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Accountants Chester | Phillips & Co | Tax News

Applicants for third SEISS grant will face new test, warns ICAEW

26 November 2020

Applicants for the third Self-employment Income Support Scheme (SEISS) grant will face a new test as the government tightens eligibility criteria, warns the Institute of Chartered Accountants in England and Wales (ICAEW).

The guidance for the third SEISS grant has been published ready for the portal to open for claims on 30 November.

To qualify for SEISS grants, businesses must be adversely affected due to the coronavirus (COVID-19). They must either be currently trading but be impacted by reduced demand, or have been trading but be temporarily unable to do so due to COVID-19. 

The latest guidance on checking if you can claim a grant and new guidance on how trading conditions affect eligibility include an additional test. This requires the claimant to intend to continue to trade and reasonably believe there will be a significant reduction in their trading profits due to reduced activity, capacity or demand or inability to trade due to COVID-19.

The ICAEW said: ‘For many taxpayers, for example those that use a 31 March or 5 April accounting date, the significant reduction of trading profits will be expected to appear in the results they report on their 2020/21 tax return. However, some taxpayers, for example those that use a 30 April accounting date, will not report the trading results for the relevant period until their 2021/22 tax return.’

Claimants can check their eligibility for the SEISS here. 

Accountants Chester | Phillips & Co | Tax News

Real Living Wage increases across the UK by 20p to £9.50 per hour

16 November 2020

The Real Living Wage has increased to £9.50 per hour across the UK.

The Living Wage Foundation, the charity which sets the voluntary wage, has raised the national Real Living Wage rate by 20p to £9.50 an hour. The London Real Living Wage has risen by 10p to £10.85 per hour.

The increase will benefit over 250,000 people working for almost 7,000 Real Living Wage employers throughout the UK, according to the Foundation.

The UK rate is 78p per hour more than the government minimum wage (for over 25s), and the London Real Living Wage is £2.13 per hour higher.

Laura Gardiner, Director of the Living Wage Foundation, said that the ‘new Living Wage rates will give a boost to hundreds of thousands of UK workers, including thousands of key and essential workers like cleaners, care workers and delivery drivers who have kept our economy going’.

She continued: ‘Since the start of the pandemic employers have continued to sign up to a real Living Wage. During Living Wage Week it’s right that we celebrate those employers that have done right by workers and families, providing them with much needed security and stability even when times are hard. These are the employers that will allow us to recover and rebuild from this crisis.’

Accountants Chester | Phillips & Co | Tax News

From 10 November you can top up your existing Bounce Back Loan to your maximum amount.

09 November 2020

The scheme helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.

The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.

The scheme is open to applications until 31 January 2021.

If you already have a Bounce Back Loan but borrowed less than you were entitled to, from 10 November you can top up your existing loan to your maximum amount. You must request the top-up by 31 January 2021.

Accountants Chester | Phillips & Co | Tax News

The furlough scheme will be extended until the end of March, the chancellor has announced

05 November 2020

The scheme, in which employees receive four-fifths of their current salary up to a maximum of £2,500 of hours not worked, was originally scheduled to end last month.

But it was extended when Prime Minister Boris Johnson announced a new four-week lockdown in England last weekend. Addressing MPs in the Commons on Thursday, Rishi Sunak announced a further extension into next year.

He confirmed the payments would remain at 80% of people’s wages, with a review of the policy in January.

The chancellor also announced support for the self-employed, with the next income support grant for November to January increasing to 80% of average profits up to £7,500.

Accountants Chester | Phillips & Co | Tax News

Self-employed Income Support Scheme (SEISS) to be doubled for November to 80%

03 November 2020

The government is increasing its support to the self-employed over the coming months and ensuring people get paid faster than previously planned, it was announced yesterday, 2 November.

  • government increases support under the third instalment of the UK-wide Self-Employment Income Support Scheme, with people receiving 80% of average trading profits for November
  • grants will also be paid faster than previously planned – with the claims window opening at the end of November rather than the middle of December
  • the increase means £4.5 billion of support for the self-employed between November and January
  • more businesses will also be able to benefit from government loan schemes which have been extended to the end of January, while firms can ‘top up’ existing Bounce Back Loans should they need additional finance

To reflect the recent changes to the furlough scheme, the UK-wide Self-Employment Income Support Scheme (SEISS) will be made more generous – with self-employed individuals receiving 80% of their average trading profits for November.

And to ensure those who need support get it as soon as possible, payments will also be made more quickly with the claims window being brought forward from 14 December to 30 November.

The changes will ensure that self-employed individuals who temporarily cannot carry out their business or have suffered reduced demand due to the outbreak are supported over winter.

In addition, more businesses will be able to access additional support as deadlines for applications for government-backed loan schemes and the Future Fund have been further extended until 31 January 2021.

