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800,000 claim tax relief for working from home

HMRC has confirmed that almost 800,000 employees who have been working from home during the pandemic have already claimed tax relief on household related costs.
The saving is worth up to £125 per year for each employee, and eligible workers can claim the full year’s entitlement if they have been told to work from home by their employer, even if it has been for just one day during the tax year.
Employees who have either returned to working in an office since early April or are preparing for their return can still claim the working from home tax relief and benefit from the full year’s relief for 2021/22.
Employees can apply directly themselves and receive the full tax relief that is due. Once their application has been approved, their tax code will be automatically adjusted for the 2021/22 tax year, and they will receive the tax relief directly through their salary.
Myrtle Lloyd, HMRC’s Director General for Customer Services, said:
‘More people are getting back to office working now, but it’s not too late to apply for tax relief on household expenses if they’ve been working from home during the pandemic.’
Check eligibility and apply online at www.gov.uk/tax-relief-for-employees/working-at-home.

Property tax changes

From 1 July 2021 there are changes to the Stamp Duty Land Tax (SDLT) and Land Transaction Tax (LTT) bands for residential property.
SDLT is payable by the purchaser in a land transaction occurring in England and Northern Ireland. The following rates and thresholds apply for SDLT from 1 July 2021 to 30 September 2021:
Residential property Band % Rates
£0 – £250,000 0
£250,001 – £925,000 5
£925,001 – £1,500,000 10
£1,500,001 and over 12
LTT is payable by the purchaser in a land transaction occurring in Wales. From 1 July 2021 the rates for residential property are:
Residential property Band % Rate
Up to £180,000 0
£180,001 – £250,000 3.5
£250,001 – £400,000 5
£400,001 – £750,000 7.5
£750,001 – £1,500,000 10
Over £1,500,000 12
There are no changes to the rates and bands for Land and Property Transaction Tax which apply in Scotland.

Apprenticeship cash boost

The government has confirmed that employers of all sizes in England can now apply for £3,000 in extra funding to help them take on new apprentices.
The boost to the apprenticeship incentive scheme was confirmed by Chancellor Rishi Sunak in the Budget in March.
The claims portal opened on 1 June and businesses can apply for £3,000 for each new apprentice hired as a new employee from 1 April until 30 September.
The cash incentive is designed to help more employers invest in the skilled workforce they need for the future as part of the government’s Plan for Jobs.
The government says the scheme builds on action already underway to protect, support and create more jobs while bringing the UK’s skills and education system closer to the employer market.
The Chancellor commented:
‘Young people have been hit especially hard by the crisis – which is why our Plan for Jobs, launched last year, is focused on helping them get the skills they need to get the jobs they want.
‘By boosting the cash incentives for our apprenticeship scheme we’re improving opportunities for young people to stay in and find work – this could not be more important in our economy’s recovery.’
Find out more and apply at www.gov.uk/guidance/incentive-payments-for-hiring-a-new-apprentice.

Furlough scheme starts to wind down

The government’s Coronavirus Job Retention Scheme (CJRS) begins winding down from 1 July.
The latest data from the Institute for Fiscal Studies (IFS) shows that at the end of April 3.4 million jobs were still on furlough so the change to the furlough scheme will affect thousands of employers across the country.
Since last March, the government has paid 80% of the salaries of employees (up to a maximum government contribution of £2,500 per month) – with the employers only having to pay employer National Insurance and pension contributions.
From 1 July the government will only pay 70% of the furloughed employee’s salary, so the employer has to pay 10% of the salary themselves. In August and September, employers will have to pay 20%, with the government picking up 60%. Furloughed employees will continue to receive 80% of their wages including the employer contribution.
However, according to the IFS, the bill for employers keeping a member of staff on the scheme will rise significantly, putting jobs at risk. For a furloughed employee previously earning £20,000 per year, the cost to an employer of keeping them will rise from £155 per month in June to £322 in July, and £489 per month in August and September, after which the scheme is due to end.
Further details of changes to the CJRS can be found at GOV.UK CJRS.

Forms P11D – reporting employee benefits

The forms P11D which report details of benefits and some expenses provided to employees and directors for the year ended 5 April 2021, are due for submission to HMRC by 6 July 2021. The process of gathering the necessary information and completing the forms can take some time, so it is important that this process is not left to the last minute.
Employees pay tax on benefits provided as shown on the P11D, generally via a PAYE coding notice adjustment or through the self assessment system. Some employers ‘payroll’ benefits and in this case the benefits do not need to be reported on forms P11D but employers should advise employees of the amount of benefits payrolled.
In addition, regardless of whether the benefits are being reported via P11D or payrolled the employer has to pay Class 1A National Insurance Contributions at 13.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form. The deadline for payment of the Class 1A NIC is 19th July 2021 (or 22nd for cleared electronic payment).
If you would like any help with the completion of the forms or the calculation of the associated Class 1A NIC please get in touch.

