28th August 2020 – Hillmans Weekly Update

Below I have summarised all the main tax related updates we have seen this week.

• Stamp Duty Cut Also Benefits Buy-to-Let Landlords

• CBILS and Bounce Back Loans Update

• CJRS Update

• Protecting Your Business Against Fraud

If you have any queries about this week’s content, please do not hesitate to contact me.

I hope you have a great weekend! 😎

Best wishes,

Steve

Steven Hillman BSc (Hons) ACA

Chartered Accountant

Tel: 01934 444100

CJRS Update

The Coronavirus Job Retention Scheme (CJRS) grant claim changes again 1st September. Please talk to us if you would like us to help estimate your claim.

- From 1 September CJRS will pay 70% of usual wages up to a cap of £2,187.50 per month for the hours furloughed employees do not work.

- You will still need to pay your furloughed employees at least 80% of their usual wages for the hours they do not work, up to a cap of £2,500 per month. You will need to fund the difference between this and the CJRS grant yourself.

- The caps are proportional to the hours not worked. For example, if your employee is furloughed for half their usual hours in September, you are entitled to claim 70% of their usual wages for the hours they do not work up to £1,093.75 (50% of the £2,187.50 cap).

- You will continue to have to pay furloughed employees’ National Insurance (NI) and pension contributions from your own funds.

Protecting your business against fraud

In these uncertain times, businesses are combating an increased amount of fraud.

Throughout recent months, there have been widespread reports of an uptick in fraudulent websites, charity scams and fake emails purporting to be from banks, etc. This increase in fraudulent activity is being driven by opportunists who are attempting to take advantage of the confusion and change of circumstances resulting from the current global pandemic.

In order to protect against fraud, businesses should carry out a risk assessment. This should include an assessment of any IT risk that could arise through remote working. Cyber security measures should be put in place including firewalls, anti-malware and anti-virus software. This software should be kept up to date. 

All staff should be trained on how to spot fraudulent emails and should be provided with clear guidelines on what to do if they spot a fraudulent email. For example – check email addresses to see if they look suspicious, report the suspicious email to the IT manager, delete the email, etc.

On the financial side of things, regular internal and external audits should be undertaken. Two signatures / authorisations should be required to sign off on payments from the business. Access to the firm’s bank accounts, online banking facilities and payment systems should be restricted to a limited number of people. An authorisation / approval process should be put in place for all payments over a certain amount.

Computers, company mobiles, phones and devices should all be password protected. All staff should be trained on how to create a secure password and a process should be put in place which means that all passwords are updated on a regular basis. 

Even if you implement these measures, your business could still be the victim of fraud or cyber crime. Make sure that you have appropriate insurance policies in place so that your business is protected against any losses incurred from crimes such as fraud.

Stamp Duty Cut also Benefits Buy-to-Let Landlords

Although the temporary increase in the Stamp Duty Land Tax (SDLT) threshold to £500,000 was aimed at those buying their main residence, it also benefits landlords buying a second or subsequent property where there is a 3% supplementary charge. 

The rate of SDLT on a second home costing up to £500,000 is now 3%. Previously, the rate was 3% up to £125,000, then 5% up to £250,000 and then 8% up to £825,000. 

So the SDLT on a second home costing £400,000 is now £12,000 compared to £22,000 if the purchase had completed before 8 July 2020. 

Please note that there are different thresholds and rates of Land and Buildings Transaction Tax for properties located in Scotland and Wales.

CBILS and Bounce Back Loans Update

Coronavirus Business Interruption loan (CBILS)

The government has given banks extra time to grant state-backed loans to medium-sized and larger businesses in an extension of Covid-19 support packages until 30 November.

The original deadline for CBILS was put at September 30, while the cut-off for the larger scheme was October 20.

The British Business Bank wrote to lenders last week to say that applications for the coronavirus business interruption loan scheme, or CBILS, aimed at medium-sized businesses with turnover of up to £45 million had to be in by midnight on September 30, but that they had two more months to consider the cases.

