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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.

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 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.

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.’

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

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.

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.’

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.’

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 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.’

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.

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.

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.

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.

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.

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

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.

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

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.

18.02.21-Frequently asked questions about the CJRS
You can find everything you need to know about the CJRS on GOV.UK by searching ‘Job Retention Scheme’, but here are some answers to the questions employers have been asking.

Will information for each branch of my company be published separately?
If there is more than one PAYE scheme attached to your company, we will publish your information together under one Company Registration Number on GOV.UK.

How do I ask HMRC not to publish my claim details?
If publishing your claim details could leave someone at risk of violence or intimidation, you can request for these not to be published by completing the online application form – go to GOV.UK and search ‘Ask HMRC not to publish your Coronavirus Job Retention Scheme claim details’.
Please submit your request by 23 February at the latest to allow us time to process your request before the publication date. Your agent can do this on your behalf.
HMRC will not publish your details until we have informed you of our decision on your request. You’ll only need to make this request once, as the decision will cover all CJRS claim periods starting from 1 December 2020.

What happens if I pay back my grants?
If you choose to pay back the money you have received, your details will be removed from the list of claims when it is next published (usually in the following month).

Can my employee work elsewhere if they’re furloughed?
If your employee has more than one employer they can be furloughed for each job. Employees can be furloughed in one job (and receive that furloughed payment) but continue working for another employer and receive their normal wages.
An employee can also take part in volunteer work during hours when they are furloughed, as long as it’s for another employer or organisation which is not connected with you.

Can I claim for employees who are training?
You can claim for employees who undertake training while they are furloughed, as long as they don’t provide services to, or generate revenue for your business or a linked or associated organisation. For more information, go to GOV.UK and search ‘Check if you can claim for your employees’ wages’.
For more information on training that is available for your employees, search ‘Career Skills and Training’ on GOV.UK.

Can I furlough an employee if they are unable to work because they have caring responsibilities or are classed as clinically extremely vulnerable?
If an employee asks to be furloughed, you can claim for them under the CJRS if:
• they are off work or on reduced hours due to caring responsibilities resulting from coronavirus, such as caring for children who are at home as a result of school or childcare closing
• they are clinically extremely vulnerable, or in the highest risk group for severe illness from coronavirus according to the public health guidance for your area.
For other circumstances where you can furlough an employee, go to GOV.UK and search ‘check which employees you can put on furlough’.
The decision to offer furlough rests with you as an employer.

The government has announced that employers can now apply for a £1,000 bonus, a cash boost, to help them take on new trainees.
The new scheme will support young people to gain the skills and experience they need from the start, helping them to get a job, an apprenticeship, or to pursue further study.
The cash boost, which is available until 31 July 2021, will help businesses with the cost of providing a high-quality work placement for a trainee. This includes providing facilities, uniforms or helping with travel costs.
Businesses offering new traineeship opportunities will receive the £1,000 bonus for every trainee they take on, up to a maximum of ten trainees.
Employers can claim the cash incentive for all work placements that have been completed since 1 September.
Gillian Keegan, Minister for Apprenticeships and Skills, said:
‘We’re pulling out all the stops to help young people get the skills and confidence they need to progress. This cash boost will help employers of all sizes provide more traineeship opportunities to invest in their workforce so they can rebuild and grow, giving young people a vital route to start their apprenticeship journey, get their first job or go on to further study.
‘I strongly encourage as many employers as possible to apply now and take advantage of this fantastic offer so more young people can gain the skills they need to progress in their careers as we build back better from the pandemic.’