Chancellor of the Exchequer Rishi Sunak said:

So far we’ve provided £13.7 billion of support to self-employed people through the crisis – and I’ve always said we will continue to do everything we can to support livelihoods across the UK.

The rapidly changing health picture has meant we have had to act in order to protect people’s lives and I know this is incredibly worrying time for the self-employed. That is why we have increased the generosity of the third grant, ensuring those who cannot trade or are facing decreased demand are able to get through the months ahead.

Business Secretary Alok Sharma said:

We know what an incredibly difficult time it has been for self-employed workers across the country. We are determined to support them.

Today’s measures will mean people will receive more money in their back pockets, faster, to help them through the winter months ahead.

As SEISS grants are calculated over three months, the uplift for November to 80 per cent, along with the 40 per cent level of trading profits for December and January, increases the total level of the third grant to 55 per cent of trading profits. The maximum grant will increase to £5,160.

This provides broadly equivalent support to the self-employed as we are providing to employees through the government contribution in the Coronavirus Job Retention Scheme in November and then the Job Support Scheme in the two subsequent months.

So far, the government has provided £13.7 billion of support to self-employed people through the crisis, with the world-leading scheme among the most generous in the world.

In September, the Chancellor announced an extension of the SEISS to provide support throughout the Winter period, with two grants to cover the period until April.

The SEISS continues to be just one element of a comprehensive package of support for the self-employed. In addition to this they can also access other elements of the package which includes Bounce Back Loans, tax deferrals, rental support, mortgage holidays, and other business support grants.

These government backed loan schemes have already supported more than 1 million businesses to access over £60 billion of finance.

Further information

  • to be eligible for the Grant Extension self-employed individuals, including members of partnerships, must:
  • have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
  • declare that they intend to continue to trade and either:
  • are currently actively trading but are impacted by reduced demand due to coronavirus
  • were previously trading but are temporarily unable to do so due to coronavirus
  • This follows the CJRS being extended until December. This provides broadly equivalent support to the self-employed as is being provided to employees through the government contribution in the Coronavirus Job Retention Scheme in November and then the Job Support Scheme in the two subsequent months.
Accountants Chester | Phillips & Co | News

Furlough scheme reinstated for national lockdown, JSS implementation delayed

02 November 2020

The coronavirus job support scheme (CJRS) will continue until 1 December 2020 with grants covering 80% of wages, while implementation of the JSS has been delayed. 

Friday night had seen the release of further JSS details, but by Saturday evening that scheme was put on the back burner, with a full extension of the existing furlough scheme (CJRS). JSS will not now take effect until the CJRS ends on 30 November.

The new national restrictions will apply from 5 November to 2 December 2020, but the financial support for employers applies from 1 November as the furlough scheme operates on full calendar months. 

What support is given?

The furlough scheme has been reinstated with similar conditions as applied in August 2020.

The CJRS grant will pay for 80% of the employee’s current wages for time not worked, up to £2,500 per month. The employer must pay for all of the employer’s NIC and employer’s minimum workplace pension contributions on those wages.

The employer can top-up the employee’s furlough pay at their own expense, if they wish to.

Business grants paid by local authorities for closed businesses premises will apply in England, the devolved administrations will set their own level of business support (see below).

Which employees qualify?

Employees who were on the employer’s payroll at 30 October 2020 will qualify to be included in CJRS claim for November; they don’t have to have been included in an earlier CJRS claim. The employee must have been paid by the employer, and that pay must have been reported on a RTI return before midnight on 30 October.

Employees on any type of contract can qualify, including zero hours, although more detail on whether contractors or directors are included is expected in the next few days.  

Flexi furlough

Flexible furlough will be permitted alongside full-time furlough, so staff may be brought back part-time to say, set up the premises for the lifting of national restrictions, or to prepare for Brexit.

The same rules for flexible furlough will continue to apply as they have done since 1 July, so the employee may be furloughed for a few days or hours per week. There appears to be no minimum time set for furloughed hours or working hours.  

However, each furlough claim must be for a period of at least seven consecutive calendar days.

Which employers qualify?

All employers with a UK bank account can claim support under the extended CJRS, there is no financial test to pass for larger employers as applies for the (now postponed) JSS.

Charities and not-for-profit organisations can also claim in respect of their employees. However, public sector bodies and publicly funded organisations are not expected to use the scheme. 

How to claim?

The claim process will be very similar to that which has applied so far under CJRS, the employer will have to report the hours the employee has not worked in a claim period, and the usual hours.

It is not yet clear whether the employee’s pay must be reported on an RTI return before the CJRS grant is submitted for November pay periods. Further details and legislation are expected to be published shortly.

Self-employed

There was no new information about support for the self-employed, so we must assume the next SEISS grant will be given at 40% of average profits, although if this could change before applications for those grants open.

