax exemption limit
  • wants to protect its assets from any trading losses
  • wants to have a separate organisation to carry out all its trading activities

VAT considerations

A charity’s trading company will not have to pay VAT on:

  • profits it makes from donated good sales (as long as it gives these profits to the parent charity)
  • fundraising events it runs for its parent charity

Other types of VAT relief that charities get are not available for their trading subsidiaries.

Trading companies must pay tax and VAT on all their other income and profits in the same way as ordinary limited companies.

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Averaging profits for creators of literary or artistic works

A special relief is available for creators of literary or artistic works under which they can claim to add together their profits for 2 years and be taxable on the average of those profits if certain conditions are met. This helps to even out fluctuating tax charges for creative persons who may pay little tax one year but perhaps higher rates of Income Tax the following year. The averaging process may help to reduce overall liabilities.

You can claim averaging if your profits come from disposing of works or from royalties you get for allowing people to reproduce your works. So, for example, you can claim if you are:

  • an author whose income comes from the sale of your written work – even if a small part of your income comes from personal appearances
  • a computer software writer whose income comes from royalties for reproducing the code you write, which is protected by copyright

You cannot claim averaging if your profits come from the services you provide. So, for example, you cannot claim if you’re:

  • an architect whose income comes mainly from your services – even if some of your income comes from selling material protected by copyright
  • a computer programmer whose income comes from the service of writing scripts or programs, not the actual works
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Advisory Fuel Rates from 1 March 2021

The advisory electricity rate for fully electric cars is 4 pence per mile.

Hybrid cars are treated as either petrol or diesel cars for advisory fuel rates.

The advisory fuel rates for petrol, LPG and diesel cars are shown in these tables.

From 1 March 2021

You can use the previous rates for up to 1 month from the date the new rates apply.

Engine size

Petrol – rate per mile

LPG – rate per mile

1400cc or less

10 pence

7 pence

1401cc to 2000cc

12 pence

8 pence

Over 2000cc

18 pence

12 pence

 

Engine size

Diesel – rate per mile

1600cc or less

9 pence

1601cc to 2000cc

11 pence

Over 2000cc

12 pence

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Tax Diary May/June 2021

1 May 2021 – Due date for Corporation Tax due for the year ended 30 July 2020.

19 May 2021 – PAYE and NIC deductions due for month ended 5 May 2021. (If you pay your tax electronically the due date is 22 May 2021).

19 May 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2021.

19 May 2021 – CIS tax deducted for the month ended 5 May 2021 is payable by today.

31 May 2021 – Ensure all employees have been given their P60s for the 2020-21 tax year.

1 June 2021 – Due date for Corporation Tax due for the year ended 31 August 2020.

19 June 2021 – PAYE and NIC deductions due for month ended 5 June 2021. (If you pay your tax electronically the due date is 22 June 2021)

19 June 2021 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2021.

19 June 2021 – CIS tax deducted for the month ended 5 June 2021 is payable by today.

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Data Protection obligations

Everyone in business that handles personal data must register for data protection purposes with the Information Commissioners Office.

Most business will need to pay an annual fee of £40 or £60 but this can rise to £2,900. Some organisations only pay £40 regardless of their size and turnover. These are: charities and small occupational pension schemes.

If you need to register, there is an online process you can use at https://ico.org.uk/for-organisations/data-protection-fee/self-assessment/.

What is personal data?

Understanding whether you are processing personal data is critical to understanding whether the UK GDPR applies to your activities. Generally speaking, personal data is information that relates to an identified or identifiable individual. The following additional definitions are reproduced from the ICO website:

  • What identifies an individual could be as simple as a name or a number or could include other identifiers such as an IP address or a cookie identifier, or other factors.
  • If it is possible to identify an individual directly from the information you are processing, then that information may be personal data.
  • If you cannot directly identify an individual from that information, then you need to consider whether the individual is still identifiable. You should consider the information you are processing together with all the means reasonably likely to be used by either you or any other person to identify that individual.
  • Even if an individual is identified or identifiable, directly or indirectly, from the data you are processing, it is not personal data unless it ‘relates to’ the individual.
  • When considering whether information ‘relates to’ an individual, you need to consider a range of factors, including the content of the information, the purpose or purposes for which you are processing it and the likely impact or effect of that processing on the individual.
  • It is possible that the same information is personal data for one controller’s purposes but is not personal data for the purposes of another controller.
  • Information which has had identifiers removed or replaced in order to pseudonymise the data is still personal data for the purposes of UK GDPR.
  • Information which is truly anonymous is not covered by the UK GDPR.
  • If information that seems to relate to a particular individual is inaccurate (i.e., it is factually incorrect or is about a different individual), the information is still personal data, as it relates to that individual.
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A new government-backed loan scheme

A new Recovery Loan Scheme was launched 6 April 2021, to provide much needed liquidity to businesses affected by COVID lockdown measures. Under the scheme, loans of up to £10m are available. The minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts.
Potentially, these loans will be attractive to businesses in retail and hospitality that are gradually being allowed to reopen.
As with the Bounce-Back Loans, the government is providing lenders – the high street banks – with a measure of guarantee to underwrite their risks.
In a recent press release government confirmed:
The scheme, which was announced at budget and runs until 31 December 2021, will be administered by the British Business Bank, with loans available through a diverse network of accredited commercial lenders. 
26 lenders have already been accredited for day one of the scheme, with more to come shortly, and the government will provide an 80% guarantee for all loans. Interest rates have been capped at 14.99% and are expected to be much lower than that in the vast majority of cases, and Ministers are urging lenders to ensure they keep rates down to help protect jobs. 
The Recovery Loan Scheme can be used as an additional loan on top of support received from the emergency schemes – such as the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme – put into place last year.
Business owners who are considering a recovery loan should apply the usual considerations. i.e., can they afford the interest and capital repayments.
Please call if you would like help considering your options.

 

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Charity – using a subsidiary trading company

One or more charities can set up a subsidiary trading company to trade on their behalf. This may be a useful strategy if your charity:

  • makes profits on trading that is not linked to its primary purpose
  • makes a profit that comes close to or is higher than the small trading tax exemption limit
  • wants to protect its assets from any trading losses
  • wants to have a separate organisation to carry out all its trading activities

VAT considerations

A charity’s trading company will not have to pay VAT on:

  • profits it makes from donated good sales (as long as it gives these profits to the parent charity)
  • fundraising events it runs for its parent charity

Other types of VAT relief that charities get are not available for their trading subsidiaries.

Trading companies must pay tax and VAT on all their other income and profits in the same way as ordinary limited companies.

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Beware trading into insolvency

The present pandemic has created just the right conditions for certain businesses to trade their way into insolvency.

As we start the gradual withdrawal from lockdown, consumers will be on the lookout to spend after months of enforced home “arrest”. This will likely fuel an increase in economic activity on an unprecedented scale as we bounce-back towards pre-pandemic levels.

But isn’t this good news?

Under normal circumstances, yes, this is great news, but unfortunately, many businesses have needed to spend reserves and borrow in order to survive the last fifteen months of COVID disruption. They are standing on the starting line for a marathon, wearing slippers; unprepared financially for what is about to unwind.

Does your business fit into this category?

  • Cash reserves are limited
  • Losses have stripped away accumulated profits
  • You are obliged to offer better terms of trade to your customers than you receive from your suppliers. i.e., you sell goods on say 60-days credit terms but pay your suppliers for raw materials cash on delivery.

But why does this matter if sales are profitable?

When you sell goods on credit – 60-days in our example – for those 60 days you will have to pay suppliers and other overheads, wages, rent and other costs, before cash arrives in your bank account for sales made almost two months ago.

Ironically, the more successful you are in creating new sales, the more damaging this funding crisis potentially becomes. In accounting speak, you will be over-trading.

Planning is critical

If your business fits the description we have outlined above it is imperative that you plan your business growth. It may still be possible to manage higher sales as long as you organise cash-flow support to fund costs until higher sales, and therefore retained profits, provide you with the resources to self-sustain future growth.