Government confirms start date for Plastic Packaging Tax

The UK government has confirmed that its plastic packaging tax (PPT) will come into force on 1 April 2022.
The PPT will be charged at a rate of £200 per metric ton of chargeable plastic packaging components of a single specification.
It will apply to plastic packaging components manufactured in or imported into the UK.
Plastics covered by the tax include bioplastics, including biodegradable, compostable and oxo-degradable plastics.
The tax will not be chargeable on plastic packaging which has 30% or more recycled plastic content, or where the packaging is made of multiple materials of which plastic is not proportionately the heaviest when measured by weight.
This includes importers of packaging which already contain goods, such as plastic bottles filled with drinks and where the imported packaging already contains other goods as the tax only applies to the plastic packaging itself.
The introduction of the plastic packaging tax is designed to encourage the use of recycled rather than new plastic within plastic packaging and will in turn stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.

Fifth SEISS grant will be open to claims from late July

HMRC has confirmed that the fifth Self-employment Income Support Scheme (SEISS) grant covering the period May 2021 to September 2021 will open to claims from late July.
To be eligible for the grant, an individual must be self-employed or a member of a partnership. They must have traded in the tax year 2019/20 and submitted their tax return on or before 2 March 2021, and also have traded in the tax year 2020/21. Claimants must either be currently trading but are impacted by reduced demand due to coronavirus or have been trading but are temporarily unable to do so due to coronavirus.
The amount of the fifth grant will be determined by how much an individual’s turnover has been reduced in the year April 2020 to April 2021.
HMRC will provide more information and support by the end of June 2021 to help individuals work out how their turnover was affected.
The online claims service for the fifth SEISS grant will be open from late July 2021. In mid-July HMRC will contact individuals who are eligible based on their tax returns to give them a date from which they can make their claim.

HMRC sets out penalty regime for SEISS abuse

The fourth Self-Employed Income Support Scheme (SEISS) grant is now live and HMRC has set out the penalties for abuse of the scheme.
An overclaimed SEISS grant includes any amount of grant which the self-employed individual was not entitled to receive or was more than the amount HMRC said the applicant was entitled to when the claim was made.
Overpayments must be notified to HMRC within 90 days of receipt of an SEISS grant.
When deciding the amount of any penalty, HMRC will take account whether the taxpayer knew they were entitled to the SEISS grant when they received it and when it became repayable or chargeable to tax because the individual’s circumstances changed.
The HMRC guidance states: ‘If you knew you were not entitled to your grant and did not tell us in the notification period, the law treats your failure as deliberate and concealed. This means we can charge a penalty of up to 100% on the amount of the SEISS grant that you were not entitled to receive or keep.
‘If you did not know you were not entitled to your grant when you received it, we will only charge you a penalty if you have not repaid the grant by 31 January 2022.’
If you would like further advice or require a compliance review on your eligibility, please contact us.

New claims required for home working tax relief

Employees who are working from home will need to make new claims for tax relief for the 2021/22 tax year, HMRC has stated.
From 6 April 2020, employers have been able to pay employees up to £6 a week tax-free to cover additional costs if they have had to work from home.
Employees who have not received the working from home expenses payment direct from their employer can apply to receive the tax relief from HMRC.
HMRC has also confirmed that the £6 per week payment is available in full, even if an employee splits their time between home and the office.
The allowance is to cover tax-deductible additional costs that employees who are required to work from home have incurred, such as heating and lighting the workroom, and business telephone calls.
Last year an online portal was launched that allows employees to claim tax relief for working at home. The portal was set up to process tax relief on additional expenses for employed workers who have been told to work from home by their employer during the coronavirus (COVID-19) pandemic.

New 95% mortgage scheme launched

On 19 April, a government-backed mortgage scheme to help people with 5% deposits get on to the housing ladder was made available to lenders.
First announced at the 2021 Budget, the scheme will help first-time buyers or current homeowners secure a mortgage with just a 5% deposit to buy a house worth up to £600,000. The government says this will provide ‘an affordable route to homeownership for aspiring homeowners’.
The government will offer lenders the guarantee they need to provide mortgages that cover the other 95%, subject to the usual affordability checks.
The scheme is now available from lenders on high streets across the country, with Lloyds, Santander, Barclays, HSBC and NatWest having launched mortgages under the scheme and Virgin Money following shortly.
Miguel Sard, Managing Director of Home Buying and Ownership at NatWest, said:
‘We welcome the government’s new mortgage guarantee scheme to give further support to those with smaller deposits. For those customers, particularly younger or first-time buyers, saving up for a big deposit can often be difficult, and we know people in these groups are some of the hardest hit by the effects of the pandemic.
‘A government-backed scheme will help segments of the market for whom homeownership has felt far out of reach in recent months.’

