Below I have summarised all the main tax related updates we have seen this week.
- New Grants to Boost Recovery of Small Businesses
- Construction Working Hours
- Updated Government guidance on reduced rate VAT for Hospitality
- Advisory fuel rates update
If you have any queries regarding this week’s content, please do not hesitate to contact me.
I hope you have a great weekend!
Steven Hillman ACA
Tel: 01934 444100
New Grants to Boost Recovery of Small Businesses
Thousands of smaller businesses in England are set to benefit from £20 million of new government funding to help them recover from the effects of the coronavirus pandemic, the Minister for Regional Growth and Local Government has announced.
Small and medium sized businesses will have access to grants of between £1,000 - £5,000 to help them access new technology and other equipment as well as professional, legal, financial or other advice to help them get back on track.
The support will be fully funded by the Government with no obligation for businesses to contribute financially and the support will be fully funded by the government from the England European Regional Development Fund and distributed through local enterprise partnerships (LEP) Growth Hubs, embedded in local areas across England.
LEPs are voluntary partnerships between local authorities and businesses, set up in 2011 by the Department for Business, Innovation and Skills to help determine local economic priorities and lead economic growth and job creation within the local area.
Activities supported through the £20 million can include:
- One-to-many events providing guidance to respond to coronavirus,
- Grants (£1,000 - £5,000) to help businesses access specialist professional advice such as HR, accountants, legal, financial, IT and digital, and to purchase minor equipment to adapt or adopt new technology in order to continue to deliver business activity or diversify.
We will provide further details on how to apply for these grants when the application process is confirmed.
For more information please visit: https://www.gov.uk/government/news/20-million-in-new-grants-to-boost-recovery-of-small-businesses
Construction Working Hours
The Government has published the latest draft guidance which sets out further detail on the proposed new route for applicants seeking to extend construction site working hours introduced in the Business and Planning Bill.
The aim of the new temporary fast track deemed consent route under section 74B of the Town and Country Planning Act 1990 is to enable urgent changes to construction working hours to support safe construction working in line with the government’s latest social distancing guidance on construction and other outdoor work. For many construction sites, implementation of this guidance will require changes to working practices, including staggered starts and finishes, requiring different hours of operation to those which are currently permitted for the site through planning conditions.
For more information see: https://www.gov.uk/government/publications/construction-working-hours-draft-guidance/draft-guidance-construction-site-hours-deemed-consent
Updated Government guidance on reduced rate VAT for Hospitality
The government has updated its guidance on reduced rate VAT for Hospitality, Holiday Accommodation and Attractions. A new section about Retail Schemes has been added to the guide. Its original announcement was on 8 July 2020 allowing VAT registered businesses to apply a temporary 5% reduced rate of VAT to certain supplies relating to:
- hotel and holiday accommodation
- admissions to certain attractions
The temporary reduced rate will apply to supplies that are made between 15th July 2020 and 12th January 2021.
Catering businesses using retail schemes may have to alter their accounting systems for the period 15 July 2020 to 12 January 2021.
If you have a bespoke retail scheme agreement, you should review it and if you think an alteration is needed, contact your large business Customer Compliance Manager. If you are not a large business customer you should contact: Kamran.Hussain@hmrc.gov.uk
Advisory fuel rates update
HMRC publish rates that can be used by employers wishing to pay their employees the cost of fuel for business journeys in company cars (or, where the employer initially pays for all fuel, for reimbursement of private mileage by company car drivers to their employers). Hybrid cars are treated as petrol or diesel cars for this purpose.
HMRC's guidance on fuel-only mileage rates for company cars confirms that employers are not obliged to use advisory fuel rates. Where an employer wishes to use them, they only apply where the employer:
- reimburses employees for business travel in their company cars; or
- requires employees to repay the cost of fuel used for private travel in those company cars.
If the employer pays more than the relevant advisory fuels rates and the payments are not an actual reimbursement, the excess is taxed (and subject to employees' and employers' National Insurance Contributions).
You can view the rates applying from 1 June 2020 on our website here:
An Advisory Electricity Rate has been introduced for electric cars. The current rate is 4p per mile, though it should be noted that electricity is not a fuel for car fuel benefit purposes.
For employees using company cars, an employer may agree to refund the fuel costs using the advisory fuel rates, of employees carrying out volunteer work related to coronavirus, for example, delivering medical supplies including PPE. These refunds are a benefit and the employer may settle any tax and National Insurance contributions on the employee's behalf by reporting through a PAYE Settlement Agreement.
The employer may also agree to fund the cost of fuel for volunteer mileage related to coronavirus. HMRC have advised that volunteer mileage should not be taken into account for the purposes of the car fuel benefit charge for company cars.
Any tax and National Insurance contributions due should be reported through a PAYE Settlement Agreement as a coronavirus related benefit based on the appropriate advisory fuel rate for the volunteer mileage.