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The Coronavirus Self-Employment Income Support Scheme – Fifth SEISS Grant introduces a turnover test

The eligibility criteria for the fifth SEISS grant have been further tightened. Claimants are being contacted now, by HMRC, by email or letter, setting out when a claim can be made.  Applications for this grant open late July and close 30th September 2021.

We look at what you need to be aware of:

 

  1. Do I Qualify For The Scheme?
  • You are eligible to claim if you are a self-employed individual or a member of a partnership only;
  • Subject to eligibility, the fifth grant can be claimed even if previous grants were not claimed;
  • The business needs to demonstrate it was impacted due to coronavirus between 1st May and 30thSeptember 2021, and also has to:
    • be currently trading but be impacted by reduced demand due to coronavirus; or
    • have been trading but be temporarily unable to do so due to coronavirus.
  • Guidance published requires you to certify
    • You intend to continue to trade; and
    • reasonably believe there will be a significant reduction in your trading profits due to reduced activity, capacity or demand or inability to trade due to coronavirus

 

  1. How Do I Prove Eligibility for the Fifth Grant?
  • You must have traded in 2019/20 and 2020/21;
  • You must intend to continue to trade;
  • You must have submitted your 2019/20 tax return to HMRC by 2nd March 2021;
  • The income-based tests are:
    • Average trading profits £50,000 or less;
    • Trading income at least equal to non-trading income (50% test);
    • Tests applied to 2020/21, if fail look at 4 years (2016/17, 2017/18, 2018/19, 2019/20)

 

  1. So What Am I Expected To Consider?
  • A claim for the 5th Grant requires turnover figures for a pandemic period and a pre-pandemic reference period;
  • Pandemic period is always deemed to be a 12 month period starting between 1 to 6 April 2020.
  • The Pre-pandemic reference period is 2019/20 tax return, with exceptions
  • You need to
    • Work out your April 2020 to April 2021 turnover
    • Find your turnover from either (1) 2019 to 2020 or (2) 2018 to 2019 to use as a reference year

 

  1. Where to find your turnover figure
  • This will be on your tax return
    • SA103S – page SES 1, box 9
    • SA103F – page SEF 1. box 15
    • SA800 – box 3.24 or 3.29 for partnerships
  • In calculating your turnover figure, you should not include any COVID 19 support payments received such as previous SEISS grants, Eat out to Help Out payments and any local authority grants received.

 

 

  1. How your turnover affects your grant amount
  • Turnover down by 30% or more
    • worked out at 80% of 3 months average trading profits, capped at £7,500
  • Turnover down by less that 30%
    • – worked out at 30% of 3 months average trading profits, capped at £2,850

 

  1. Your Consideration in Making A Claim
  • Given the complexity of this process, it seems HMRC are reliant upon you making an honest assessment.
    • Please be aware that any claim you make under the scheme will be retrospectively reviewed and HMRC will be able to check your figures after you submit your tax return for 2020/21.
    • There is clear intent to seek recovery of any claim made that is not supported by the retrospective review
  • If in doubt, please contact one of the Partners or your regular Account Manager.
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The Recovery Loan Scheme

Business owners can now apply for ongoing access to financial support as they recover and grow following the coronavirus pandemic.

The scheme can be used for any legitimate business purpose, including managing cashflow, investment and growth. It is designed to appeal to businesses that can afford to take out additional debt finance for these purposes.