Recovery Loan Scheme opens to businesses

On 6 April, the Recovery Loan Scheme (RLS) was introduced to replace the government’s coronavirus lending schemes.
The RLS provides financial support to businesses affected by the COVID-19 pandemic. The scheme gives lenders a guarantee of 80% on eligible loans between £25,000 and £10 million to give them confidence in continuing to provide finance to UK businesses.
The RLS is open to all businesses, including those who have already received support under the previous COVID-19 guaranteed loan schemes, the Bounce Back Loan Scheme, the Coronavirus Business Interruption Scheme and the Coronavirus Large Business Interruption Scheme although the amount they have borrowed under an existing scheme may in certain circumstances limit the amount they may borrow under RLS.
The RLS is initially available through a number of lenders accredited by the British Business Bank.

Fourth self-employed grant now open for online applications-01.05.21

On 21 April, the online service for applications for the fourth Self-employment Income Support Scheme (SEISS) grant was opened for claims, HMRC confirmed.
All applications must be submitted by the individual self-employed worker and cannot be handled by accountants or tax advisers.
The fourth grant will be 80% of three months’ average trading profits, to be claimed from late April 2021.
Payment will be in a single instalment capped at £7,500 in total and will cover the period 1 February to 30 April 2021. The scheme has been extended to those who filed a 2019/20 self-assessment tax return prior to 3 March 2021.
Claimants must have been impacted by reduced activity, capacity and demand, or have been trading previously and are temporarily unable to do so. All claims must be made on or before 1 June 2021.
There is no requirement for an earlier SEISS grant to have been claimed to be able to claim the fourth grant.
The fifth SEISS grant will cover the period from 1 May to 30 September 2021 and will be available from July.
It will be set at 80% of three months’ average trading profits, paid out in a single instalment, capped at £7,500, for those with a turnover reduction of 30% or more.
Alternately, it will be worth 30% of three months’ average trading profits, capped at £2,850 for those with a turnover reduction of less than 30%.
Further details of the fifth grant will be provided in due course.

ICAEW urges HMRC to rethink quarterly reports under MTD for corporation tax-22.04.21

The Institute of Chartered Accountants in England and Wales (ICAEW) has urged HMRC to rethink the requirement for companies to report quarterly under Making Tax Digital for corporation tax (MTD for CT).
In response to HMRC’s consultation on expanding the MTD initiative to corporation tax, the ICAEW suggested that HMRC should reconsider reporting requirements ‘at the very least for businesses below the VAT registration threshold’ and other organisations including those that require a senior accounting officer.
The Institute argued that quarterly reports would merely consist of cash in and out transactions.
The ICAEW said:
‘These reports will tell HMRC very little about the true accounting or tax results of the company for the quarter concerned.
‘The additional burden placed on companies in providing quarterly reports is not justified and should not be introduced until digital record keeping has become established and the software available is shown to work efficiently for companies and HMRC.’

HMRC publishes details of final grants for self-employed-07.04.21

HMRC has published details of the eligibility criteria of the final two grants available under the coronavirus (COVID-19) Self-employment Income Support Scheme (SEISS).
At the 2021 Budget it was confirmed that the fourth SEISS grant will be set at 80% of three months’ average trading profits, paid out in a single instalment, capped at £7,500. It will cover the period from February 2021 to April 2021.
To be eligible for the fourth grant, self-employed workers must have filed their 2019/20 tax return by midnight on 2 March 2021. This includes those who became self-employed in 2019/20, provided they have filed according to the deadline.
Eligibility will be based on the 2019/20 self assessment tax return which may affect the amount of the fourth grant which could be higher or lower than previous grants.
The remaining eligibility criteria are unchanged so applicants must either be currently trading but impacted by reduced demand, or be temporarily unable to trade due to COVID-19. They must also declare an intention to continue trading.
Claims can be made from late April until 31 May 2021.
The fifth SEISS grant will cover the period from May to September 2021 and will be available from July.
It will be set at 80% of three months’ average trading profits, paid out in a single instalment, capped at £7,500, for those with a turnover reduction of 30% or more.
Alternately, it will be worth 30% of three months’ average trading profits, capped at £2,850 for those with a turnover reduction of less than 30%.
Further details of the fifth grant will be provided in due course.

£20 million SME Brexit Support Fund opens for applications

The UK government has unveiled a £20 million Brexit support package to help small and medium-sized enterprises (SMEs) with changes to customs and tax rules when trading with the EU.
The SME Brexit Support Fund aims to help businesses prepare for the implementation of further import controls which come into force later this year.
Businesses who trade only with the EU and are therefore new to importing and exporting processes will be encouraged to apply for grants of up to £2,000 for each trader to pay for practical support, including training and professional advice, to ensure they can continue trading effectively.
Businesses must meet certain criteria, including having been established in the UK for at least 12 months, having fewer than 500 employees and no more than £100 million in turnover.
The closing date for applications is 30 June. HMRC states that the fund may close for applications earlier if the full £20 million is allocated.
Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said:
‘We have been asking for proper financial assistance of this scale so that a cash-strapped small business can afford to buy-in expertise, training and practical support. The new fund will make a significant difference.’