That pushes the final approvals date to November 30. The deadline for approving larger CBILS has been set for December 31.

The bank said that it had given “an update clarifying the closing of applications”.

Some lenders interpreted this as an extension of the loans, which may be the first step in a move to keep the schemes open into next year.

Bounce Back Loans

The bounce back loan scheme, is aimed at smaller businesses and is due to end on November 4. No extra time has been given for approvals of bounce back loans as they were designed to be agreed by banks speedily, with minimal affordability checks.

Almost £52 billion has been lent under the schemes, including £35 billion in bounce back, £13.4 billion in CBILS and £3.4 billion in larger CBILS.

Please contact us if you need help in applying for a loan.

21st August 2020 – Hillmans Weekly Update

Below I have summarised all the main tax related updates we have seen this week.

• UK Claims Open for Second Self-Employed Support Grant
• Coronavirus Job Retention Scheme - A Reminder
• What to do if you've claimed too much or not enough from the Coronavirus Job Retention Scheme
• Check if you can get Tax-Free Childcare and 30 hours free childcare during coronavirus

If you have any queries regarding this week’s content, please do not hesitate to contact me.

I hope you have a great weekend!

Best wishes,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk/covid-19-updates 

Check if you can get Tax-Free Childcare and 30 hours free childcare during coronavirus

Find out about temporary changes that may affect you if you are applying for, or already getting, Tax-Free Childcare or 30 hours free childcare.    

Working parents or carers, who are eligible for Tax-Free Childcare or 30 Hours Free Childcare but have temporarily fallen below the minimum income requirement because of coronavirus, will continue to receive financial support until 31st October 2020.

Critical workers who may exceed the income threshold for the 2020 to 2021 tax year, as a result of working more to play a vital role in tackling coronavirus, will continue to receive support this tax year.

See more information here: https://www.gov.uk/guidance/check-if-you-can-get-tax-free-childcare-and-30-hours-free-childcare-during-coronavirus-covid-19

What to do if you've claimed too much or not enough from the Coronavirus Job Retention Scheme

The Government has updated its guidance if an employer has claimed too much or not enough from the CJRS. 

If you have claimed too much

If you want to delete a claim in the online service, you must do this within 72 hours.

If you have made an error in a claim that means you’ve received too much, you must pay this back to HMRC. You can either:

• tell HMRC as part of your next online claim (your new claim will be reduced and you’ll need to keep a record of the adjustment for 6 years)

• contact HMRC to pay the money back (you should only do this if you’re not submitting another claim)

If you’ve overclaimed a grant and have not repaid it, you must notify HMRC by the latest of either:

• 90 days after the date you received the grant you were not entitled to

• 90 days after the date you received the grant that you were no longer entitled to keep because your circumstances changed

• 20 October 2020

If you do not do this, you may have to pay a penalty. If you do repay any overclaimed grant, this will prevent any potential tax liability in respect of the overpayment of Coronavirus Job Retention Scheme. HMRC have advised they will not be actively looking for innocent errors in their compliance approach.

If you have not claimed enough

If you made an error in your claim that has resulted in receiving too little money, you will still need to make sure you pay your employees the correct amount. You should contact HMRC to amend your claim and as you are increasing the amount of your claim and they may need to conduct additional checks.

See: https://www.gov.uk/guidance/if-youve-claimed-too-much-or-not-enough-from-the-coronavirus-job-retention-scheme

Coronavirus Job Retention Scheme - A Reminder

From September 1, the government grant towards the employee wages will be reduced to 70%. From October 1, the government grant will be reduced again to 60%. During these months’ employers will be asked to contribute towards the cost of their furloughed employees’ wages to ensure they continue to receive at least 80% of their wages for the time they are on furlough.

You cannot claim for:

• additional National Insurance or pension contributions you make because you choose to top up your employee’s wages
• your employees’ wages for any time they spend working, or any National Insurance or pension contributions you make on these wages
• any pension contributions you make that are above the mandatory employer contribution

You can choose to top up your employees’ wages above the minimum furlough pay amount, but you do not have to. Employees must not work or provide any services for the business during hours which they are recorded as being on furlough, even if they receive a top-up wage.