The Scheme is scheduled to run until 31 December 2021, subject to review. It is available through a range of lenders and partners accredited by the British Business Bank

If you have already used a Coronavirus Loan Support Scheme, the Recovery Loan Scheme is still open to you.

www.gov.uk/government/news/new-bounce-back-loans-to-launch-today

 

  1. What is The Recovery Loan Scheme?
  • The Recovery Loan Scheme is intended to assist small and medium-sized businesses to access finance up to £10 million per business (maximum £30 million per group).
  • Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts;
  • Term loans and asset finance facilities are available for a minimum of three months to up to six years, with overdrafts and invoice finance available from up to three months to three years.;
  • Unlike the previous Government-backed loan schemes, Coronavirus Business Interruption Loan Scheme (CBIL) and Bounce Back Loan Scheme (BBL) loans, businesses must meet the costs of interest payments and any fees associated with the facility;
  • The scheme provides the lender with a government-backed guarantee against the outstanding balance of the facility, although the borrower always remains 100% liable for the debt.

 

  1. What Are The Terms Of The Recovery Loan Scheme?
  • The annual effective rate of interest, upfront fee and other fees cannot be more than 14.99%;
  • Lenders cannot take personal guarantees for facilities of £250,000 or less. Above £250,000the maximum amount that can be covered is capped at a maximum of 20% of the outstanding balance of the facility after the proceeds of business assets have been applied. No personal guarantees can be held over principal private residences.
  • Loan terms will be up to 6 years.
  • No repayments will be due during the first 12 months.

 

  1. Eligibility
  • Your business must:
    • have been affected by Covid-19 – you will need to confirm to the lender that the coronavirus pandemic has had an impact on your ability to operate;
    • be carrying out trading activity in the UK;
    • have a viable business proposition – your lender may disregard (at its discretion) any concerns over your business’ performance over the short to medium term because of the uncertainty and impact of Covid-19;
  • There is no restriction on turnover, meaning your business can access the scheme regardless of what amount of revenue it generates.
  • You will not be eligible if your business is a Bank, a public sector body or a state-funded primary or secondary school

 

  1. How to Apply For the Scheme
  • Find a lender on the British Business Bank website

https://www.british-business-bank.co.uk/ourpartners/recovery-loan-scheme/current-accredited-lenders/

  • Contact a lender to express an interest in applying for the Scheme, and for them to be able to assess your eligibility under their criteria and available finance offered under the Scheme by them;
  • Submit an application
    • Typically you will be asked for supporting information to show evidence that you are able to afford the repayments, most likely in the form of management accounts, business plan, historic accounts and details of assets.
  • Please contact one of our specialists for advice and assistance in preparing your claim

 

  1. What Should I Consider Before Making An Application
  • Fundamentally, this is a loan and requires repayment;
  • When considering how much loan is required, consider carefully the current financial position of your business as well as the impact upon your business of market conditions normalising, or even growing beyond historic trading levels, as the impact of COVID-19 fades.
  • Take into account issues like
    • Does the business need capital investment;
    • What working capital stretches will I encounter as I rebuild levels of stock and work in progress;
    • What impact on my business will my growing debtor book have on available cash;
    • What loan repayments am I already committed to, remembering that any CBIL or BBL loans have either expired or are coming up toward the end of, the 12-month interest and capital holiday;
    • Any deferral of Government or finance based repayments that will need to be taken from working capital
  • You should prepare a (simple) cash and trading forecast to support your assessment, and ensure you have claimed all other reliefs and grants available to you.
  • Barrons are here to help you, please refer to the specialists above or your usual Relationship Manager who will be happy to help.
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Beware HMRC Scam Telephone Calls & E-Mails

We are aware that a number of people have recently received either a telephone call or e-mail purporting to originate from HMRC advising that their National Insurance Account has been compromised.

HMRC have issued assurances that these are scams and you should not reply to any e-mails or give out any information over the telephone.

HMRC have confirmed that all correspondence from HMRC is sent by post to the individuals home address – they do not contact individuals by telephone or e-mail.

Please take care and if you are in any doubt about any contact from HMRC please do not hesitate to contact your main contact at Barrons

 

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The Coronavirus Self-Employment Income Support Scheme – Extension For New (Previously Excluded) & Existing Claimants

In the latest Budget, the Government announced details of who can claim the fourth SEISS grant and the level that claims can will be paid out at. 