18.03.21-Tax Thresholds, Rates and Codes 2021-22

England and Northern Ireland
PAYE tax rates and thresholds 2021 to 2022
Employee personal allowance
£242 per week
£1,048 per month
£12,570 per year

English and Northern Irish basic tax rate 20% on annual earnings above the PAYE tax threshold and up to £37,700
English and Northern Irish higher tax rate 40% on annual earnings from £37,701 to £150,000
English and Northern Irish additional tax rate 45% on annual earnings above £150,000

Scotland
PAYE tax rates and thresholds 2021 to 2022
Employee personal allowance
£242 per week
£1,048 per month
£12,570 per year

Scottish starter tax rate 19% on annual earnings above the PAYE tax threshold and up to £2,097
Scottish basic tax rate 20% on annual earnings from £2,098 to £12,726
Scottish intermediate tax rate 21% on annual earnings from £12,727 to £31,092
Scottish higher tax rate 41% on annual earnings from £31,093 to £150,000
Scottish top tax rate 46% on annual earnings above £150,000

Wales
PAYE tax rates and thresholds 2021 to 2022
Employee personal allowance
£242 per week
£1,048 per month
£12,570 per year

Welsh basic tax rate 20% on annual earnings above the PAYE tax threshold and up to £37,700
Welsh higher tax rate 40% on annual earnings from £37,701 to £150,000
Welsh additional tax rate 45% on annual earnings above £150,000

Emergency tax codes
The emergency tax codes from 6 April 2021 are:

1257L W1
1257L M1
1257L X

Class 1 National Insurance thresholds
You can only make National Insurance deductions on earnings above the lower earnings limit.

Class 1 National Insurance thresholds 2021 to 2022
Lower earnings limit
£120 per week
£520 per month
£6,240 per year

Primary threshold

£184 per week
£797 per month
£9,568 per year

Secondary threshold

£170 per week
£737 per month
£8,840 per year

Upper secondary threshold (under 21)

£967 per week
£4,189 per month
£50,270 per year

Apprentice upper secondary threshold (apprentice under 25)

£967 per week
£4,189 per month
£50,270 per year

Upper earnings limit

£967 per week
£4,189 per month
£50,270 per year

National Minimum Wage
The National Minimum Wage is the minimum pay per hour almost all workers are entitled to by law. Use the National Minimum Wage calculator to check if you’re paying a worker the National Minimum Wage or if you owe them payments from past years.

These rates apply from 1 April 2021.

Category of worker Hourly rate
Aged 23 and above (national living wage rate) £8.91
Aged 21 to 22 inclusive £8.36
Aged 18 to 20 inclusive £6.56
Aged under 18 (but above compulsory school leaving age) £4.62
Apprentices aged under 19 £4.30
Apprentices aged 19 and over,
but in the first year of their apprenticeship £4.30

Allowance 2021 to 2022 rate
Employment allowance £4,000

16.03.21-Tax Codes to use from 06.04.21

For 2021 to 2022 the basic Personal Allowance will be £12,570 for the whole of the UK.
The threshold (starting point) for PAYE is £242 per week (£1,048 per month). The emergency code is 1257L for all employees.

Get ready for the new tax year starting on 6 April

For each employee who will be working for you on 6 April you’ll need to:
• prepare a payroll record
• identify the correct tax code (including the correct prefix i.e. ‘S’ or ‘C’)
• enter the correct tax code on the payroll record

Tax code changes-
Add 7 to any tax code ending in L, for
example, 1250L becomes 1257L.
Add 8 to any tax code ending in M.
Add 6 to any tax code ending in N

When HMRC do issue a new tax code for any of your employees, you’ll receive one of the following:
• a paper form P9(T), ‘Notice to employer of employee’s tax code’
• an internet notification of coding if you’re registered to use our PAYE Online – internet service
To access your online coding notices:
• go to www.gov.uk/paye-online-log-in and select ‘Sign in’
• from the Business tax account home page, select ‘Messages’ and then select ‘PAYE for employers messages’
• select ‘View your Tax Code Notices’
• from the ‘Tax Year’ drop down box select the new tax year (2021 to 2022)

What you need to do before 6 April 2021

Employees without a new tax code

Copy the authorised tax code from the 2020 to 2021 payroll record and continue
to use for 2021 to 2022.
Do not copy or carry over any ‘week 1’ or ‘month 1’ markings.

Tax code changes-
Add 7 to any tax code ending in L, for
example, 1250L becomes 1257L.
Add 8 to any tax code ending in M.
Add 6 to any tax code ending in N
The payroll records for these employees are now ready for the new tax year.