HMRC has revealed that more than 10.7 million taxpayers submitted their 2019/20 Self Assessment tax returns by the 31 January deadline.
The remaining 1.8 million whose tax return is now late will not be charged a late filing penalty provided they submit their return online by 28 February.
Taxpayers who did not pay their Self Assessment tax bill by 31 January are now incurring interest on the outstanding balance and should pay their bill as soon as possible.
Taxpayers should pay any outstanding balance, or arrange a payment plan, before 3 March 2021 to avoid a 5% late payment penalty.
Those who are not yet able to file their tax return should pay an estimated amount as soon as possible, which will minimise any interest and late payment penalty.
Karl Khan, HMRC’s Interim Director General for Customer Services, said:
‘Thank you to the 10.7 million customers who have sent in their tax returns.
‘We won’t send anyone a late filing penalty if they complete their tax return by 28 February.
‘We know that many individuals and small businesses are finding it harder to pay this year, due to the pandemic. Anyone who can’t afford to pay their tax bill in full can set up a payment plan, once they’ve filed their return, to spread their tax bill into monthly instalments.’
There are several ways that taxpayers can pay their Self Assessment tax bill or an estimated amount. They can pay online, via their bank, or by post.
Anyone who cannot pay their bill in full can apply to spread the cost. Taxpayers can set up a payment plan, in up to 12 monthly instalments, online via https://www.gov.uk/pay-self-assessment-tax-bill/pay-in-instalments provided they meet the following requirements:
Taxpayers need to have no:
• outstanding tax returns
• other tax debts
• other HMRC payment plans set up.
The debt needs to be between £32 and £30,000.
The payment plan needs to be set up no later than 60 days after the due date for payment. Taxpayers should set up the payment plan as soon as possible, and certainly before 3 March to avoid a 5% late payment penalty.
Those who do not meet these requirements, or who need more than 12 months to pay their bill, can apply for a payment plan by speaking to one of HMRC’s debt advisers.
Interest accrues on all outstanding balances, including those in payment plans.
Self Assessment taxpayers who are required to make Payments on Account, and know their 2020/21 tax bill is going to be lower than in 2019/20, for example due to loss of earnings because of COVID-19, can reduce their Payments on Account. More information is available at https://www.gov.uk/understand-self-assessment-bill/payments-on-account.

Paying your deferred VAT

Any VAT payments due between 20 March and 30 June 2020 were deferred by a lot of businesses until 31 March 2021.

The due date for this deferred VAT was originally on or before the 31st March 2021. There are now a couple of options for paying this…..

To pay this VAT, you can:

• pay in full on or before 31 March 2021
• opt in to a new scheme that allows you to pay in instalments, until January 2022.

If you want to opt in to the new payment scheme
The online opt in process will be available in early 2021. You must opt in yourself, agents cannot do this for you.

Instead of paying the full amount by the end of March 2021, you can make up to 11 smaller monthly instalments, interest free. All instalments must be paid by the end of March 2022.

The scheme will allow you to:

pay your deferred VAT in instalments without adding interest
select the number of instalments from 2 to 11 equal monthly payments
To use this scheme you must:

still have deferred VAT to pay
be up to date with your VAT returns
opt in before the end of March 2021
pay the first instalment when you opt in
If you opt in to the scheme, you can still have a time to pay arrangement for other HMRC debts and outstanding tax.

Get ready to opt in to the new payment scheme
Before opting in you must:

create your own Government Gateway account if you don’t already have one
submit any outstanding VAT returns from the last 4 years. You will not be able to join the scheme if you have not done so
correct errors on your VAT returns as soon as possible
make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid.

You should also:

pay what you can as soon as possible to allow HMRC to show the correct deferred VAT balance
consider the number of equal instalments you’ll need, from 2 to 11 months.

HMRC is advising the self employed that the Self-Employment Income Support Scheme (SEISS) has been extended. Taxpayers who were not eligible for the first and second grant will not be eligible for the third.
To make a claim for the third grant the taxpayer’s business must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021, which they reasonably believe will have a significant reduction in their profits.
The third taxable grant is worth 80% of a taxpayer’s average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total.
The online service to claim the third grant is open. Taxpayers should make their claim from the date HMRC give taxpayers either by email, letter or within the service. Eligible taxpayers must claim the third grant on or before 29 January 2021.
The grant does not need to be repaid, but will be subject to Income Tax and self-employed National Insurance and must be reported on the taxpayer’s 2020 to 2021 Self Assessment tax return. Taxpayers must keep evidence to support their claim.