Some significant changes have been introduced for the fourth grant, please take a moment to consider them:

 

  1. If You Already Qualified For The Third Grant
  • The fourth SEISS grant will be set at 80% of 3 months’ average trading profits, paid out in a single instalment, capped at £7,500;
  • Your continued eligibility for the scheme will now be based on your submitted 2019 to 2020 tax return;
  • This may affect the amount of the fourth grant which could be higher or lower than previous grants you may have received.
  • You must still continue to meet all historic criteria set under the Scheme.

 

  1. I Have Never Been Eligible For The SEISS Grant Before – Could I Be Now?
  • The fourth grant will take into account 2019 to 2020 tax returns and will be open to those who became self-employed in tax year 2019 to 2020;
  • To be eligible for the fourth grant you must be a self-employed individual or a member of a partnership;
  • You must also have traded in both tax years 2019/20 (and have submitted a tax return by 2nd March 2021) and also in the current tax year 2020/21;
  • Finally you must also be able to declare that you
    • intend to continue to trade; and
    • you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus.
  • PLEASE ENSURE YOU READ through to the end of this update – it is ESSENTIAL READING for new claimants in particular to ensure that you are included in the next tranche of payouts by Government.

 

  1. What Is The Eligibility Period?
  • The eligibility period for the fourth grant is 1 February 2020 to 30th April 2021;

 

  1. When Can I Make A Claim?
  • The online claims service for the fourth grant will be available from late April 2021 until 31 May 2021;
  • If you are eligible, HMRC will contact you in mid-April to give you your personal claim date;
  • This will be the date that you can make your claim from; more details will be published.

 

  1. Do I Need To Report SEISS Grants On My Future Tax Returns?
  • YES, SEISS grants are all taxable.

 

  1. Is There A Fifth Grant?
  • The Government has announced that there will be a fifth and final grant, covering the period May to September 2021;
  • The fifth grant will be worth
    • 80% of 3 months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more
    • 30% of 3 months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%
  • You will be able to claim from late July if you are eligible, details to follow later in the year.

 

  1. New Claimants – The Qualification Process
  • Taxpayers that commenced trade in the 2019/20 tax year are now eligible to make a claim under the Self Employed Income Support Scheme.
  • The Government has set stringent steps to be followed to prevent fraud – unfortunately, the steps leave you open to receiving fraudulent calls so please read and take note of the what follows.
    • With this particular grant HMRC will be writing to you asking you to confirm your identity and prove that you have been trading, before the 4th SEISS grant can be claimed (covering the period Feb to Apr 21) toward the end of April 21;
    • The Revenue have advised that only taxpayers that started trading as self-employed after 5th April 2019 will receive this verification letter, and that only part of that group will be contacted in this way.
  • Once contacted, there is a lengthy process to be undertaken which must be followed. If you are in doubt about the legitimacy of the process or correspondence that you are receiving please contact Tracy tracyc@barrons-bds.com
    • Step 1: Receipt of HMRC’s letter

You should receive, read and respond to the HMRC letter which should arrive between 10 March and mid-April.

  • Step 2: Answer a call from HMRC

Up to two weeks after the letter is sent, an HMRC officer will call the contact number detailed on your 2019/20 tax return.

If the agent’s number (i.e. Barrons) was shown as the contact point HMRC will ask the agent to pass on their client’s telephone number. We would appreciate your forward confirmation to Tracy that we are authorised to release your personal data.

When HMRC call you, this will, unfortunately, be shown as coming from an “unknown number”. When receiving this call, please seek to identify the caller by asking them to provide you with the last 4 digits of your Unique Tax Reference number – there are going to be scam calls the way Government has set up trying to avoid fraud appertaining to them, unfortunately we anticipate many will be targets for being defrauded themselves

HMRC will make only three attempts to call between 8am and 5.30pm. If none of those three attempts are successful you will have failed the pre-verification.