Accountants Chester | Phillips & Co | Tax News

Businesses must prepare for new custom and tax rules so they can continue trading with the EU

28 October 2020

HMRC has urged businesses to make sure they are prepared for new customs and tax rules so that they can continue to trade with the EU from 1 January 2021.

In a letter to VAT-registered businesses, HMRC stated that it is ‘really important’ that firms act now. Businesses will not be able to trade with the EU from 1 January 2021 if they do not have the correct processes, contracts and agreements in place.

Businesses will need to make import and export declarations to move goods between the UK and the EU. From 1 January 2021, if firms send goods from the UK to customers in the EU, they will be responsible for completing export declarations for those goods. If businesses import goods from the EU that are on the controlled goods list (such as animal products, alcohol or tobacco or firearms), they will have to make declarations from 1 January 2021.

Business Secretary Alok Sharma said: ‘Businesses must act now to ensure they are ready for the UK’s new start as an independent trading nation once more.

‘There will be no extension to the transition period, so there is no time to waste.’

The letter can be viewed in full here.

Accountants Chester | Phillips & Co | Tax News

Self-employed grant to double as Job Support Scheme revamped

22 October 2020

Self-employed workers affected by coronavirus could receive up to £3,750 in the next tranche of grants, double the amount previously announced by the government.

As part of the government’s ‘Plan for Jobs’, the chancellor announced an “increase in the generosity and reach of its winter support scheme” to support livelihoods in the “difficult months to come”.

For the self-employed, eligible applicants will receive a maximum of £3,750 in the next round of support offered by the government.

Under the initial extension to the Self-employment Income Support Scheme (SEISS), chancellor Rishi Sunak said the lump sum will cover three-months’ worth of profits (November to January) up to a total of £1,875.

But today’s announcement essentially doubles the amount of profits which will be covered under the scheme, from 20% to 40%.

Sunak said this is a potential further £3.1bn of support to the self-employed through November to January alone, with a further grant to follow covering February to April.

Job Support Scheme

The Job Support Scheme comes into effect on 1 November and means that for every hour not worked, an employee would be paid up to two-thirds of their usual salary. Previously it was confirmed that employers would pay a third of their employees’ wages for hours not worked.

But today, Sunak announced that the employer contribution will be reduced to 5% of unworked hours, and reduces the minimum hours requirement to 20%.

This means for those working one day a week, they will be eligible. If someone was being paid £587 for their unworked hours, the government will contribute £543 and an employer just £44.

He added that the government will provide up to 61.67% of wages for hours not worked, up to £1,541.75 per month – more than doubling the maximum payment of £697.92 under previous rules.

The cap is set above median earnings for employees in August at a reference salary of £3,125 per month.

Business grants

The chancellor has also announced additional funding of up to £2,100 per month primarily for businesses in the hospitality, accommodation and leisure sectors impacted by the restrictions in high-alert level (Tier 3) areas.

These grants will be available retrospectively for areas that have already been subject to restrictions.

The government said the grants could benefit around 150,000 businesses in England, including hotels, restaurants, B&Bs and many more which aren’t legally required to close but have been adversely affected by local restrictions nonetheless.

Sunak said: “I’ve always said that we must be ready to adapt our financial support as the situation evolves, and that is what we are doing today. These changes mean that our support will reach many more people and protect many more jobs.

“I know that the introduction of further restrictions has left many people worried for themselves, their families and communities. I hope the government’s stepped-up support can be part of the country pulling together in the coming months.”

 

Accountants Chester | Phillips & Co | Tax News

Workers can claim tax relief for working at home using online portal

20 October 2020

HMRC has received over 54,800 claims from customers using a new online portal that allows employees to claim tax relief for working at home.

The portal, which was launched on 1 October, has been 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.

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.

Workers will get tax relief based on the rate at which you pay tax. For example, if you pay the 20% basic rate of tax and claim tax relief on £6 a week you would get £1.20 per week in tax relief (20% of £6).

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 is available in full, even if an employee splits their time between home and the office.

Commenting on the portal, HMRC’s Interim Director General of Customer Services, Karl Khan, said: ‘We want everyone to get the money that they are entitled to, so we’ve made the online service as easy to use as we can – it takes just a few minutes to make a claim.’

The portal can be found at www.gov.uk/tax-relief-for-employees/working-at-home.

 

Accountants Chester | Phillips & Co | Tax News

Government's Job Support Scheme expanded for local lockdowns

13 October 2020

The government’s Job Support Scheme (JSS) will be expanded to protect jobs and support businesses required to close their doors due to local lockdowns as the number of coronavirus (COVID-19) cases continues to rise in some areas.

Under the JSS extension the government will pay two thirds of employees’ salaries to protect jobs over the coming months.