Please talk to us if you need assistance in making these claims. 

See: https://www.gov.uk/guidance/calculate-how-much-you-can-claim-using-the-coronavirus-job-retention-scheme

Claims Open for Second Self-Employed Support Grant

From today (17th August), eligible self-employed individuals will be able to claim for their second grant under the Self-Employment Income Support Scheme (SEISS). 

If you are self-employed or member of a partnership, and you were eligible for the first grant and can confirm to HMRC that your business has been adversely affected on or after 14th July 2020, you will be able to make a claim for a second and final grant from today.

Directors of limited companies and the newly self-employed (2019/20+) are unfortunately not eligible for SEISS.

If eligible, the scheme allows you to claim a second and final taxable grant worth 70% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £6,570 in total.

You can make a claim for the second grant if you’re eligible, even if you did not make a claim for the first grant. You must make your claim on or before 19th October 2020.

As with the first grant, HMRC are opening the application process in stages over the next week.

You can check if you can claim a grant through the Self-Employment Income Support Scheme, and your individual application date by visiting: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

Although we cannot make the application for you, we can talk you through the process and help you with the information you need to enter for the grant application. Please drop us a line and we will be pleased to help.

Weekly Update 14th August 2020

Below I have summarised all the main tax related updates we have seen this week.

• UK Officially in Recession
• Business asset disposal relief update
• CGT Reporting Deadline
• How to Claim Money Back Through The Eat Out to Help Out Scheme

If you have any queries regarding this week’s content, please do not hesitate to contact me.

I hope you have a great weekend!

Best wishes,

Steve

Steven Hillman ACA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk/covid-19-updates 

UK Officially in Recession

The headlines yesterday (12th August) were about the economy being in recession for the first time in 11 years and the UK suffering its biggest slump on record between April and June as coronavirus lockdown measures pushed the country officially into recession. The economy shrank 20.4% compared with the first three months of the year.

This is not really a surprise to anyone as household spending dived as shops were ordered to close, while factory and construction output also fell.

There is however some good news - The Office for National Statistics (ONS) said the economy bounced back in June as government restrictions on movement started to ease. On a month-on-month basis, the economy grew by 8.7% in June, after growth of 1.8% in May. Growth is expected to continue although some sectors of the economy will not recover as fast as others. It will take time for the retail and hospitality sectors to get anywhere near where they were in March. 

For all of us in business now is the time to be flexible and resilient with planning forward. Some of our clients have already repurposed their businesses and pivoted into new areas, these businesses are now seeing signs of recovery and what is clear to us is the need to take time to think about new ways of doing business. 

Please talk to us about our planning resources to help you think about your future, we are here to support you!

Business asset disposal relief update

The Government has announced a significant restriction on future availability of entrepreneur's relief (ER) for individuals who dispose of all or part of their business, individuals who dispose of shares in their personal company, and trustees who dispose of business assets.

Broadly, the changes will increase the amount of tax payable by a business sold at a profit of over £1m. For potential sale profits at or around this limit, careful planning may be needed to extract value from the business prior to sale, for example through increased employer pension provision, to bring the chargeable gain within the revised limit.

Entrepreneur's relief is to change its name to business asset disposal relief (BADR).

When an individual disposes of an asset at a gain, capital gains tax may be due. Ordinarily, for gains falling above the higher-rate threshold (£50,000 in 2020/21), this will be charged at a rate of 20%. However, if certain conditions are met, BADR may be available and the chargeable rate be reduced to 10%. Broadly, the lifetime limit of £10m is reduced to £1m for disposals on or after 11 March 2020 (for disposals between 6 April 2011 and 10 March 2020, the lifetime limit on gains qualifying for ER was £10 million). The measure also provides that the lifetime limit must take into account the value of ER claimed in respect of qualifying gains in the past.