Employees with a new tax code
Keep and use the form P9(T) or other tax code notification with the most recent date on for each employee:
• scrap any form P9(T) or other tax code notification for the same employee with an earlier date
• copy the tax code from the form P9(T) or other tax code notification onto your payroll record
• update any tax codes where you’ve received form P9(T) or other tax code notification after you’ve set up your payroll records
The payroll records for these employees are now ready for the new tax year.
Employees leaving
You do not need to change the tax code for any employee who leaves before 6 April, even if you’ll be paying them after 6 April.
Just use the old tax code.
This does not apply to payments after leaving when you’ve already given an employee a P45. In these circumstances tax must be deducted using tax code 0T, S0T for employees who had an S prefix in their code or C0T for employees who had a C prefix in their code, on a non-cumulative basis.

Borrowers of Bounce Back loans given six more months for repayments-12.03.21

Businesses that took out government-backed Bounce Back loans to get through the coronavirus (COVID-19) pandemic will now have greater flexibility to repay their loans, the government has announced.
The Pay as You Grow repayment flexibilities now include the option to delay all repayments for a further six months. This means businesses can choose to make no payments on their loans until 18 months after they originally took them out.
Pay as You Grow will also enable borrowers to extend the length of their loans from six to ten years, which reduces monthly repayments by almost half.
They can also make interest-only payments for six months to tailor their repayment schedule to suit their individual circumstances.
The Pay as You Grow options will be available to more than 1.4 million businesses which took out a total of nearly £45 billion through the Bounce Back Loan Scheme (BBLS).
The Chancellor of the Exchequer, Rishi Sunak, said:
‘Businesses are continuing to feel the impact of extended disruption from COVID-19, and we’re determined to give them the backing and confidence they need to get through the pandemic.
‘That’s why we’re giving Bounce Back loan borrowers breathing space to get back on their feet, through greater flexibility and time to repay their loans on their terms.’

Online service opens for VAT deferral scheme-08.03.21

HMRC has announced that businesses that deferred VAT payments last year can now join the new online VAT Deferral New Payment Scheme to pay it in smaller monthly instalments.
To take advantage of the new payment scheme businesses will need to have deferred VAT payments between March and June 2020, under the VAT Payment Deferral Scheme. They will now be given the option to pay their deferred VAT in equal consecutive monthly instalments from March 2021.
Businesses will need to opt-in to the VAT Deferral New Payment Scheme. They can do this via the online service that opened on 23 February and closes on 21 June 2021.
Jesse Norman, Financial Secretary to the Treasury, said:
‘The Government has provided a package of support worth over £280bn during the pandemic to help protect millions of jobs and businesses.
‘This now includes the VAT Deferral New Payment Scheme, which will help provide businesses with the breathing space they may need to manage their cashflows in the weeks and months ahead.’

Late payment penalties for Self Assessment waived until 1 April-07.03.21

HMRC has announced that Self Assessment taxpayers will not be charged a 5% late payment penalty if they pay their tax or set up a payment plan by 1 April.
The payment deadline for Self Assessment is 31 January and interest is charged from 1 February on any amounts outstanding.
Normally, a 5% late payment penalty is also charged on any unpaid tax that is still outstanding on 3 March. But this year, because of the impact of the coronavirus (COVID-19) pandemic, HMRC is giving taxpayers more time to pay or set up a payment plan.
Taxpayers can pay their tax bill or set up a monthly payment plan online and are required to do this by midnight on 1 April to prevent being charged a late payment penalty. The online Time to Pay facility allows taxpayers to spread the cost of their Self Assessment tax bill into monthly instalments until January 2022.
Jim Harra, HMRC’s Chief Executive, said:
‘Anyone worried about paying their tax can set up a payment plan to spread the cost into monthly instalments. Support is available at GOV.UK to help anyone struggling to meet their obligations.’

Business groups welcome Budget-06.03.21

Business groups welcomed the Chancellor’s Budget for protecting the economy now and kickstarting recovery from the COVID-19 pandemic.
Tony Danker, Director General of the CBI, said:
‘The Chancellor has gone above and beyond to protect UK businesses and people’s livelihoods through the crisis and get firms’ spending.
‘Thousands of firms will be relieved to receive support to finish the job and get through the coming months. The Budget also has a clear eye to the future; to ensure finances are sustainable, while building confidence and investment in a lasting recovery.’
Meanwhile, the British Chambers of Commerce’s (BCC) Director General, Dr Adam Marshall, commented:
‘The Chancellor has listened and acted on our calls for immediate support to help struggling businesses reach the finish line of this gruelling marathon and to begin their recovery.
‘Extensions to furlough, business rates relief and VAT reductions give firms a fighting chance not only to restart but also to rebuild.’