Cash grants for businesses required to close as a result of local lockdowns are being increased to up to £3,000 per month. Under the expansion, firms whose premises are legally required to shut for some period over winter as part of a local or national lockdown will receive grants to pay the wages of employees who cannot work.

The government will support eligible businesses by paying two thirds of each employee’s salary, up to a maximum of £2,100 a month.

In response to the expansion, Carolyn Fairbairn, Director General of the Confederation of British Industry (CBI), said: ‘The steep rise in infections in some areas means new restrictions to curb numbers feel unavoidable.

‘The Chancellor’s more generous job support for those under strict restrictions should cushion the blow for the most affected and keep more people in work.

‘But many firms, including pubs and restaurants, will still be hugely disappointed if they have to close their doors again after doing so much to keep customers and staff safe.’

 

Accountants Chester | Phillips & Co

ICAEW suggests that Benefits-in-kind regime 'not fit for purpose'

07 October 2020

The current benefits-in-kind (BiK) system is ‘not fit for purpose’ for a post-coronavirus (COVID-19) world according to The Institute of Chartered Accountants in England and Wales (ICAEW).

Taking into account the ‘new normal’, the ICAEW said that the BiK tax legislation is no longer fit for purpose ‘in light of the likely increase in employees working from home’.

It stated that responsible employers are likely to permit their employees to choose whether they work from home or in the office, and recommended that employee choice should not be detrimental to the deductibility of expenses incurred by homeworkers.

The ICAEW’s Tax Faculty has submitted a series of recommendations to HMRC, outlining improvements to the employee BiK and expenses regime in light of the COVID-19 pandemic.

The Institute stated that the BiK regime needs to ‘adapt to accommodate changes in working practices arising from the COVID-19 lockdown’, including the introduction of social distancing measures.

 

Accountants Chester | Phillips & Co | Covid and Self Isolation

New package to support and enforce self-isolation comes into effect today

28 September 2020

From today, people will be required by law to self-isolate. They will be supported by a payment of £500 for those on lower incomes who cannot work from home and have lost income as a result. 

New fines for those breaching self-isolation rules will start at £1,000 – bringing this in line with the penalty for breaking quarantine after international travel – but could increase to up to £10,000 for repeat offences and the worst breaches, including business owners who threaten self-isolating staff with redundancy if they do not come to work, sending a message that this will not be tolerated.

Recognising that self-isolation is one of the most powerful tools for controlling the transmission of Covid-19, this new Test and Trace Support payment of £500 will ensure that those on low incomes are able to self-isolate without worry about their finances.

Just under 4 million people who are in receipt of benefits in England will be eligible for this payment, which will be available to those who are required to self-isolate from today (28 September.

The government expects the self-isolation support schemes to be in place by 12 October. Those who start to self-isolate from today will receive backdated payments once the scheme is set up in their Local Authority.

 

Accountants Chester | Phillips & Co

Local lockdown grant supports businesses forced to close

11 September 2020

New grants worth up to £1,500 will be available every three weeks to businesses required to close due to local lockdowns or targeted restrictions.

The grants come as the government locks down areas such as Bolton, which have seen localised spikes in coronavirus and new rules on gatherings over six people. This means the effected businesses in England will be able to claim up to £1,500 per property every three weeks, while smaller businesses can claim £1,000.

Announcing the news in Parliament yesterday, chief secretary to the Treasury Steve Barclay said: “These grants provide businesses with a safety net as they temporarily close their doors to help save lives in their local areas.”

The scheme is currently under trial in Blackburn with Darwen, Pendle, and Oldham, before rolling out to other local authorities.

The scheme is basing the size of the business on the rateable value of its premises. A business classed as small with a rateable value less than £51,000, or pays annual rent or mortgage of less than that amount, would receive £1,000. Any business that has a rateable value or mortgage payments more than £51,000 will receive £1,500. Like the other grants, these payments will also be treated as taxable income.

However, the scheme is not designed to support businesses that have closed at a national level, such as nightclubs – it’s specifically for businesses affected by local lockdowns or restrictions.

The local authorities will distribute grants to businesses and they will also have authority to implement further eligibility criteria.

These grants target businesses on the business rates list, which is why local authorities also have an additional 5% top up amount of support funding to aid other businesses hit by these local restrictions. The grants offered from this discretionary fund almost are worth up to £1,500. But unlike the scheme based on the rateable value, funding may be less than £1000 in some cases.

“No business should be punished for doing the right thing, which is why today’s package will offer additional breathing space for businesses that have had to temporarily close to control the virus,” said the business secretary Alok Sharma.

 

Accountants Chester | Phillips & Co | Self Employed

IPSE considers tax hike for freelancers to be unjust

07 September 2020

Chancellor Rishi Sunak’s plan to raise the national insurance contributions (NICs) paid by self-employed workers would be unjust, the Association of Independent Professionals and the Self-Employed (IPSE) has claimed.