  • Step 3: Supply email address

When you speak to HMRC you will need to confirm or supply your email address, and you must also agree to receive a link to a Dropbox account to that email address.

  • Step 4: Find email from HMRC

You will need to open the email from HMRC that includes the Dropbox link, please monitor your junk folder, as the communication may well file to this folder.

  • Step 5: Digital copies

You will need to make digital copies of a form of your ID (e.g. photo-card driving licence, or current passport) plus three months of your UK business bank statements from 2019/20 (from 6th April 19 to 5th April 2020). This information is needed to demonstrate that the new business has been active in 2019/20.

If the business has been run without a UK bank account HMRC will accept other documents, but you must agree what is acceptable in your call with HMRC.

  • Step 6: Upload documents

You will only have two days to upload the digital copies of your ID and bank documents to the HMRC Dropbox. After two days you will fail the pre-verification.

  • Step 7: Apply for the grant

The online portal to apply for the next SEISS grant will open in late April,

  • We are sorry to advise that tax agents cannot claim SEISS grants on behalf of their clients but we will help however we can.  

 

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Coronavirus Business Interruption Loan Scheme (“CBILS”) – Imminent Closure

The Coronavirus Business Interruption Loan Scheme (CBILS) set to close for applications at the end of March 2021.

If you intend to make an application for a CBILS loan you must ensure that your Bank / chosen financier has lodged your application by 31st March 2021.

If your claim is not acknowledged by the Bank by that date, you will no longer be eligible for the scheme – so there is no time to waste if you intend making a CBILS application.

Please refer to our previous posts concerning the Scheme should you wish to research your potential to benefit from the Scheme, or alternatively follow this link:

https://www.gov.uk/guidance/apply-for-the-coronavirus-business-interruption-loan-scheme

 

  1. What is the Coronavirus Business Interruption Loan Scheme (CBILS)?
  • CBILS is a scheme that can provide facilities of up to £5m for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow;
  • CBILS supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance;
  • The scheme provides the lender with a government-backed guarantee potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.
  • The borrower always remains 100% liable for the debt.

 

  1. Should I Make An Application Before The Scheme Runs Out?
  • You really do need to consider how the Pandemic has, and still might, affect your business
  • For instance,
    • the Job Retention Scheme ceases at the end of September 2021;
    • there may well be further challenges arising for us all in terms of a further wave or for your industry or business in particular
  • You should consult your current trading patterns and cash projections
    • You really do need to have a minimum rolling 90 day cash forecast in place to review immediate cash needs;
    • Have you (for instance) taken into account that as your turnover builds, your cash may deplete as often customer credit stretches beyond the need to pay employees, key suppliers and day to day running costs – the business could be moving toward recovery yet run out of cash!
    • You must understand how your cash outgoings are to be managed and controlled for whatever duration this Pandemic may impact upon your business, and remember we may well be headed for a long and stressful winter as the economic recession takes its full impact upon demand.

 

  1. What If I have Already Received a Bounce Back Loan (BBL)?
  • You can still apply for a CBIL Loan;
  • Your would need to settle the BBL Loan out of the funds generated from the CIBL.

 

  1. Is The Bounce Back Loan (BBL) Closing Too?
  • Yes – on 31st March 2021.

 

  1. Am I Eligible?
  • Smaller businesses (“SME”) from most sectors can apply for the facility;
  • Your business needs to be
    • UK-based in its business activity;
    • Operate with annual turnover of no more than £45m;
  • You need to be able to demonstrate a viable Borrowing Proposal
    • You must show in your borrowing proposal that were it not for the COVID-19 pandemic, your business would be considered viable by the lender, and for which the lender believes the provision of finance will enable your business to trade out of any short-to-medium term difficulty;

 

  1. Recovery Loan Scheme
  • The Government has announced a replacement loan scheme, the Recovery Loan Scheme, that will be launched on 6th April 2021 and which will close on 31st December 2021;
  • The Recovery Loan Scheme ensures businesses of any size can continue to access loans and other kinds of finance up to £10 million per business once the existing COVID-19 loan schemes close;
  • The finance can be used for any legitimate business purpose, including growth and investment.
  • The government guarantees 80% of the finance to the lender;
  • Full particulars of how to apply for this Scheme and how exactly it will operate and compare to the CBILS Scheme is still to be announced.

