Tax and BREXIT Update November 2020
The furlough scheme has been extended while grants for businesses and the self-employed are being made available.
In other news preparations continue for import and export trading after Brexit and the Annual Investment Allowance is set for a reduction, as usual there is lots to update you on.
- Furlough scheme extended
- Increased support made available for the self employed
- Chancellor approves grants for businesses closed by lockdown
- Self-assessment customers to benefit from enhanced payment plans
- 54,800 customers claim tax relief for working from home
- Brexit imports and exports
- ATT issues last call for firms seeking to use increased Annual Investment Allowance
- Latest guidance for employers
Furlough scheme extended
On 5 November, Chancellor Rishi Sunak announced that as part of the new national lockdown the Coronavirus Job Retention Scheme (CJRS) has been extended until the end of March 2021. This announcement updates the Prime Minister's previous announcement on 31 October that the CJRS would be extended for a month until December.
The scheme has also reverted to its original level of support. Furloughed employees will receive 80% of salary for hours not worked and businesses asked only to cover national insurance and employer pension contributions. The CJRS was due to have ended on 31 October after being scaled back to cover 60% of salaries during that month.
Chancellor Rishi Sunak said that the scheme will retain the flexible element and furloughed employees will receive 80% of their current salary for hours not worked, up to a maximum of £2,500.
A statement from the Treasury also confirmed that the Job Support Scheme (JSS), which had been due to launch on 1 November has now been postponed and will not start until the CJRS has closed.
Chancellor Rishi Sunak said:
'I've always said I would do whatever it takes to protect jobs and livelihoods across the UK - and that has meant adapting our support as the path of the virus has changed.
'It's clear the economic effects are much longer lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support.
'Extending furlough and increasing our support for the self-employed will protect millions of jobs and give people and businesses the certainty they need over what will be a difficult winter.'
Increased support made available for the self employed
The government has increased the support available to self-employed workers and extended its emergency business loan schemes as the UK heads for a second national lockdown.
On 5 November Rishi Sunak announced an increase in the level of the third instalment of the Self-employment Income Support Scheme (SEISS) from 55% to 80% of average trading profits for November to January. SEISS grants are calculated over three months and the uplift for November to January, increases the level of the third grant to 80% of trading profits. The maximum grant will be capped at £7,500.
The SEISS 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.
Chancellor Rishi Sunak said:
'The rapidly changing health picture has meant we have had to act in order to protect people's lives and I know this is an 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.'
Chancellor approves grants for businesses closed by lockdown
Chancellor Rishi Sunak has announced approved additional funding for cash grants to support businesses required to close in England due to the lockdown.
Those businesses affected will be eligible for the following:
- For properties with a rateable value of £15,000 or under, grants to be £1,334 per month, or £667 per two weeks
- For properties with a rateable value of between £15,000-£51,000 grants to be £2,000 per month, or £1,000 per two weeks
- For properties with a rateable value of £51,000 or over grants to be £3,000 per month, or £1,500 per two weeks.
The Chancellor said:
'I have always said that we will do whatever it takes as the situation evolves. Now, as restrictions get tougher, we are taking steps to provide further financial support to protect jobs and businesses. These changes will provide a vital safety net for people across the UK.'
More: GOV.UK news
Self-assessment customers to benefit from enhanced payment plans
Self-assessment taxpayers are now able to benefit from enhanced payment plans and can apply online for additional support to help spread their tax bill into monthly payments.
The online payment plan service was already able to set up instalment arrangements for paying tax liabilities up to £10,000. From 1 October 2020, HMRC increased the threshold to £30,000 for self-assessment customers following Chancellor's Rishi Sunak's announcement on 24 September 2020.
As part of that speech, the Chancellor announced that self-assessment taxpayers could pay their deferred payment on account bill from July 2020, any outstanding tax owed for 2019/20 and their first payment on account for 2020/21 in monthly instalments, up to 12 months, via this self-serve tool.
Taxpayers who wish to set up their own self-serve Time to Pay arrangements must meet the following requirements:
- they have no outstanding tax returns, other tax debts or other HMRC payment plans set up
- the debt needs to be between £32 and £30,000; and
- the payment plan needs to be set up no later than 60 days after the due date of a debt.
Taxpayers using self-serve Time to Pay will be required to pay any interest on any outstanding balance from 1 February 2021.
Financial Secretary to the Treasury, Jesse Norman, said:
'We are supporting jobs by giving more breathing space to up to 11 million self-assessment taxpayers when managing their tax affairs.
'Enhancing Time to Pay should ease the financial burdens and protect the livelihoods of these taxpayers, as they navigate the months ahead.'