According to reports, the Chancellor is considering bringing the 9% Class 4 NICs rate paid by the self-employed into line with the 12% rate for employees. It is one of the ways the Treasury is reported to be looking at raising revenue after spending billions on its coronavirus (COVID-19) support packages.

When Mr Sunak announced the Self-employment Income Support Scheme (SEISS) in March, he warned: ‘If we all want to benefit from state support, we must all pay equally in the future.’

IPSE has argued that making the 1.5 million self-employed pay for support they did not get would be unfair. It also said that given the slump in the number of self-employed individuals it would also be uneconomical to squeeze these workers further.

Andy Chamberlain, Director of Policy at IPSE, said: ‘The last few months have financially hammered the self-employed, with over two-thirds seeing a drop in demand for their work. Government support was some help – to a proportion of the self-employed.

‘More noticeable, though, was the 1.5 million who fell through the gaps, leaving many financially devastated. The idea that this 1.5 million should now suffer a drastic tax hike to pay for support they never got is unjust, uneconomical – and unbelievable. If the government is really considering this, it must stop now.’

 

Accountants Chester | Phillips & Co | UK Plastic Tax

UK plastic bag tax charge to be doubled to 10p from April 2021

01 September 2020

The fee for plastic shopping bags in England will be doubled to 10p and extended to all shops from April 2021.

Small retailers – those employing 250 people or fewer – will no longer be exempt, the Department for Environment, Food and Rural Affairs (Defra) said.

According to Defra, since the charge was first introduced in 2015 it has successfully prevented billions of plastic bags being sold and ending up in the ocean and environment.

Government data shows the current levy, which stands at 5p and applies to any retailer employing 250 or more people, has led to a 95% cut in plastic bag sales in major supermarkets since 2015.

Commenting on the announcement, Environment Secretary George Eustice, said: ‘We have all seen the devastating impact plastic bags have on the oceans and on precious marine wildlife, which is why we are taking bold and ambitious action to tackle this issue head on.

‘The UK is already a world-leader in this global effort, and our carrier bag charge has been hugely successful in taking billions of harmful plastic bags out of circulation. But we want to go further by extending this to all retailers so we can continue to cut unnecessary waste and build back greener.’

 

Accountants Chester | Phillips & Co

Professional fees grant to include accountancy fees

25 August 2020

Small businesses in England are set to benefit from a new tranche of government grants designed to help them recover from the impact of coronavirus through professional advice – including guidance from accountants.

The scheme will dispense grants of between £1,000 – £5,000 to small and medium-sized businesses from an overall fund of £20m to help them access professional services advice from accountants, HR experts and lawyers, as well as purchase new technology and equipment.

Interested parties can access the funding – provided by the England European Regional Development Fund – as part of the European Structural and Investment Funds Growth Programme 2014-2020, through 38 growth hubs within their Local Enterprise Partnership (LEP) area. Each LEP has been awarded a minimum of £250,000 to get the programme rolling.

 

 

Accountants Chester | Phillips & Co | Furlough Fraud

Thousands of furlough applications blocked by HMRC

24 August 2020

HMRC has blocked thousands of applications for the government’s Coronavirus Job Retention Scheme (CJRS) due to fears they are fraudulent.

More than 30,000 CJRS applications have been rejected by HMRC, according to reports. At the end of June, 1,526 CJRS claims were rejected because the companies applying had ceased trading.

An additional 23,899 applications were rejected because businesses didn’t have any employees on their payroll for the 2019/20 tax year.

HMRC reportedly believes many applications are fraudulent, and has taken steps to block claims.

The CJRS has provided £35.4 billion in support for 9.6 million jobs. It is being gradually wound down and will end in October, to be replaced by a Job Retention Bonus. This will see UK employers receive a one-off payment of £1,000 for each furloughed employee who is still employed as of 31 January 2021.

To qualify for the payment, the employee must be paid at least £520 on average in each month from November to January. Payments will be made from February 2021.

Accountants Chester | Phillips & Co | Self Employed

Second round of grants for the self-employed opens

17 August 2020

The Self-Employment Income Support Scheme (SEISS) has opened for applications for the second and final grant.

Under the scheme, the government pays self-employed individuals a taxable grant based on an average of their earnings over the past three years.

The grant covers up to 70% of earnings, up to a limit of £2,190 a month.

The eligibility criteria for the second grant are the same as for the first one. To be eligible, self-employed workers must have filed a tax return for the 2018/19 tax year and have average trading profits under £50,000 for the past three years.

The claimant’s business must have been adversely affected by the coronavirus (COVID-19) at any time since 14 July. Both those who claimed the first grant and those who did not are eligible for the second grant. Claims must be made by 19 October.