 

  1. Need Help To Review Your Cash Position?
  • Please contact us urgently – time is incredibly tight;
  • We have a dedicated team focussed upon Scheme eligibility and the application process led by jasonm@barrons-bds.com 
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Domestic Reverse Charge for the Construction Industry

After several delays, the Government has now formally announced that the domestic reverse charge rules for the building and construction industry will be introduced effective from the 1st March 2021.

You are recommended to read this synopsis and to use the following link as a reference guide, particularly for the helpful Flow Charts that appear in Section 25.

www.gov.uk/guidance/vat-reverse-charge-technical-guide

 

  1. Is My Business Affected By The New Regulations?
  • You must use the reverse charge if you are either:

 

  • VAT registered in the UK, supply building and construction industry services and:
  • your customer is registered for VAT in the UK
  • payment for the supply is reported within the Construction Industry Scheme (CIS)
  • the services you supply are standard or reduced rated
  • you are not an employment business supplying either staff or workers, or both
  • your customer has not given written confirmation that they are an end user or intermediary supplier

 

  • if you are VAT registered in the UK, buy building and construction industry services and:
  • payment for the supply is reported within the Construction Industry Scheme (CIS)
  • the supply is standard or reduced rated
  • are not hiring either staff or workers, or both
  • you’re not using the end user or intermediaryexclusions

 

  1. What Services Are Covered By The Reverse Charge?
  • constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services;
  • constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence;
  • installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure;
  • internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration;
  • painting or decorating the inside or the external surfaces of any building or structure;
  • services which form an integral part of, or are part of the preparation or completion of the services described above – including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works

 

  1. How Do I Account For The Reverse Charge?
  •  VAT is due when a VAT invoice is issued, or payment is received, whichever is earlier.

 

  • For invoices issued for specified supplies that become liable to the reverse charge, the VAT treatment for invoices with a tax point:
    • before 1 March 2021 – the normal VAT rules will apply and you should charge VAT at the appropriate rate on your supplies;
    • on or after 1 March 2021 – the domestic reverse charge will apply

 

  1. How Are Transitional Supplies To Be Handled? 
  • For authenticated tax receipts or self-billed invoices the tax point is normally the date the supplier receives payment.
  • The transitional arrangements for how to determine the VAT treatment for payments due on any supplies entered into your accounting system is if the date entered is:
    • before 1 March 2021 and the payment date will be on or before 31 May 2021, use the normal VAT rules
    • before 1 March 2021 and the payment date will be on or after 1 June 2021, use the domestic reverse charge
    • on or after 1 March 2021, you must use the domestic reverse charge

 

  1. How Do I Complete My VAT Return? 
  • VAT on sales
    • Suppliers must not enter any output tax on sales under the reverse charge.
    • The supplier only needs to enter the net value of the sale.

 

  • VAT on purchases
    • If you buy services subject to the reverse charge, you must enter the VAT charged as output tax on your VAT return.
    • You must make sure you do not enter the net value of the purchase as a net sale.
    • You may reclaim the input tax on your reverse charge purchases, subject to the normal VAT rules.

 

  1. Potential Impacts Upon Cashflow – And How You Can React? 
  • The reverse charge may mean your business will make net repayment claims to HMRC, as you no longer receive VAT on your sales.
  • You can apply to move to monthly returns using your online VAT account;
  • If you are a sub-contractor you should also be aware that your customers will no longer be paying you VAT, which will reduce the gross value of payments coming into your business.

