Below I have summarised all the main tax related updates we’ve seen this week.
- Chancellor extends self-employment income support scheme
- Major changes to the furlough scheme
- North Somerset Council Discretionary Grants Fund Now Open (closes the 8th June)
- ow to Claim back Statutory Sick Pay due to coronavirus (COVID-19)
- Temporary Coronavirus Tax Exemption for Homeworker Expenses
- How to register as a self-employed subcontractor in the construction industry
As always if you need any support or advice please don’t hesitate to contact me.
I hope you have a great weekend!
Chancellor extends self-employment income support scheme
The Chancellor this evening annouced some good news for the self-employed. It has been confirmed that the self-employment income scheme (SEISS) will be extended, with applications opening in August for the second and final grant payment.
The second grant will work the same as for the first grant, however the max grant will be capped at £6,570 or 70% of average profits (previously 80%).
Unfortunately the support grant still excludes company directors who earn dividends from their own limited company.
The SEISS scheme will then end.
Major changes to the furlough scheme
In a further annoucement this evening, the Chancellor has confirmed a number of changes to the furlough scheme.
In June and July the furlough scheme will continue as before. However from August, employers will be asked to cover National Insurance and employer pension contributions.
From September, employers will pay 10% of wages for furloughed staff, and then in October 20%.
The Government is also introducing a more flexible furlough scheme in July, with the ability to bring back employees on a part-time basis, whilst remaining on the furlough scheme.
To summarise the furlough changes:
- June & July - no employer contribution.
- Aug - employers pay NI and pension contributions.
- Sept - government pays 70% and employers pay 10% of wages.
- Oct - government pays 60% and employers pay 20% of wages.
The furlough scheme will then close at the end of October 2020.
North Somerset Council Discretionary Grants Fund Now Open (until the 8th June)
Small businesses in North Somerset, which have yet to receive financial support during the COVID-19 crisis, can now apply for additional funding following an announcement from the Government.
A grant of £2.1 million has been awarded to North Somerset Council as part of a new Government Discretionary Grants Fund, and will offer financial support to small businesses that can demonstrate:
-they have suffered a significant fall in income because of the Covid-19 pandemic
-have fixed property-related costs
-employ fewer than 50 employees
The Government is asking councils to prioritise the following types of businesses:
-small businesses in shared offices or other flexible workspaces
-regular market traders who do not have their own business rate assessment
-bed and breakfasts (excluding Airbnb) which pay council tax instead of business rates
-charity properties that receive charitable business rates relief, which would otherwise have been eligible for small business rates relief or rural rate relief
Organisations applying for the fund must have been trading on 11th March 2020 and not have received any other Government funding.
Businesses need to apply online to the Discretionary Grants Fund, however you need to be quick as the window is only open for two weeks from the 26th May until the 8th June.
You can read more here: https://www.n-somerset.gov.uk/2020/05/22/new-government-grant-launched-to-help-small-businesses-during-coronavirus
How to Claim back Statutory Sick Pay due to coronavirus (COVID-19)
The Coronavirus Statutory Sick Pay Rebate Scheme launched online on Monday 26th May.
The Coronavirus Statutory Sick Pay Rebate Scheme will repay employers the Statutory Sick Pay paid to current or former employees.
Read our full blog full article on how to claim back statutory sick pay due to coronavirus here: https://blog.hillmans.co.uk/2020/05/how-to-claim-back-statutory-sick-pay.html
Temporary Coronavirus Tax Exemption for Homeworker Expenses
The government has introduced a temporary tax exemption and National Insurance disregard to ensure that home office equipment purchased by employees as a result of the coronavirus outbreak, will not attract tax and NICs liabilities where reimbursed by the employer. This temporary change applies for 2019/20 from 16 March 2020, and for the 2020/21 tax year.
To be eligible for the exemption the expenditure must meet the following two conditions:
1. The equipment is obtained for the sole purpose of enabling the employee to work from home as a result of the coronavirus outbreak; and
2. The provision of the equipment would have been exempt from income tax if it had been provided directly to the employee by or on behalf of the employer.
Mobile phones and internet connections
If an employer provides a mobile phone and SIM card without a restriction on private use, limited to one per employee, this is non-taxable.
If an employee already pays for broadband, then no additional expenses can be claimed. However, if a broadband internet connection is needed to work from home and one was not already available, the broadband fee can be reimbursed by the employer and is non-taxable. In this case, the broadband is provided for business and any private use must be limited.
Laptops, tablets, computers, and office supplies
If items are purchased and mainly used for business purposes with incidental private use, these will be non-taxable.
Where the employer does not reimburse the employee for purchased items, the employee can claim tax relief for the expenditure on their tax return (or form P87) as long as the amount claimed is incurred 'wholly, exclusively and necessarily in the performance of their duties of employment'. Employees will need to keep records of their purchase and claim for the exact amount.
Additional household costs of working from home
Payment or reimbursement to employees of up to £6 a week from 6 April 2020 is non-taxable for additional household expenses incurred when an employee is required to work from home.
If an employer wishes to pay more than the guideline rate of £6 per week tax-free, then it is recommended that the employer should agree a scale rate in advance with HMRC. Failing that, records will need to be kept of the actual additional costs incurred by each employee.
If an employee needs to self-isolate but cannot do so in their own home, the employer may reimburse hotel expenses and subsistence costs but such expenses will be taxable.
How to register as a self-employed subcontractor in the construction industry
If you've recently been offered self-employed work in the construction industry (or due to COVID-19 you're considering a career move into the construction industry sector as a subcontractor), you will need to register with HMRC for both self-assessment as self-employed, and under the construction industry scheme (CIS). This does mean that there are two separate registrations, but these can be both done at the same time.
In most cases you can register as self-employed by calling the HMRC Newly Self-employed Helpline on 0300 200 3504. If you are already registered as self-employed, but need to register under the CIS scheme, you should contact the CIS Helpline on 0300 200 3210.
The contractor for whom you are working will ask you for your unique tax reference (UTR) and you need to provide this before you are first paid, in order to determine which tax deduction rate to use.
The UTR is issued when you are first set up under self-assessment to complete a tax return. If you have not previously been required to prepare a tax return, you will be given a UTR when you register as self-employed.
For further guidance on registration and other obligations for subcontractors, see the Gov.uk website at https://www.gov.uk/what-you-must-do-as-a-cis-subcontractor.
If you have questions about CIS you can read our guide at www.hillmans.co.uk/cis, or contact us on 01934 444100 and we'd be pleased to help.
Stay safe and well.
Steven Hillman ACA
Tel: 01934 444100