Below I have summarised all the main tax related updates we have seen this week.
• Cycle to work scheme
• HMRC powers to recover Covid-19 payments
• Construction VAT reverse charge delayed again to March 2021
• New Addition to the Hillmans Team!
I hope you have a great weekend!
Steven Hillman ACA
Tel: 01934 444100
Cycle to work scheme
The Government is encouraging employers to consider joining a Cycle to Work scheme to help ease pressure on public transport due to the COVID-19 pandemic.
The government-backed cycle to work scheme allows employees commuting to work to pay for bikes and related accessories via salary deductions from pre-tax income. This can result in tax and national insurance savings for both employees and employers.
The cycle to work scheme was introduced to try and encourage employees to cycle to work and reduce environmental pollution by providing tax incentives to employers and employees.
To qualify for the relief, the following conditions must be met:
• The employer must purchase the cycle and related accessories and then loans the cycle to the employee during the “loan period”
• The employee then uses the bike mainly for qualifying journeys; i.e. commuting to and from work
• The cycle to work scheme must be available to the whole workforce
The employer can recover the cost of providing the bike and accessories loaned to the employee via a salary sacrifice arrangement. Under this arrangement the employee will agree to a reduced salary (benefiting from less PAYE tax and NIC). The gross reduction in salary per month could be the cost of the cycle divided by the loan period in months.
The employee can then purchase the bicycle from the employer at the end of the loan period. This must be done at market value, which is at a substantial discount to the original cost, as well as taking into account any payments made by the employee to the employer.
If the employer is VAT registered they can claim input VAT on the purchase of the bike, but it’s worth keeping in mind that they will need to declare output VAT on any disposal. In addition the bike will be of a capital nature and the employer will be able to claim a tax deduction.
If you would like to discuss this further please drop us a line.
HMRC powers to recover Covid-19 payments
We have been advising clients for some time now that HMRC will start to closely review a claimant’s eligibility for the Covid-19 reliefs and grants being paid. Well we noticed that a HMRC draft consultation paper has now been published on the .Gov website supporting this (unsurprisingly without much fanfare):
The consultation period closes on the 12th June 2020, but the paper covers the powers HMRC would have to raise a tax assessment on anyone who has received a SEISS or CJRS payment to which they are not entitled, or anyone who has not used a CJRS payment to pay furloughed employee costs. It also gives HMRC powers to charge a penalty where a person deliberately makes an incorrect claim for a SEISS or CJRS payment. In addition, it gives HMRC powers to charge a penalty where a person who has claimed a CJRS payment deliberately does not use it for the costs it was intended to reimburse.
These HMRC powers aim to quite rightly cover situations of fraud and misuse of government schemes. However if you haven’t yet made a claim and feel that you are eligible for support, it is important to make a claim in a timely manner. Please drop us a line and we can talk you through what support may be available.
Construction VAT reverse charge delayed again to March 2021
Due to the impact of the Coronavirus on the construction sector, the UK VAT domestic reverse charge has been delayed until March 2021.
The VAT reverse charge was due to be introduced in October 2020, and would have seen an end to subcontractors in the construction sector receiving VAT payments in most situations.
It is the second time we have seen a delay with this scheme, the original date for the changes to be introduced was scheduled for October 2019.
Under the proposed VAT reverse charge system, only the main contractor will collect VAT from the customer to pass on to HMRC, rather than each party in the supply chain paying VAT to HMRC and claiming back their share.
You can read more here: https://www.gov.uk/government/publications/revenue-and-customs-brief-7-2020-domestic-reverse-charge-vat-for-construction-services-delay-in-implementation/revenue-and-customs-brief-7-2020-domestic-reverse-charge-vat-for-construction-services-delay-in-implementation
New Addition to the Hillmans Team
We're pleased to introduce Sophie Taylor who has joined Hillmans as an office administration apprentice from Weston College.
Sophie will be assisting with administration, customer service and of course offering a warm welcome to visitors.
Welcome to the Hillmans Team Sophie!