Detailed guidance about the grants can be found here.

 

Accountants Chester | Phillips & Co | Childcare

Government extends Tax-Free Childcare scheme due to Covid-19

10 August 2020

The government has further extended Tax-Free Childcare (TFC) to 31 October 2020 for parents who may have fallen below the minimum income requirement as a result of the coronavirus (COVID-19) pandemic.

HMRC confirmed that key workers who may exceed the income threshold for the 2020/21 tax year as a result of working more due to the pandemic will continue to receive support.

The TFC scheme provides families with a £2 government top-up for every £8 they pay into their child’s account, up to the value of £2,000 per child, or £4,000 per disabled child. The money can be used towards the cost of qualifying childcare for a child up to the age of 11, or 17 for a disabled child.

Commenting on the matter, Angela MacDonald, Deputy Chief Executive at HMRC, said: ‘HMRC has been providing vital financial support to families during a time when it has been needed most, and we will continue to help them as they gradually transition back to a normal life.

‘We want to make sure families will not be adversely affected by any abrupt change in circumstances, which is why we have extended available support through TFC to give families that extra boost.’

Accountants Chester | Phillips & Co | MTD

Government announces next steps for Making Tax Digital

 03 August 2020

The tax digitisation programme will impact lots more people including private landlords and businesses with a turnover of more than £10,000.

 At present, businesses above the VAT threshold of £85,000 are covered by the system, which requires them to keep digital records and provide VAT returns through software.

Since it was introduced in 2019 more than 1.4 million businesses have joined the programme, submitting more than 6 million returns.

From April 2022, the programme will be extended to all VAT-registered businesses with turnover below the VAT threshold (£85,000). From April 2023, it will apply to taxpayers who file income tax self-assessment tax returns for business or property income of more than £10,000 a year.

 Jesse Norman, financial secretary to the Treasury, said: “Making Tax Digital will make it easier for businesses to keep on top of their tax affairs. But it also has huge potential to improve the productivity of our economy, and its resilience in times of crisis.”

Making Tax Digital changes will affect the way that taxes are reported, not the level of tax that is collected.

The government says it will help to minimise avoidable mistakes – which cost the exchequer £8.5bn in 2018-19.

 

Accountants Chester | Phillips & Co

Small business confidence begins to bounce back

28 July 2020

Confidence in the UK’s small business sector is starting to bounce back, according to a quarterly survey conducted by Hitachi Capital Business Finance (HCBF).

The HCBF survey reported that the number of UK small businesses predicting growth has almost doubled in just three months, from 14% to 27%.

Following last quarter’s report, which saw the percentage of small business owners predicting growth plummeting from 39% to just 14%, the new findings show the highest quarter-on-quarter rise in five years.

The IT/telecoms sector had the highest proportion of small businesses that predicted growth at 44%, while transport and distribution saw the biggest rise in confidence.

Commenting on the report, Gavin Wraith-Carter, Managing Director at HCBF, said: ‘We knew last quarter that small business confidence would fall as lockdown started and the scale of the fall was a concern, particularly the steep rise in the number of business owners fearing for their survival. Our new research – just in – shows what an immediate and positive impact the easing of lockdown has had on the small business community.

 

Accountants Chester| Phillips & Co

Free online advice scheme for small businesses launched

13 July 2020

A government-backed advice scheme has been launched to help small businesses bounce back from the coronavirus (COVID-19).

The Recovery Advice for Business Scheme gives small firms access to free, one-to-one advice with an expert adviser to help them through the COVID-19 pandemic and prepare for long-term recovery.

Advice offered includes bespoke, specialist assistance from accountancy, legal and advertising experts, as well as marketing, recruitment and tech advice to help businesses adapt to difficult circumstances and bounce back as the UK economy recovers.

The Institute of Chartered Accountants in England and Wales (ICAEW), the Chartered Institute of Personnel Development (CIPD), the Advertising Association, the Law Society and the Management Consultancies Association (MCA) are among the professional bodies that have signed up for the scheme.

Commenting on the scheme, Small Business Minister Paul Scully said: ‘We have stood by small businesses throughout this crisis, offering a wide-ranging package of financial support. However, it is also important that business owners get easy access to expert advice and support.

‘It is incredible to see so many professional advisers stepping up to do their bit for small businesses across the country. This advice platform will help to boost our recovery from the impact of coronavirus, giving small businesses extra support to adapt their business models and come back fighting.’

The Recovery Advice for Business Scheme runs until 31 December 2020. Further information on accessing the support can be found here.