However, the Federation of Small Businesses (FSB) said that there was little in the Budget to aid job creation or help people return to work. Mike Cherry, National Chairman of the FSB, said: ‘Thousands of small businesses are on the brink of collapse and thousands more are suffering from low confidence as cash reserves dwindle.
‘The continuation of business rates and VAT discounts is critical, and it’s important that those in supply chains benefit from them, not just those that neatly fit the definitions of frontline retail, leisure and hospitality.’

Sunak set out Budget to protect businesses-05.03.21

Chancellor Rishi Sunak set out a Budget to protect businesses through the pandemic, fix the public finances and begin building the future economy.
The Chancellor once again pledged to do ‘whatever it takes’ during the COVID-19 pandemic and confirmed that the furlough scheme would be extended until September 2021 to support jobs through the crisis.
Mr Sunak also confirmed that the Self-Employment Income Support Scheme (SEISS) has also been extended, with two further grants this year. Claimable by the self-employed, including the newly self-employed from 6 April 2019, provided they have filed their 2019/20 tax return for by midnight on 2 March 2021,
The stamp duty nil rate band on residential properties in England up to £500,000 will continue until the end of June. It will taper to £250,000 until the end of September, and then return to the usual level of £125,000 from 1 October 2021.
To support businesses as they re-open following lockdown, £5 billion will be made available in restart grants. Non-essential retail businesses re-opening first will be eligible for up to £6,000 but the leisure and hospitality sectors, which have been worse affected and will re-open later, will be eligible for up to £18,000.
However, the rate of corporation tax will increase to 25% in April 2023 for companies with profits over £250,000, whilst retaining a Small Profits Rate of 19% for companies with profits of £50,000 or less.
The Chancellor also introduced a super-deduction for companies investing in qualifying new plant and machinery. Under this measure a company will be allowed to claim 130% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances.
He also confirmed the location of the eight Freeports in England. Freeports are special economic zones with favourable tariffs and lower taxes to make it easier and cheaper to do business.

04.03.21-Extension to the Coronavirus Job Retention Scheme

Extension to the Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme (CJRS) has been extended until the end of September 2021.
The UK Government will continue to pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month, up to the end of June 2021.
For periods in July, CJRS grants will cover 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50. In August and September, this will then reduce to 60% of employees’ usual wages up to a cap of £1,875.
You will need to continue to pay your furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month. This means, for periods between July and September, you will need to fund the difference between this and the CJRS grants yourself. You can also top up wages above the 80% if you wish, but you are not required to do so.
You must continue to pay the associated Employer National Insurance contributions and pension contributions on subsidised furlough pay from your own funds.

CJRS eligibility from May

For periods from 1 May 2021 onwards, you will be able to claim for eligible employees who were employed by you and on your PAYE payroll on 2 March 2021. This means you must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying us of earnings for that employee.
You and your employees do not need to have benefitted from the scheme before to make a claim, as long as you meet the eligibility criteria.

04.03.21- Corporation tax to rise to 25%- but a small companies rate will stay at 19%

The government have stated-To balance the need to raise revenue with the objective of having an internationally competitive tax system, the rate of Corporation Tax will increase to 25%, which will remain the lowest rate in the G7. In order to support the recovery, the increase will not take effect until 2023. Businesses with profits of £50,000 or less, around 70% of actively trading companies, will continue to be taxed at 19% and a taper above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate.

03.03.21-Budget 2021-Key highlights

Here are some of the key highlights from the 2021 budget-

An extension of the Coronavirus Job Support Scheme to September 2021 across the UK.

An extension of the UK-wide Self Employment Income Support scheme to September 2021, with 600,000 more people who filed a tax return in 2019-20 now able to claim for the first time.

An extension to the temporary cut in Stamp Duty Land Tax in England and Northern Ireland until September will support the housing market and protect and create jobs.

A new mortgage guarantee scheme will enable all UK homebuyers secure a mortgage up to £600,000 with a 5% deposit.

£5 billion for new Restart Grants – a one off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England.

A new UK-wide Recovery Loan Scheme to make available loans between £25,001 and £10 million, and asset and invoice finance between £1,000 and £10 million, to help businesses of all sizes through the next stage of recovery.

Extension of the Film & TV Production Restart scheme in the UK, with an additional £300 million to support theatres, museums and other cultural organisations in England through the Culture Recovery Fund.

Six-month extension of the £20 per week Universal Credit uplift in Great Britain, with the Northern Ireland Executive receiving additional funding to match the increase. A one-off payment of £500 to eligible Working Tax Credit claimants across the UK.

Extension to the VAT cut to 5% for hospitality, accommodation and attractions across the UK until the end of September, followed by a 12.5% rate for a further six months until 31 March 2022.

750,000 eligible businesses in the retail, hospitality and leisure sectors in England will benefit from business rates relief.

Extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000.

£7 million for a new “flexi-job” apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector.

Additional £126 million for 40,000 more traineeships in England, funding high quality work placements and training for 16-24 year olds in 2021/22 academic year.

More than doubling the legal limit for single contactless payments, from £45 to £100

£10 million to support veterans with mental health needs across the UK.

£19 million to tackle domestic abuse in England and Wales, with funding for a network of ‘Respite Rooms’ to support homeless women and a programme to prevent reoffending.

£90 million funding to support our government-sponsored national museums in England due to the financial impact of Covid-19.

£300 million for major spectator sports, supporting clubs and governing bodies in England as fans begin to return to stadia.

Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs per employee from the Government.

To further support the cashflow of businesses, the government is extending the loss carry back rules worth up to £760,000 per company.

£100 million for a new Taxpayer Protection Taskforce to crack-down on COVID fraudsters who have exploited UK Government support schemes.

Maintaining the income tax Personal Allowance and higher rate threshold from April 2022 until April 2026.

To balance the need to raise revenue with the objective of having an internationally competitive tax system, the rate of Corporation Tax will increase to 25%, which will remain the lowest rate in the G7. In order to support the recovery, the increase will not take effect until 2023. Businesses with profits of £50,000 or less, around 70% of actively trading companies, will continue to be taxed at 19% and a taper above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate.

Maintaining inheritance tax thresholds at their current levels until April 2026.

Fuel duty will be frozen for the 11thconsecutive year.

Alcohol duties will be frozen across the board for the second year running saving drinkers £1.7 billion.

Capping the amount of SME payable R&D tax credit that a business can receive in any one year at £20,000 (plus three times the company’s total PAYE and NICs liability).

Maintaining the Lifetime Allowance at its current level of £1,073,100 until April 2026.

The adult ISA annual subscription limit for 2021-22 will remain unchanged at £20,000.

03.03.21-New Super-Deduction introduced in the budget today.

A new 130% first-year capital allowance for qualifying plant and machinery assets.

From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will be able to claim:

a 130% super-deduction capital allowance on qualifying plant and machinery investments
a 50% first-year allowance for qualifying special rate assets
The super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest, ensuring the UK capital allowances regime is amongst the world’s most competitive.

The government are hoping this super-deduction will encourage firms to invest in productivity-enhancing plant and machinery assets that will help them grow, and to make those investments now.

26.02.21- Construction Industry -reverse charge starts 01.03.21

REVERSE CHARGE VAT- 01.03.21
VAT changes will take place on 1 March 2021 that will affect all VAT registered builders who work for construction industry clients.
A lot of people working in the construction industry are still unclear of what they need to do, and we are helping client here at Brotherton’s with all the issues and questions they have.

ONWARD SUPPLY TO ANOTHER TRADER.
The rules for the reverse charge apply if a subcontractor is working for a main building contractor on a specific project. The customer must be registered for the Construction Industry Scheme (CIS) and the work in question must come within the scope of the CIS scheme. All work, both 20% and 5% work are applicable here. However, the main condition for the reverse charge rules to apply in a particular circumstance, is that the business receiving the supplies from the other builder must be making an onward supply of those services to another customer.

MAIN CONTRACTOR – END USER OR INTERMEDIARY SUPPLIER

It must be ascertained if the main contractor is classed as either an ‘end user’ or ‘intermediary supplier’ for the services in question: If they are classified as either of these two things, then normal rules would apply on that project and VAT would be charged as normal. It is only when the main contractor is making an onward supply of those services to another customer that the reverse charge rules will be applicable on a particular project.

So, we can see it is important to understand the definition of END USER and INTERMEDIARY SUPPLIER.

END USER
End user: This would be relevant if the work being done is not relevant to an onward supply of construction services made by the main contractor. For example, it might relate to building work carried out at its own head office and not for one of its customers buildings or sites. In this situation, the onus is on the main contractor to advise the sub-contractor that it is an ‘end user’ for that particular job. The sub-contractor will then charge 20% VAT on his invoice in the normal way.

INTERMEDIARY SUPPLIER
This is a business that is registered for both CIS and VAT and is connected or linked to end users. The connection is based on Companies Act 2006 s 1161; (the two entities are in the same corporate group or undertaking). A link will exist if both the intermediary supplier and end user have a relevant interest in the same site where the building work is taking place. This may be where the relationship is such as a landlord and tenant relationship. In this situation, even though the intermediary supplier is making an onward supply of construction services to the end user, the supplies it receives from other builders will be subject to normal VAT rules rather than the reverse charge. So again, the sub-contractor builder will charge VAT as normal.
So, we can see the main thing to identify, is who we are selling to as a sub-contractor and what their relationship is to the overall project. We have had clients saying to us that this will be difficult to ascertain in certain circumstances. However, it is the customer that is responsible for notifying the sub-contractor of their relationship to the project.