The deadline for submitting your 2019/20 self assessment return is 31 January 2021. The deadline applies to taxpayers who need to complete a tax return and make direct payments to HMRC in respect of their income tax, Classes 2 and 4 National Insurance Contributions (NIC), capital gains tax and High Income Child Benefit Charge liabilities.
There is a penalty of £100 if a taxpayer’s return is not submitted on time, even if there is no tax due or the return shows that they are due a tax refund.
The balance of any outstanding income tax, Classes 2 and 4 NIC, capital gains tax and High Income Child Benefit Charge for the year ended 5th April 2020 is also due for payment by 31 January 2021. Where the payment is made late interest will be charged.
The first payment on account for 2020/21 in respect of income tax and any Class 4 NIC or High Income Child Benefit Charge is also due for payment by 31st January 2021.
HMRC revealed that more than 2,700 taxpayers filed their return on Christmas Day. If you would like help with your return or agreeing your tax liability, please contact us.

HMRC is warning self assessment taxpayers to be alert to the danger of scammers posing as the tax authority in the lead up to the tax return deadline.
Every year HMRC issues thousands of SMS messages and emails as part of its push to remind people to file before the 31 January deadline. HMRC says it is aware that fraudsters use calls, emails and texts to contact taxpayers.
In the last 12 months, HMRC has responded to more than 846,000 referrals of suspicious HMRC contact from the public and reported over 15,500 malicious webpages to internet service providers so that they can be taken down.
Many scams target customers to inform them of a fake tax rebate or tax refund. The imposters use language intended to convince the taxpayer to hand over personal information, including bank details, in order to claim the refund.
Karl Khan, Interim Director General for Customer Services at HMRC, said:
‘We know that criminals take advantage of the self assessment deadline to panic customers into sharing their personal or financial details and even paying bogus ‘tax due’.
‘If someone calls, emails or texts claiming to be from HMRC, offering financial help or asking for money, it might be a scam. Please take a moment to think before parting with any private information or money.’

Increased minimum wage rates have been announced to take effect from 1 April 2021.
The government has announced that the National Living Wage (NLW) will increase by 2.2% from £8.72 to £8.91, and will be extended to 23 and 24 year olds for the first time. For workers aged under 23, Commissioners recommended smaller increases in recognition of the risks to youth employment, which the current economic situation poses.
NLW and National Minimum Wage (NMW) rates will also increase as follows:

Rate from April 2020 Rate from April 2021 Increase
National Living Wage £8.72 £8.91 2.2%
21-22 Year Old Rate £8.20* £8.36 2.0%
18-20 Year Old Rate £6.45 £6.56 1.7%
16-17 Year Old Rate £4.55 £4.62 1.5%
Apprentice Rate £4.15 £4.30 3.6%
*Rate also applies to those aged 23 and 24

Bryan Sanderson, Chair of the Low Pay Commission, said:

‘Recommending minimum wage rates in the midst of an economic crisis coupled with a pandemic is a formidable task. The difficulty in looking forward even to next April is daunting. There are strong arguments concerning both low-paid workers – many performing critically important tasks – and the very real solvency risks to which small businesses are currently exposed. In these unprecedented conditions, stability and competence are prime requirements.
‘Our value as a social partnership is to use the imperfect economic evidence to produce a recommendation which is professionally researched and dispassionate. Most importantly, after much debate it has the support of the business, trade union and academic representatives who make up the Commission. We have opted for a prudent increase which consolidates the considerable progress of recent years and provides a base from which we can move towards the Government’s target over the next few years.’