 

Accountants Chester | Phillips & Co

Rishi Sunak unveils £30bn 'National Recovery' package

08 July 2020

Chancellor Rishi Sunak unveils a £30bn package to to turn the UK’s national recovery “into millions of stories of personal renewal”. The package included:

a £1,000 bonus for each worker that companies bring back from furlough and employ through to January next year;
a “kickstart scheme” to directly pay firms to create jobs for 16 to 24-year-olds;
cash for businesses to take on trainees and apprentices;
an eight-month temporary cut in stamp duty, with no charge on property transactions below £500,000;
a cut in VAT on food, accommodation and attractions from 20% to 5% until 12 January;
an “Eat Out to Help Out” discount of up to £10 per head to get Britons back to restaurants, cafes and pubs.
Accountants Chester | Phillips & Co | Tax News

Flexible Furlough Scheme starts today

01 July 2020

Businesses will have the flexibility to bring furloughed employees back to work part time from today (1 July) as part of the government’s plan to re-open the UK and kick-start our economy. From today businesses can bring furloughed employees back to work on a part time basis.Firms will be given the flexibility to decide the hours and shift patterns of their employees – with the government continuing to pay 80% of salaries for the hours they do not work

The government’s Coronavirus Job Retention Scheme (CJRS) has so far helped protect more than 9.3 million jobs through the pandemic, with employers claiming more than £25.5 billion to support wages.

The scheme will remain open until the end of October and will continue to support jobs and business in a measured way as people return to work, our economy reopens and the country moves to the next stage of its recovery.

From today, a month earlier than previously announced, employers will have the flexibility to bring furloughed employees back to work on a part time basis.

Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them – and will be responsible for paying their wages while in work.

Chancellor of the Exchequer Rishi Sunak said:

Our number one priority has always been to protect jobs and businesses through this outbreak. The furlough scheme, which will have been open for eight months by October, has been a lifeline for millions of people and as our economy reopens we want that support to continue.

Giving firms the flexibility to bring back furloughed workers on a part-time basis will help them work gradually and help them plan for the months ahead.

From August, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work. Businesses will be asked to contribute a modest share, but crucially individuals will continue to receive that 80% of salary covering the time they are unable to work.

More information about the changes can be found here.

 

Accountants Chester | Phillips & Co | VAT

Government urged to consider VAT cut to stimulate spending

23 June 2020

The government has again been urged to consider an emergency reduction in the rate of VAT in order to help businesses once the Coronavirus (COVID-19) lockdown ends.

A new report published by think tank Policy Exchange has suggested that reducing the rate of VAT to 15% could help boost consumer spending in the short-term. The standard rate of VAT is currently 20%.

The publication of the report comes following rumours that Chancellor Rishi Sunak is reportedly considering cutting the standard rate of VAT to help tackle the economic fallout caused by the COVID-19 lockdown.

According to reports, the Chancellor is preparing to deliver a ‘Summer Statement’ in early July, in which he is likely to outline new initiatives on skills and apprenticeships, alongside measures to help boost the UK economy.

Experts have also recommended cutting employer national insurance contributions (NICs) and extending the business rates relief scheme in England and Wales.

 

Accountants Chester | Phillips & Co

Businesses are urged to reinstate VAT direct debits

19 June 2020

The ICAEW (Institute of Chartered Accountants in England and Wales) has reminded businesses that they need to reinstate their direct debit mandates before the deferral of VAT payments (due to the Coronavirus) comes to an end on 30 June.

The VAT payment deferral means that all UK VAT-registered businesses have the option to defer VAT payments due between 20 March and 30 June 2020 until 31 March 2021.

Businesses, however, need to take steps to reinstate their direct debit mandates so that they are in place in time for payments due from July 2020 onwards. Any outstanding returns should be filed and three working days should be allowed to elapse before reinstating the direct debit mandate.

The Tax Faculty at the Institute of Chartered Accountants in England and Wales (ICAEW) said: ‘HMRC has confirmed to the Tax Faculty that it will not collect the outstanding balance of deferred VAT when the direct debit mandate is reinstated. HMRC has made the necessary systems change to avoid this happening for businesses in Making Tax Digital for VAT (MTD for VAT).

‘Arrangements will also need to be made to pay the deferred VAT by 31 March 2021; further guidance is expected from HMRC on the mechanism.’

 

Accountants Chester | Hospitality

MP's call for October bank holiday and VAT cuts

15 June 2020

The government has been urged by MP’s to cut VAT rates for firms in the tourism sector in order to help them recover from the coronavirus (COVID-19) lockdown.

A report published by the All-Party Parliament Group (APPG) for Hospitality and Tourism has called for a reduction in VAT for businesses in the hospitality sector, alongside an overhaul of the business rates system in England and Wales and the creation of a new autumn Bank Holiday.

It is thought that an extra bank holiday – recommended for October – could soften the blow of peak season losses by promoting autumn ‘staycations’.