No business owner should have to suffer the financial tragedy of over-trading through lack of planning. Pick up the phone, we can help.

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New build your own home funding

Considering a home build? It would seem that government is keen to support this activity as they have just announced new plans to provide over £150 million in new government funding. This is aimed to make it easier and more affordable for people to build their own homes.

The ‘Help to Build’ scheme will ensure that self and custom home building can become a realistic option to get onto the housing ladder through lower deposit mortgages.

Lowering the required deposit will free up capital, so people can build the home that they want and need whether it’s a commissioned, made to order home, or a new design from scratch. The scheme will provide an equity loan on the completed home, similar to the Help to Buy scheme.

Made to order homes allow people to customise the home they want based on existing designs. This could include more office space, or a particular design to support a family’s requirements including for disabled or older people.

Self and custom build could deliver 30-40,000 new homes a year: a significant contribution to the country’s housebuilding ambitions.

The scheme is part of the government’s wider Plan for Jobs as the new plans will also benefit small building firms. SME builders account for 1 in 10 new homes and the scheme will help scale up the number of self and custom build homes built every year.

This follows the news that major lenders have signed up to the government’s new 95% mortgage guarantee scheme to help more people than ever on to the housing ladder. Lloyds, Santander, Barclays, HSBC and Natwest are launching mortgages under the scheme with Virgin Money following next month.

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New Recovery Loan Scheme

A new government backed loan scheme was launched 6 April 2021.

A recent news story confirming the details is reproduced below:

The scheme, which was announced at budget and runs until 31 December 2021, will be administered by the British Business Bank, with loans available through a diverse network of accredited commercial lenders.

 

26 lenders have already been accredited for day one of the scheme, with more to come shortly, and the government will provide an 80% guarantee for all loans. Interest rates have been capped at 14.99% and are expected to be much lower than that in the vast majority of cases, and Ministers are urging lenders to ensure they keep rates down to help protect jobs. The Recovery Loan Scheme can be used as an additional loan on top of support received from the emergency schemes – such as the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme – put into place last year.

The Recovery Loan Scheme will ensure businesses continue to benefit from Government-guaranteed finance throughout 2021.

With non-essential retail and outdoor hospitality reopening this week, Ministers intend that new support is still available to businesses to protect jobs. From 6 April 2021, businesses – ranging from coffee shops and restaurants to hairdressers and gyms – can access loans varying in size from £25,000, up to a maximum of £10 million. Invoice and asset finance is available from £1,000.

Businesses who are tempted to secure lending under this scheme should ensure that future trading will generate sufficient funds to cover interest charges and provide cash flow to repay the amount borrowed.

Please call if you would like our help to consider your options.

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The Finance Bill 2021

An outline of the Finance Bill 2021 has been published and provides the legal framework for changes announced in the recent Budget. We have reproduced below the published text. This is subject to scrutiny by parliament and may change before the Bill receives Royal Assent.

The Bill will ensure a number of tax changes set out by the Chancellor at last week’s Budget will take effect from the start of the next tax year beginning in April 2021, including:

  • the extension of the stamp duty holiday
  • extending the VAT cut for tourism and hospitality to September

As the country begins to recover from the effects of the pandemic, the Bill also legislates to help strengthen the public finances in the medium term through:

  • Increasing the rate of Corporation Tax to 25% on profits over £250,000 from April 2023, balancing the need to raise revenue with the objective of having an internationally competitive tax system. Over 90 per cent of businesses will pay less than the 25%.
  • Maintaining Income Tax Personal Allowance and Higher Rate Threshold at 2021 levels. This is a progressive measure: the richest households will contribute the most.
  • keeping the Capital Gains Tax Annual Exempt Amount (AEA), the inheritance tax nil-rate band and the pensions Lifetime Allowance at their current levels

The Bill also helps deliver a fairer and more sustainable tax system too through legislating to:

  • Implement a Plastic Packaging Tax which encourages the use of recycled plastic instead of new plastic within packaging. The rate of the tax is £200 per tonne of plastic packaging which contains less than 30% recycled plastic content.
  • Reform the penalty regime for VAT and Income Tax Self-Assessment (ITSA) to make it fairer and more consistent. The new late submission regime will be points-based, and a financial penalty will only be issued when the relevant threshold is reached.