The limit is a lifetime threshold and claims may be made against it on more than one occasion.

Selling all or part of a business

To qualify for BADR, both of the following conditions must apply:

- the individual must be a sole trader or business partner; and
- the individual must have owned the business for at least two years before the date they sell it.

The same conditions apply if the business is closing rather than being sold. The business assets must be disposed of within three years to qualify for relief.

Selling shares or securities

To qualify, both of the following conditions must apply for at least two years before the shares are sold:

- the individual is an employee or office holder of the company (or one in the same group); and
- the company's main activities are in trading (rather than non-trading activities like investment) or it's the holding company of a trading group.

There are other rules depending on whether or not the shares are from an Enterprise Management Incentive scheme (EMI).

Selling assets previously lent to the business

To qualify, both of the following must apply:

- the investor sold at least 5% of their part of a business partnership or their shares in a personal company and
- they owned the assets but let their business partnership or personal company use them for at least one year up to the date they sold the business or shares - or the date that the business closed.

CGT Reporting Deadline

Capital gains tax (CGT) on disposals of UK residential property between 6 April and 1 July 2020 had to be reported to HMRC by 31 July to avoid a penalty.

Finance Act 2019 made certain changes regarding payment of CGT, which took effect from April 2020 and broadly align the position of UK residents and non-UK residents. From 6 April 2020, a UK resident who sells a residential property in the UK will have 30 days to tell HMRC and pay any CGT owed. Failure to notify HMRC within 30 days of completing a sale may result in penalty and interest charges.

However, in response to the COVID-19 pandemic the government extended the reporting deadline so that no late filing penalty will be charged for any transactions completed between 6 April 2020 and 1 July 2020 which were reported by 31 July 2020.

The extended deadline applies only to UK resident taxpayers for whom the requirement is new - non-residents have to file within 30 days of completion.

The requirement to pay any CGT due within 30 days of completion was not deferred and interest will be charged on any tax not paid within 30 days of completion.

UK residents are required to report gains on UK residential property only where tax is due.

A CGT report and accompanying payment of tax may be required where the taxpayers sells or otherwise disposes of:

- a property that they have not used as their main home;
- a holiday home;
- a property which has been let out for people to live in;
- a property that has been inherited and not used as a main home.

There is no requirement to make a report make a payment of tax when:

- a legally binding contract for the sale was made before 6 April 2020;
- the individual satisfies the for Private Residence Relief (generally a main residence);
- the sale was made to a spouse or civil partner;
- the gains (including any other chargeable residential property gains in the same tax year) are within the tax free allowance known as the annual exempt amount (£12,300 in 2020/21);
- the property is sold for a loss; or
- the property is outside the UK.

HMRC have launched a new online service that allows taxpayers to report and pay any CGT owed: https://www.tax.service.gov.uk/capital-gains-tax-uk-property/start/report-pay-capital-gains-tax-uk-property

How to Claim Money Back Through The Eat Out to Help Out Scheme

The Government has announced details on how to claim the reimbursement for discounts given to diners with the Eat Out to Help Out Scheme.

Please talk to us if you need help with your claim and record keeping. 

Who can claim?

If you have registered your establishment for the Eat Out to Help Out Scheme and offered scheme discounts to diners on Mondays to Wednesdays between 3 and 31 August, you can:

• claim back the discount given on food and non-alcoholic drinks

• submit weekly claims for August until 30 September

You must make the claim ONLINE yourself. Unfortunately HMRC does not allow Accountants to do it for you. However we can help you calculate the claim if you want us to. 

You must enter accurate details for all the establishments you’re claiming for before submitting your claim. If you need to amend information later your payment may be delayed.

When you can claim

You can make a claim after 7 days from the date of your registration. You can only claim for scheme discounts you offered on or after the date you registered. 

What you will need

You will need the records you’ve kept for each day you have used the scheme, including the:

• total number of diners (covers) who have used the scheme, including children

• total amount of discount you’ve given

• period you’re claiming for

If you are making a claim for more than one establishment, you will need to have the:

• records for each establishment

• overall total value of the claim for all establishments ready before you claim

How to claim

You must enter accurate details for all the establishments you’re claiming for and check your claim carefully before submitting.