Just 11% of businesses in the UK hospitality sector have been able to trade through the COVID-19 pandemic, according to the APPG. Figures published recently by the Treasury also revealed that accommodation and food services companies have furloughed 1.4 million people, and have claimed £2.6 billion in furlough funds.

Commenting on the matter, Steve Double, Chair of the APPG, said: ‘The UK’s hospitality and tourism sectors have been devastated by the COVID-19 crisis, and this report highlights the scale of the damage done to businesses.

‘Whilst the support provided to the sector so far has been very welcomed, we are under no illusions that the path to recovery will be tough.’

Tourism is a ‘vital pillar of the economy’, with 37.9m visitors to the UK in 2018 and an overall visitor spend of £22.9bn. The north west welcomed 3.1m of those visitors, with an average spend of £443 per visit totalling £1.46bn.

 

Accoutants Chester | Phillips & Co | VAT Reverse Charge

HMRC delays VAT reverse charge on construction services

08 June 2020

The government has announced a five-month delay to the introduction of the domestic VAT reverse charge for construction services, due to the impact of the coronavirus pandemic on the sector.

The change, which is being introduced to reduce fraud in the sector, will now apply from 1 March 2021 and will overhaul the way VAT is payable on building and construction invoices. Under the domestic reverse charge, the customer receiving the service will have to pay the VAT owed straight to HMRC instead of paying the supplier, if they report via the Construction Industry Scheme (CIS).

The change which has now been put back from 1 October 2020 to 1 March 2021 was originally scheduled to come into effect from 1 October 2019. It was deferred for 12 months after industry bodies highlighted concerns about the lack of preparation and the impact on businesses.

There will also be an amendment to the original legislation. This will make it a requirement that for businesses to be excluded from the reverse charge because they are end users or intermediary suppliers, they must inform their subcontractors, in writing, that they are end users or intermediary suppliers. The amendment, HMRC have said, is designed to make sure both parties are clear in regard to whether the supply is excluded from the reverse charge. It reflects recommended advice published in HMRC guidance and brings certainty for subcontractors as to the correct treatment for their supplies.

 

Accountants Chester | Phillips & Co | Small Business Accountants

Strong economic recovery likely, but not certain

04 June 2020

A strong economic recovery following the coronavirus pandemic is likely, with conditions ripe for a quick turnaround, a new report by Oxford Economics suggests.

The unusual nature of this recession could be a silver lining for recovery, the report, which was commissioned by chartered accountancy body ICAEW, said. GDP has fallen because of a planned, partial economic shutdown, so in theory activity and demand should rebound as restrictions lift, particularly given fiscal and monetary support from government and the Bank of England since the crisis began.

The report predicts that the economy should return to growth in the second half of the year if the lockdown continues to be relaxed over the summer.

Some households and private sector companies will have saved cash during the crisis, which could lead to a spike in demand when the lockdown eases, particularly with inflation likely to reach zero in the summer.

The impact of coronavirus should hopefully be a short, if very sharp, shock, the report said, with most of the damage quickly repaired. With low interest rates likely to persist, and gilt yields at historic levels, reducing the deficit should not be an urgent government priority.

Risks to the economy are however high, Oxford Economics said. Recovery could falter if lockdown is extended; if a second wave of coronavirus triggers another lockdown; if long-term economic damage is worse than expected; or if government support is withdrawn too early. A collapse of UK-EU trade talks could also hamper recovery.

Martin Beck, Oxford Economics lead UK Economist said:  “Coronavirus and the restrictions on daily life imposed in response are inflicting a once-in-a-century downturn on the economy. But the nature of the shock and the massive support put in place by policymakers mean a strong bounce back is achievable. However, with no precedents to draw on, the outlook is clouded by multiple risks.”

 

Accountants Chester | Phillips & Co

Businesses are urged to reinstate VAT direct debits

19 June 2020

The ICAEW (Institute of Chartered Accountants in England and Wales) has reminded businesses that they need to reinstate their direct debit mandates before the deferral of VAT payments (due to the Coronavirus) comes to an end on 30 June.

The VAT payment deferral means that all UK VAT-registered businesses have the option to defer VAT payments due between 20 March and 30 June 2020 until 31 March 2021.

Businesses, however, need to take steps to reinstate their direct debit mandates so that they are in place in time for payments due from July 2020 onwards. Any outstanding returns should be filed and three working days should be allowed to elapse before reinstating the direct debit mandate.

The Tax Faculty at the Institute of Chartered Accountants in England and Wales (ICAEW) said: ‘HMRC has confirmed to the Tax Faculty that it will not collect the outstanding balance of deferred VAT when the direct debit mandate is reinstated. HMRC has made the necessary systems change to avoid this happening for businesses in Making Tax Digital for VAT (MTD for VAT).

‘Arrangements will also need to be made to pay the deferred VAT by 31 March 2021; further guidance is expected from HMRC on the mechanism.’

 

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