The Bill helps drive an investment-led recovery through:

  • the ‘super deduction’ – from 1 April 2021 until 31 March 2023. The independent OBR have forecast that, at its peak, the super-deduction will raise the level of business investment by 10%, or roughly £20bn a year.
  • supporting the introduction of Freeports through allowing the government to designate ‘tax sites’ in Freeports in Great Britain, where businesses will be able to benefit from a number of tax reliefs.

The Bill will now follow the normal passage through parliament.

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HMRC clarifies furlough queries

HMRC has recently clarified the action you need to take if you have claimed too little or too much under the furlough scheme (Coronavirus Job Retention Scheme). They are published in a FAQ format. Here’s what they say:

What if I’ve claimed too much in error?

If you have claimed too much CJRS grant and have not already repaid it, you can repay as part of your next online claim without needing to call us. If you claimed too much but do not plan to submit further claims, you can let us know and make a repayment online through our card payment service or by bank transfer – go to 'Pay Coronavirus Job Retention Scheme grants back' on GOV‌‌‌‌‌‌‌‌‌‌.‌‌‌‌‌‌UK.

You must notify us and repay the money by the latest of whichever date applies below:

  • 90 days from receiving the CJRS money you’re not entitled to
  • 90 days from the point circumstances changed so that you were no longer entitled to keep the CJRS grant.

If you do not do this, you may have to pay interest and a penalty as well as repaying the excess CJRS grant. For more information on interest search 'Interest rates for late and early payments' on GOV‌‌‌‌‌‌‌‌‌‌.‌‌‌UK.

What if I haven’t claimed enough?

If you made a mistake in your claim that means you received too little money, you’ll need to amend it within 28‌‌ ‌calendar days after the month the claim relates to – unless this falls on a weekend or bank holiday, in which case the deadline is the next weekday. The deadline to amend claims for February is Monday‌‌ ‌29‌‌ ‌March.

To find out how to amend your claim, search 'Get help with the Coronavirus Job Retention Scheme'.

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What are Super-Deductions?

Most company business owners understand that if you incur a cost that is wholly and exclusively for the purpose of your trade, then it can be deducted from your taxable profits or added to tax losses.

Likewise, if companies invest in plant or other equipment that qualifies for tax relief, even though the expenditure is the acquisition of an asset – something that will be working in your business for years – it can be partly or wholly written off for tax purposes in the year it was acquired.

The facility that allows assets to be written off are called capital allowances and currently, they range from just a few percent per annum to a 100% write down. That was the case until Mr Sunak delivered his Budget last week…

Business owners have become accustomed to this writing off process and it had proved to be an incentive for companies to invest in new equipment.

But last week the Chancellor surprised us all by saying that companies investing in plant and machinery in the period from 1 April 2021 to 31 March 2023 will be able to benefit from enhanced capital allowances. These are:

  • Investments in assets that qualify for the main rate of capital allowances of 18% will benefit from a 130% first-year allowance. This means that for every £100 that you spend, you can deduct £130 in computing your taxable profits. This is equivalent to a tax saving of 24.7%. For example, if a company bought a new machine for its factory for £10,000 during April 2021, it could deduct £13,000 from its profits; at the present 19% rate of corporation tax this would save £2,470 in corporation tax. And so, for an expenditure of £10,000 the company would reduce its tax bill be £2,470, amounting to 24.7%.
  • In a further twist, investments in assets qualifying for special rate capital allowances benefit from a 50% first year allowance (although claiming the 100% annual investment allowance instead where this is available will be more beneficial).

If you are looking to invest in plant and machinery, it can be advantageous to do so within this window to benefit from the super-deduction. However, it is not available where contracts were agreed before Budget day.