HMRC is also warning taxpayers to be aware of scams claiming to be from HMRC, offering to help set up payment plans to pay any tax owed. These scams are trying to harvest taxpayers' details, in order to steal their money.
Please contact us for advice on meeting your tax payments.
More: Gov.uk news
54,800 customers claim tax relief for working from home
HMRC has received more than 54,800 claims from taxpayers using a new online portal which allows workers to claim tax relief for working at home.
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.
Launched on 1 October 2020, the online portal 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 to help stop the spread of COVID-19.
From 6 April 2020, employers have been able to pay employees up to £6 a week tax-free to cover additional costs if they have had to work from home. Employees who have not received the working from home expenses payment direct from their employer can apply to receive the tax relief from HMRC.
HMRC is encouraging taxpayers claiming tax relief for working from home to apply directly through GOV.UK working at home.
Eligible taxpayers can claim tax relief based on the rate at which they pay tax. For example, if an employed worker pays the 20% basic rate of tax and claims tax relief on £6 a week, they would receive £1.20 a week in tax relief (20% of £6 a week) towards the cost of their household bills.
Higher rate taxpayers would therefore receive £2.40 a week (40% of £6 a week). Over the course of the year, this could mean taxpayers can reduce the tax they pay by £62.40 or £124.80 respectively.
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.
'Once the application has been approved, the online portal will adjust an individual's tax code for the 2020/21 tax year. The employee will receive the tax relief directly through their salary and will continue to receive the adjustment until March 2021.'
More: GOV.UK working at home
Brexit imports and exports
From 1 January 2021, the UK will operate a full external border with the EU, which will entail major changes for imports and exports to and from the trading bloc. From 1 January 2021, declarations will be needed to import or export specific (limited) goods categorised as 'controlled'.
However, for non-controlled goods brought from the EU to GB, import controls apply in three stages: January, April and July 2021. Some changes will apply to all goods movements, and will involve customs declarations, customs duties and VAT on imports, and safety and security declarations. 'Additional requirements' come in, but only affect certain specific goods movements, such as foodstuffs.
Action points to consider now include:
Economic Operators Registration and Identification (EORI) numbers: from 1 January 2021, an EORI number with the prefix 'GB' is needed to move goods between the UK and the EU, unless you only move goods between Northern Ireland and Ireland.
Remember that from January 2021, it will be important to think about both the UK and EU sides of the equation: to comply with EU requirements, you will, for example, need an EU EORI number if your business makes customs declarations or gets a customs decision in the EU.
Using a customs intermediary: given the complexity of UK and EU customs declarations, you may want to engage a customs intermediary to deal on your behalf.
Postponed VAT accounting for goods imported from the EU: from 1 January 2021, import VAT applies to imports from the EU. Using 'postponed VAT accounting' from 1 January 2021 lets you account for import VAT on your VAT return, giving the potential to declare and recover import VAT on the same return.
Delaying customs declarations and payment of tariffs: when the UK's full suite of border controls are in place in July 2021, full customs declarations and payment of customs duties, as set out in the new UK Global Tariff (or as specified in any trade deal with the EU) must take place when goods are imported from the EU. But from 1 January 2021 to 30 June 2021, most traders with a good compliance record can defer declaration and payment for up to six months on imports of standard goods from the EU.
ATT issues last call for firms seeking to use increased Annual Investment Allowance
The Association of Taxation Technicians (ATT) has issued a last call for businesses looking to make use of the increased Annual Investment Allowance (AIA).
The AIA will be reduced from £1 million to £200,000 from 1 January 2021. Businesses that incur significant expenditure on plant and machinery before the end of this year are likely to get tax relief on the cost much earlier than if the purchase is made in 2021.
Jeremy Coker, President of the ATT, said:
'The AIA rules can catch a business unawares. Many businesses will have deferred decisions about purchasing capital equipment this year because of the enormous uncertainties created by the pandemic. For any which are considering such purchases now, the scheduled ending of the temporary increase in the AIA in two months' time introduces an unwelcome additional complexity.
'Although the timing of a purchase may make no difference in the long run to the amount of expenditure which qualifies for tax relief, it can make an enormous difference to how quickly that relief is received and the contribution that the relief can make to the cashflow of a business.'
Latest guidance for employers
HMRC has published the latest issue of the Employer Bulletin. The October issue has information on various topics including:
- coronavirus support schemes and what employers need to do from November onwards
- National Insurance Number delays
- Guidance on off payroll working rules (IR35)
- grants for businesses that complete customs declarations
- new Employment Allowance status option on PAYE for employers
- using HMRC's Business Tax Account
- making PAYE settlement agreement payments
- applications for the £50 million customs grant scheme
- deferred self-assessment payments from July 2020
- Student Loan repayments.
Please contact us for help with payroll matters.
See: Employer Bulletin
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