 

  1. These Changes Are Challenging – Will I Be Fined If I Get It Wrong? 
  • HMRC has stated that implementing the reverse charge may cause some difficulties and have indicated that they will apply a light touch in dealing with any errors made in the first 6 months of the new legislation, as long as you are trying to comply with the new legislation and have acted in good faith;
  • Any errors should be corrected as soon as possible, as the longer under declared or over charged sums remain outstanding the more difficult it may be to correct or recover them.
  • HMRC officers may assess for errors during the light touch period, but penalties will only be considered if you are deliberately taking advantage of the measure by not accounting for it correctly.

 

  1. Still Confused Or In Need Of Help? 

Please contact Jo Travis on jot@barrons-bds.com

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The Budget 2021 – What Changes Might Impact Me & My Business

This week, the Chancellor announced extensions to a number of current COVID-19 schemes, alongside additional support for individuals and businesses, as the UK continues to navigate the impact of the pandemic.

We have sought to summarise some of the immediate key measures for employers below, and we have also included a very brief synopsis of 2021/22 tax changes..  

If you want to know more detail about the Budget, follow this link: www.gov.uk/government/publications/budget-2021-documents

 

  1. Coronavirus Job Retention Scheme (CJRS)
  • The CJRS Scheme has been extended until the end of September 2021.
    • Employers will continue to pay their furloughed employees associated Employer National Insurance contributions and pension contributions on subsidised furlough pay from their own funds.
    • When claiming for periods from 1 May 2021 onwards, eligible employees must have been employed on 2 March 2021 and been included upon a Real Time Information (RTI) submission to HMRC notifying a payment of earnings for that employee between 20 March 2020 and 2 March 2021.
  • Until June 2021
    • The government will continue to pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month
  • For July 2021
    • CJRS grants will cover 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50.
  • For August & September 2021
    • CJRS grants will then reduce to 60% of employees’ usual wages, up to a cap of £1,875.

 

  1. Self-Employment Income Support Scheme (SEISS)
  • The eligibility criteria for the fourth SEISS grant has now been confirmed; the Chancellor also announced a fifth and final grant.
    • The eligibility criteria for these grants have been updated to take into account 2019/20 self-assessment tax returns, which must have been filed by 2 March 2021.
    • Some newly self-employed taxpayers who were not eligible for the first three grants will consequently be eligible for the final two grants.
  • The fourth SEISS grant
    • has been set at 80% of three months’ average trading profits and is capped at £7,500.
    • HMRC will contact potentially eligible taxpayers in mid-April and applications will be open from late-April to the end of May 2021.
  • The fifth grant
    • has been set at 80% of three months’ average trading profits capped at £7,500 for those whose turnover has reduced by 30% or more.
    • Those with a turnover reduction of less than 30% will receive a grant based on 30% of three months’ average trading profits, capped at £2,850.
    • Applications are expected to open in late July.

 

  1. The VAT Deferral Payment Scheme
  • The new payment scheme helps businesses with deferred VAT to pay in smaller, monthly instalments from March, interest free;
  • The scheme is now open, and you can choose to make between 2-11 monthly payments, depending on when you join.
    • The later you join the fewer instalments are available to you;
    • You can join the Scheme through an online service without needing to contact HMRC.

www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19

  • You must join the scheme before the end of June if you want to make use of this Scheme.

 

  1. Extended Loss Carry Back For Business
  • To help otherwise-viable UK businesses which have been pushed into a loss-making position, the trading loss carry-back rule will be temporarily extended from the existing one year to three years.
  • This carry back rule will be available for both incorporated and unincorporated businesses.