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Pension pot top-ups before 6 April 2021

The 2020/21 tax year comes to an end on 5 April 2021. As this date approaches, it is prudent to review your pension contributions and consider whether it would be beneficial to top up your pension before the end of the tax year.

Is there a limit on tax-relieved contributions?

Yes — tax relief is only available on contributions to registered pension schemes up to certain limits. Individuals can make contributions to the higher of £3,600 and 100% of their earnings, as long as they have sufficient annual allowance available to shelter the contributions. Contributions can be made by (or on behalf of) non-taxpayers up to £3,600 a year. Net of basic rate relief at 20%, this will cost £2,880.

 

How much is the annual allowance?

The annual allowance is set at £40,000 for 2020/21. However, a taper applies which reduces your annual allowance if you have:

  • adjusted net income of £240,000 or more (broadly income including pension contributions); and
  • threshold income of £200,000 or more (broadly income excluding pension contributions).

Where both of these apply, the annual allowance is reduced by £2 for every £1 by which adjusted net income exceeds £240,000 until the minimum level of the annual allowance is reached. This is set at £4,000 for 2020/21.

The impact of the taper means that if your adjusted net income is £312,000 or more, and your threshold income is at least £200,000, you will only receive the minimum annual allowance of £4,000 for 2020/21

A reduced annual allowance – the money purchase annual allowance (MPAA) — also applies if you have flexibly accessed a money purchase pension pot having reached the age of 55. This is set at £4,000 for 2020/21.

 

What about employer contributions?

Contributions made by your employer count towards the annual allowance. They are also considered when working out adjusted net income for the purposes of determining whether the annual allowance taper applies.

 

Don’t forget unused allowances from earlier years

Where the annual allowance is not fully utilised in a tax year, the unused portion can be carried forward for up to three years. This means that when working out the total tax relieved pension contributions that you can make before 6 April 2021, you need to consider not only the available annual allowance for the current tax year, but also any unused allowances brought forward from:

  • 2019/20;
  • 2018/19; and
  • 2017/18.

Allowances brought forward from a previous year can only be used once the current year’s annual allowance has been used up. Once this has been done, brought forward allowances from an earlier year are used before those of a later year. Any allowances brought forward from 2017/18 are lost if they are not used by 5 April 2021. However, remember, contributions cannot exceed 100% of your earnings (or £3,600 if higher).

 

Why make additional pension contributions?

Making pension contributions is tax-efficient as relief is given at your marginal rate of tax. This means that a contribution of £100 will only cost you £60 if you are a higher rate taxpayer, and £55 if you are an additional rate taxpayer.

Planning ahead to secure an income in retirement is worthwhile in itself.

If you have some or all of the 2017/18 annual allowance available, making contributions to mop it up prevents it from being lost.

 

Pension contributions may also protect your personal tax allowance

Making pension contributions can also be useful if you want to reduce your income, for example to preserve some or all of your personal allowance for 2020/21 or to move into a lower tax bracket. The personal allowance, set at £12,500 for 2020/21, is reduced by £2 for every £1 by which adjusted net income (in this instance, income before personal allowances and less trading losses, charitable donations and pension contributions) exceeds £100,000. For 2020/21, this means that the personal allowance is lost once adjusted net income reaches £125,000. Because of the taper, the marginal rate of tax between £100,000 and £125,000 is 60%. Where making additional pension contributions is an option, this can be valuable, whether to prevent losing any of the personal allowance or to preserve some of it or more of it.

 

We can help

If you are thinking of making additional pension contributions before the end of the tax year, we can help you work out your options in conjunction with your pension’s adviser.

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SEISS – the net widens

One aspect of the recent budget will please self-employed business owners that have previously been unable to claim under the Self-Employed Income Support Scheme (SEISS) as they commenced trading after 5 April 2019.

As long as you submitted your self-assessment tax return for 2019-20 before midnight 2 March 2021, and you meet the other qualifying criteria – basically that you have been adversely affected by COVID disruption – then you should be able to claim.