Some employers may wish to give a small gift to their employees. As long as the employer meets the relevant conditions, no tax charge will arise on the employee.
A tax exemption is available which should help employers ensure that the benefits provided are exempt and do not result in a reportable employee benefit in kind. In order for the benefit to be exempt it must satisfy the following conditions:
• the cost of providing the benefit does not exceed £50 per employee (or on average when gifts are made to multiple employees)
• the benefit is not cash or a cash voucher
• the employee is not entitled to the benefit as part of a contractual arrangement (including salary sacrifice)
• the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties
• where the employer is a ‘close’ company and the benefit is provided to an individual who is a director, an office holder or a member of their household or their family, then the exemption is capped at a total cost of £300 in a tax year.
If any of these conditions are not met then the benefit will be taxed in the normal way subject to any other exemptions or allowable deductions.
No more than £50
One of the main conditions is that the cost of the benefit does not exceed £50. If the cost is above £50 the full amount is taxable, not just the excess over £50. The cost of providing the benefit to each employee and not the overall cost to the employer determines whether the benefit can be treated as a trivial benefit. So, a benefit costing up to £50 per employee whether provided to one or more employees can be treated as trivial. Where the individual cost for each employee cannot be established, an average could be used. HMRC examples consider various gifts including turkeys, bottles of wine and gift vouchers.
Further details on how the exemption works, including family member situations, are contained in the HMRC manual.
However if you are unsure please do get in touch before assuming the gift you are about to provide is covered by the exemption.

It is time to prepare for the end of the Brexit transitional period.
Whilst the United Kingdom officially left the European Union (EU) on 31 January 2020, this prompted the start of an 11-month transitional period during which time the UK remains part of the Single Market, the EU Customs Union and the VAT Territory. The UK will leave the EU VAT Territory on 31 December 2020. After this date, Great Britain (England, Wales and Scotland) will not be subject to EU VAT legislation. Northern Ireland will remain subject to EU VAT legislation in respect of transactions involving goods, but not for services.
Acquisitions (purchases of goods from EU member states) will be treated as imports. A new system, Postponed Accounting, will be introduced and will apply to imports received from all over the world, with some exceptions such as low-value consignments. The system is intended to mitigate the cashflow disadvantage posed by paying import VAT upfront and waiting to reclaim it in a later VAT return. Under the new system, import VAT can be deferred and declared to HMRC in the VAT return for the period of importation. The VAT can be reclaimed in the same return subject to the normal rules for reclaiming input tax.
Dispatches (zero-rated sales of goods to business customers in EU member states) will be treated as exports. Exports are zero-rated, provided certain conditions are met.
Distance sales (sales of goods to non-business persons in the EU) will also be treated as exports. The EU distance-selling regime and thresholds will no longer apply to UK suppliers.
Customs changes
When the UK leaves the EU Customs Union on 1 January 2021 the UK will operate a full, external border with the EU. New border controls on imports from the EU to Great Britain will be introduced in stages, with customs declarations for goods which are not controlled being delayed until 30 June 2021.
Customs Duty
From 1 January 2021, there will be new rates of Customs Duty for imports – called the UK Global Tariff. To check the tariffs that will apply to different categories of imported goods, please see https://www.gov.uk/guidance/uk-tariffs-from-1-january-2021.
It is important to be ready for these changes. Some practical actions to take now include:
• Obtaining an Economic Operator Registration and Identification (EORI) number, which will be required when trading with the EU post Brexit. It is free to obtain an EORI number and you can do so by visiting https://www.gov.uk/eori.
• Deciding whether to use an agent freight forwarder to help with making customs declarations. The following guidance outlines the services they can provide: https://www.gov.uk/guidance/appoint-someone-to-deal-with-customs-on-your-behalf
• If you buy goods from the EU, checking whether those goods are ‘controlled’. Ascertaining which declarations are required and when they will need to be made. For more information please see https://www.gov.uk/guidance/list-of-goods-imported-into-great-britain-from-the-eu-that-are-controlled.
• Checking the UK Global tariff to see the rate of Customs Duty that is likely to apply to the goods you import.
• Deciding whether to use the Postponed Accounting system (https://www.gov.uk/guidance/check-when-you-can-account-for-import-vat-on-your-vat-return) to defer import VAT and familiarising yourself with the procedure for declaring the deferred import VAT on the VAT return.
If you require more information please contact us to discuss how we can help you move smoothly into 2021.
Internet link: GOV.UK transition campaign