 

  1. Capital Allowances
  • From 1 April 2021 to 31 March 2023, a “super deduction” of 130% will be available to companies incurring expenditure on qualifying plant and machinery (P&M).
  • This will generate a reduction in tax of 7p for every £1 pound spent.
  • There are some exclusions to the assets eligible for the relief, broadly those that have been excluded from first year allowances in the past as well as used and second-hand assets and expenditure on contracts entered into prior to 3 March 2021 even if expenditure is incurred after 1 April 2021.
  • Expenditure on special rate assets (eg, hot and cold water systems and other ‘integral assets’) will attract a 50% rate and a 9.5p tax reduction.

 

  1. Business Rates Holiday 
  • The Chancellor also announced a three-month extension of the business rates holiday from 1 April 2021 to 30 June 2021.
  • Thereafter, for the remainder of 2021/22 (ie, nine months) businesses will enjoy 66% rates relief up to a cap of £2m per business.

 

  1. Stamp duty land tax (SDLT)
  • The temporary increase in the residential SDLT nil rate band to £500,000 in England and Northern Ireland is extended until 30 June 2021.
  • The nil rate band will then reduce to £250,000 until 30 September 2021 before returning to £125,000.

 

  1. VAT Reduction for the UK’s Tourism and Hospitality Sector
  • HMRC have extended the temporary reduced rate of 5% VAT for goods and services supplied by the tourism and hospitality sector until 30 September 2021;
  • To help businesses manage the transition back to the standard 20% rate, a 5% rate will apply for the subsequent six months until 31 March 2022.

 

  1. Continuation of the Home Office Equipment Expenses COVID-19 Easement
  • An Income Tax exemption and corresponding NICs disregard were introduced for the 2020-21 tax year to allowed employers to reimburse employees for the cost of home office equipment deemed necessary to work from home as a result of the COVID-19 outbreak free from Income Tax and Class 1 NICs.
  • The exemption was due to end on 5 April 2021 but will now be extended to have effect until 5 April 2022.

 

  1. Tax rate changes 2021/22 And Beyond
  • Personal Allowance and Higher Rate Threshold (HRT)
    • The income tax Personal Allowance
      • will rise with CPI as planned to £12,570 from April‌‌‌ ‌2021; and
      • will remain at this level until April 2026.
    • The income tax Higher Rate Tax Allowance
      • will rise as planned to £50,270 from April 2021; and
      • will remain at this level until April 2026.
    • Corporation Tax
      • The rate of Corporation Tax will increase from April 2023 to
        • 25% on profits over £250,000;
        • The rate for small profits under £50,000 will remain at 19%; and
        • there will be relief for businesses with profits under £250,000 so that they pay less than the main rate.
      • Pensions Lifetime Allowance
        • The Lifetime Allowance will remain at its current level of £1,073,100 until April‌‌‌ ‌2026.
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Coronavirus – Self Assessment, A Further Update

HMRC announced this week (on Friday 19th February 2021) that Self Assessment customers will not be charged the initial 5% late payment penalty if you pay your tax or make a Time to Pay arrangement by 1‌‌ April 2021.

 

  1. So What Exactly Has Changed?
  • The deadlines to file your tax returns have not changed, but a concession has been introduced to extend by one month the time you have to file your return without a fine being imposed;
  • Also, because of the impact of COVID 19 HMRC is giving taxpayers more time to pay or 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

 

  1. So How Do I Set Up A Time to Pay Arrangement?
  • You must liaise directly with HRMC, your agent (Barrons) cannot do this for you by decree;
  • The self-serve Time to Pay facility allows you to spread the cost of your tax liabilities into monthly instalments until January‌‌ 2022;
  • You can set up a payment plan online, on GOV‌‌.UK.

 

  1. What If I Still Cannot Meet My Repayments Using A Time to Pay Arrangement?
  • HMRC has stated that it recognises the pressure affecting taxpayers due to the pandemic;
  • If you are worried about paying your tax HMRC advise that you should contact them for help and support on 0300‌‌ 200‌‌ 3822;
  • We would be happy to discuss any need to contact HMRC before liaising with HMRC directly so that we can help you prepare – please contact lisag@barrons-bds.com

 

  1. What About Late Filing Penalties?
  • If you have yet to file your tax return you should do so‌‌ by‌‌ 28‌‌‌‌ February to avoid a late filing penalty.