Two grants will be available. The fourth grant under the scheme covers February to April 2021. It is worth three months’ average profits capped at £7,500. It can be claimed from late April.

The fifth and final grant covers the period from May to September 2021. The amount of the grant will depend on the impact that Covid-19 has had on your profits. If your turnover has fallen by 30% or more because of Covid-19, you will be able to claim a grant equal to 80% of your average profits for three months, capped at £7,500. However, if your turnover has dropped by less than 30%, you will be entitled to a reduced grant of 30% of three months’ average profits, capped at £2,850.

The final grant can be claimed from late July. At present, this scheme is therefore timed to end 30 September 2021.

Remember, you can only claim the grant if you have been adversely affected by the pandemic.

Grants received under the scheme are taxable and must be considered in working out your profits.

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Concerned about tax payments due 31 January 2021?

UK taxpayers that file a tax return will need to pay a variety of self-assessment tax and NIC liabilities that will fall due at the end of January 2021. They include:

 

· The second payment on account for 2019-20 if deferred when first due 31 July 2020.

· Any balance of taxes unpaid for 2019-20

· The first payment on account for 2020-21

The second two amounts will have been quantified when your self-assessment tax return was filed for 2019-20.

If you have concerns that you will not have sufficient funds to meet these liabilities on 31 January 2021, it is possible to negotiate under HMRC’s time to pay scheme. On their website HMRC offer the following advice:

If you cannot pay your Self-Assessment tax bill

You can set up a payment plan to spread the cost of your latest Self-Assessment bill if:

  • you owe £30,000 or less

  • you do not have any other payment plans or debts with HMRC

  • your tax returns are up to date

  • it’s less than 60 days after the payment deadline

You do not need to contact HMRC if you set up a payment plan online. Call the Self-Assessment helpline if you’re not eligible for a payment plan or cannot use the online service.

Self-Assessment Payment Helpline
 

Telephone: 0300 200 3822
Monday to Friday, 8am to 4pm
Find out about call charges

 

If you cannot pay other taxes

You might be able to set up a Time to Pay Arrangement with HMRC if you’re unable to pay any other taxes in full. This lets you spread the cost of your tax bill by paying what you owe in instalments.

How you do this depends on whether you’ve received a payment demand.

If you’ve received a payment demand, like a tax bill or a letter threatening you with legal action, call the HMRC office that sent you the letter. If you’ve not received a bill or letter, call the Payment Support Service.

Payment Support Service
Telephone: 0300 200 3835
Monday to Friday, 8am to 4pm
Find out about call charges

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Parting shot from the Chancellor

For a man that has admitted he has concerns about the level of government funding committed to the support of businesses during the last nine months, Rishi Sunak’s disclosure last week that he is extending the furlough scheme to the end of April 2021 points to a deepening concern in government that we are not out of the woods just yet.

He also extended the deadline for making applications under the government-guaranteed loan schemes. Applications were required before 31 January 2021, this deadline is now 31 March 2021.

In his statement to parliament the Chancellor hinted that he may be offering more financial support when he stands to present his budget on 3rd March 2021.

None of us want to contemplate another year like 2020. Although the various vaccines coming online should make some difference to the efforts to control infection it is likely that these efforts will not be some magic bullet to completely tame COVID.

What is likely, is that as soon as government is able to cut-back on its furlough funding and other commitments it will turn its attention to pay-back.

This will likely involve public expenditure cuts and higher taxation. Described by the pundits in the past as austerity.

We will have wait for Rishi Sunak’s announcements on 3rd March to see how this will play out.

The options the Treasury are probably contemplating are reductions in costly tax reliefs – such as continuing higher rate tax relief for pension contributions – and increases in taxation.

Economists that have a different view of government spending and whether it needs to be paid back, will be pressing for a different fiscal agenda. They will no doubt point out that we need to kick-start the economy by encouraging investment and stimulating consumers to buy.