CUSTOMERS RESPONSIBILITY
The customer receiving building services must always notify the supplier in writing of the end user or intermediary supplier situation. In HMRC’s guidance, they suggest that the supplier should include a statement in the terms and conditions of a contract along the lines of: ‘We will assume you are an end user or intermediary supplier unless you say you’re not.’ The builder supplying services is therefore adopting a cautious approach of charging VAT on all invoices unless the customer says otherwise.

As soon as your customer notifies you they are not the end user or intermediary supplier and there is a onward supply to another trader, then you will have to reverse charge and apply the new rules.

IF YOU ARE THE MAIN CONTRACTOR- PROCEED WITH CARE-
It is important that if you are the customer of other building services which are covered by these rules it is crucial the customer deal with this situation properly. If they are for instance, working on a project that is an onward supply and they are charged vat incorrectly by a supplier on that work the sub-contractor provides, then HMRC could argue that they need to assess this work under the proper reverse charge rules and will then potentially assess them on the reverse charge rule basis, leaving them with a double VAT charge. So, if you are a contractor buying in sub-contractor work from other builders, make sure you notify the sub-contractor of your status and if there is an onward supply the vat registered sub-contractor should reverse charge their services and not charge you vat. You will then account for the vat on your tax return.

INFORMATION TO BE INCLUDED ON A REVERSE CHARGE INVOICE

The information is the same as for a normal sale invoice;
However, the invoice must make it clear that the reverse charge applies. The amount of VAT to be accounted for by the customer on their VAT returns should be clearly shown, either as a total figure of £X or the VAT rate that applies to the job. The latter approach is useful if an invoice includes work subject to different rates of VAT. Wording such as: ‘Reverse charge – customer to pay the VAT to HMRC’ should be prominently recorded on the invoice.

GOODS included in the supply.

Where goods and building materials are provided together with construction services and in the course of the construction work, then the reverse charge also applies to these goods. There are likely to be cases where it may be very difficult to determine if there is a separate supply of goods that is excluded from the reverse charge, or whether they are to be included as part of a single supply of construction services. In these cases, a business will need to consider the position further to ensure the correct VAT treatment.

Lots of people have been calling the office for help with this and we are here to help anyone concerned with how to apply the new rules. Please call- 01527 433 111 or 0121 289 4433

Statutory Maternity Pay during the Pandemic.-21.02.21

21.02.21-The calculation of an employee’s statutory maternity pay (SMP) entitlement is usually based on their average weekly earnings during the calculation period. This period is the eight weeks leading up to the 14th week before their expected week of childbirth. HMRC have amended the rules on the calculation of SMP for employees who have been furloughed under the Coronavirus Job Retention Scheme. For periods of maternity leave beginning on or after 25 April 2020, if an employee was furloughed and on reduced wages during any part of the calculation period, their SMP should be calculated using the pay they would have earned had they not been furloughed, rather than the actual earnings in that period, which may have been reduced by the furloughed element of the wages.

VAT deferral new payment scheme – join from 23 February-20.02.21

20.02.21- If you deferred paying VAT due in the period from 20 March to 30 June 2020, you should pay it by 31 March 2021 if you can.

If you can’t afford to pay by 31 March 2021, you can join the VAT deferral new payment scheme and pay your deferred VAT over a longer period.

The online service will open on 23 February 2021 and close on 21 June 2021. You can make up to 11 monthly instalments, interest free. The earlier you join, the more months you can spread your payments across.
You can join the scheme online without the need to call – search ‘Pay deferred VAT’ on GOV.UK for more information and to join quickly and simply online when the scheme opens. Please call the office if you need any help with this. 01527 433111

Late Payment penalty for Self-assessment and extensions to payment deadlines. 19.02.21

19.02.21- Today HMRC has announced that Self assessment tax-payers will not be charged the initial 5% late payment penalty if they pay their tax or make a Time to Pay arrangement by 1 April.
The payment deadline for Self Assessment is 31 January and interest will be charged from 1 February on any amounts outstanding. The deadline has not changed, but this year, because of the impact of COVID 19, HMRC is giving taxpayers more time to pay or time to set up a payment plan.

Payment plans or payments in full must be in place by midnight on 1 April to avoid a late payment penalty.

HMRC recognises the pressure affecting customers due to the pandemic, and anyone worried about paying their tax should contact HMRC for help and support on 0300 200 3822.
The self-serve Time to Pay facility allows customers to spread the cost of their tax liabilities into monthly instalments until January 2022. Customers can set up a payment plan online. Please call the office on 01527 433111 if you need any help with this or any other issue.

Self Assessment customers who have yet to file their tax return should do so by 28 February to avoid a late filing penalty. Please call us if you need help with your filing requirements if we don’t already help you with this. Remember we are here to help.