 

  1. Can I Still Be Charged Interest On Late Payment?
  • If you have not paid your Self Assessment tax bill by 31‌‌ ‌January 2021; then interest will be charged from 1‌‌ ‌February on any outstanding liabilities.

 

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Coronavirus – VAT Deferred Due To Coronavirus

HMRC have announced the launch date for their new VAT deferral payment scheme.

We detail below how to make use of the scheme and the other options that you currently have to settle the liability.

 

  1. What Are My Options?

If you deferred VAT between 20 March and 30 June 2020 and still have payments to make, you can:

  • pay the deferred VAT payment in full on or before 31 March 2021;
  • opt into the VAT deferral payment scheme using the online service between 23 February and 21 June 2021;
  • contact HMRC by 30 June 2020 if you need more help to pay

 

  1. What Do I Gain From Opting In?
  • Instead of paying the full amount by the end of March 2021, you can make up to 11 smaller monthly instalments, interest free
  • You select the number of instalments from 2 to 11 equal monthly payments

 

  1. Am I Eligible For The Scheme?
  • To use this scheme you must:
    • Still have deferred VAT to pay;
    • be up to date with your VAT returns;
    • join by 21 June 2021;
    • pay the first instalment when you opt in;
    • pay your instalments by Direct Debit

 

  1. What If I Want To Opt In To The New Payment Scheme?
  • The VAT deferral new payment scheme will be open from 23 February up to and including 21 June 2021
    • You must opt in yourself, we cannot do this for you
  • If you are on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, you will be invited to join the new payment scheme later in March 2021

 

  1. Instalments Options available
  • The month you decide to join the scheme will determine the maximum number of instalments that are available to you;
  • If you join the scheme in March you’ll be able to pay your deferred VAT in 11 instalments or fewer.
  • The number of instalments reduces by one for every month that passes from the launch date of the scheme

 

  1. What If I Have Other Time To Pay Arrangements?
  • You can still have a time to pay arrangement for other HMRC debts and outstanding tax.

 

  1. Can I Prepare Now To Opt In To The New Payment Scheme?
  • You will need to use your own Government Gateway account; so if you have not set up one it is time to do so on-line https://www.gov.uk/log-in-register-hmrc-online-services
  • 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
  • consider the number of equal instalments you’ll need, from 2 to 11 months

 

  1. What If I Am Not Able To Pay My Deferred VAT
  • If you are unable to pay the VAT due and need additional time to pay, or are unable to use the online service, you should contact HMRC before the payment is due.
  • For help, either
    • Contact Lisa Garfinkle (lisag@barrons-bds.com) at Barrons who will be able to assist you and contact HMRC on your behalf if you prefer, or
    • Contact HMRC direct by
      • Using the GOV‌‌.UK website and search for ‘If you cannot pay your tax bill on time’, or
      • Call 0800 024 1222.
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Coronavirus – Self Assessment Update

HMRC has announced today that there will be no penalties for filing the 2019-20 Self Assessment Tax Return late, so long as they are filed online by 28‌‌ ‌February.

 

You will still need to pay your Self Assessment tax bill by 31‌‌ ‌January 2021; if you fail to do so then

  1. Interest will be charged from 1‌‌ ‌February on any outstanding liabilities, and
  2. Other late payment penalties will continue to apply for payments made after 28th February 2021.

 

We are encouraging clients who have not yet filed to do so by 31‌‌ ‌January 2021, if possible, especially if you

  1. Hold an insurance policy that requires filing by 31st January of each year;
  2. You wish to take advantage of the online Time to Pay arrangements that HMRC have made which require you to file your 2019-20 tax return before you can organise setting up a time to pay arrangement.
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