The Chancellor’s parting shot for 2020 will also be coloured by the outcome of the present, protracted EU trade negotiations. At the time this article was written the outcome of discussions was far from clear and mirrors the general feeling of uncertainty that has grown since the first signs of COVID appeared March 2020.

Meantime, we are required to make the best of a situation that is feeling increasingly like self-imposed house arrest and yet there is a note of optimism that 2021 will see a change in our fortunes, and for the better.

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Looks like we are heading for a no-deal exit from the EU

If the following criteria apply, this is what our government recommend that you do from 1 January 2021:

You:

  • Are British
  • Live and work in the UK
  • Travel to the EU for business reasons
  • Have no plans in the short-term to travel abroad for holidays
  • Do not plan to move to the EU
  • Run and/or own a business in the UK
  • Do not employ EU citizens in your business
  • Do not exchange any form of personal data with customers or suppliers in the EU
  • Do not sell your products or services to the UK public sector
  • Do not rely on intellectual property protection
  • Do not have a website with an .eu domain
  • Import and export goods from and to the EU
  • Are manufacturers of consumer goods

 

If the above apply to your circumstances, our government advises that you need to attend to the following matters to comply with our new trading relationship with the EU from 1 January 2021:

  1. URGENT Check what you need to do to export to the EU from 1 January 2021
  2. URGENT Check what you need to do to import from the EU from 1 January 2021
  3. URGENT Decide how you want to make customs declarations and whether you need to get someone to deal with customs for you.
  4. Check if you need to pay a tariff on the goods you import from 1 January 2021
  5. Get an EORI number that starts with GB to move your goods into or out of the EU. It takes up to a week and you will not be able to move your goods into or out of the EU without an EORI number.

There are also a number of specialist issues that you may have to consider including:

  1. Moving goods between or through common transit countries including the EU
  2. How to comply with REACH chemical regulations
  3. Exporting controlled goods from 1 January 2021
  4. Meeting climate change requirements from 2021
  5. Movement of wood packaging material from 2021
  6. Trading and moving endangered species protected by CITES
  7. Applying for a trade remedies investigation

 

Additionally, you and your family will need to consider

1. Taking out travel insurance and health insurance before travelling to the EU.

2. Check if you need a visa or work permit.

3. Check your mobile contract as providers may reintroduce roaming charges.

4. Allow more time at border crossings.

We will need to get used to treating countries in the EU as non-local. Borders will be re-established at the end of December, no more quick-access to EU gates in airports.

Hopefully, you will have attended to most of these issues already. If not, use the hyperlinks in our text to find out what’s to do next. And call if you want to discuss these or your wider options as we grapple with Brexit and COVID-19.

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Are you eligible for further self-employed grants?

Two quarterly grants have been paid to UK self-employed traders that qualify for the Self- Employed Income Support Scheme (SEISS). These covered the periods up to 31 October 2020.

The Chancellor has announced that two further quarterly payments will be made. Traders will still need to qualify for the payments and in particular:

  • Have been previously been eligible for the SEISS first and second grant (although they do not have to have claimed the previous grants)
  • Declare that they intend to continue to trade and either:
    • are currently actively trading but are impacted by reduced demand due to coronavirus
    • were previously trading but are temporarily unable to do so due to coronavirus

If these conditions are confirmed then a claim can be made for the following periods:

Quarter 1 November 2020 to 31 January 2021

The maximum that can be claimed for this period is 80% of average, qualifying quarterly earnings capped at £7,500. This is an increase on the previously announced amount of 55%.

The online portal to make a claim will open 30 November 2020 and payments should be received before Christmas.

Quarter 1 February 2021 to 30 April 2021

Details of the amount that will be paid for this quarter will be announced January 2021.

Self-employed traders who, for what ever reason, do not qualify for this grant, but are still suffering financial hardship due to COVID disruption, may be able to claim under the Universal Credit.

The SEISS is taxable…

And don’t forget, when you prepare accounts covering any period during which you received an SEISS grant these will need to be added to your taxable earnings in the relevant tax period.

Need help applying?

Please call if you need assistance claiming these additional SEISS grants.

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