If you claim too much, HMRC will not be able to correct this until 14 August.

If you claim too little, HMRC will not be able to correct this until 21 August.

You can make up to 5 claims before 30 September. You cannot claim after that.

When you sign into the service you must choose the periods that you are claiming for, from:

• 3 to 5 August

• 10 to 12 August

• 17 to 19 August

• 24 to 26 August

• 31 August

You’ll also need to enter the total number of covers and claim value for each establishment that has offered the scheme discount.

Records you must keep

To show the link between the number of diners who got the discount and the total value of scheme discount being claimed for in each claim period, for each day, all you must keep is a record of the:

• total number of diners who have used the scheme discount in your establishment

• total value of all eat in food and non-alcoholic drink sold where the scheme discounts were given

• total value of scheme discounts you’ve given and claimed for

If you are using the scheme for more than one establishment, you must keep these records for each.

HMRC may ask for your records relating to the scheme. You should keep records:

• in a format that suits your business

• with your other business records

Once you have claimed, you will get a claim reference number. HMRC will then check your claim is correct and pay the claim amount by BACs into the bank account you gave when you registered, within 5 working days.

Paying tax

You will still need to pay VAT based on the full amount of your customer’s bill before the scheme discount is applied. This amount needs to be reflected in the correct VAT return for the period the transaction took place.

If your point of sale system does not allow you to account for VAT accurately under this scheme, you can manually adjust your VAT account after the sale.

If you cannot include the adjustment in the period the transaction took place, you should estimate the VAT and you must account for any difference in your next VAT return.

The payment you receive will be treated as taxable income.

If you need to make a correction

If you need to correct any information given during registration or to a claim, you will need to contact HMRC. There is a dedicated helpline for this scheme: 0300 322 9429.

For further information or assistance with the claim please contact us.

See:  https://www.gov.uk/guidance/claim-money-back-through-the-eat-out-to-help-out-scheme

Weekly Update 7th August 2020

Below I have summarised all the main tax related updates we have seen this week.

 

·         How to Apply for the Local Enterprise Partnership Small Business Grants of £1,000 to £5,000

·         Face Covering Required in Financial Premises from 8th August

·         Job Retention Bonus

·         Asking HMRC to Verify You Had a New Child Which Affected Your Eligibility for the SEISS Grant

 

If you have any queries regarding this week’s content, please do not hesitate to contact me.

I’m away from the office on annual leave next week with the family, but if you need any support or advice please do not hesitate to contact the team.

I hope you have a great weekend!

 

Best wishes,

 

Steve

 

Steven Hillman ACA

Chartered Accountant

Tel: 01934 444100

https://www.hillmans.co.uk/covid-19-updates

Face Covering Required in Financial Premises from 8th August

The Government has updated its guidance on Face Coverings. For members of the public, from the 8th August 2020 you will have to wear a face covering in premises providing professional, legal or financial services. This will include our office.

We therefore politely request that clients visiting our office please wear a face covering from the 8th August onwards. 

We understand there are some circumstances where people are not expected to wear face coverings. We will be mindful and respectful of such circumstances, noting that some people are less able to wear face coverings, and that the reasons for this may not be visible to others.

See: https://www.gov.uk/government/publications/face-coverings-when-to-wear-one-and-how-to-make-your-own/face-coverings-when-to-wear-one-and-how-to-make-your-own

Please drop me a line if you have any queries regarding this or if I can assist further.

Many thanks,

Steve

Steven Hillman BSc (Hons) ACA

Chartered Accountant

Tel: 01934 444100

https://www.hillmans.co.uk/covid-19-updates

Asking HMRC to Verify You Had a New Child Which Affected Your Eligibility for the SEISS Grant

ASK HMRC TO VERIFY YOU HAD A NEW CHILD WHICH AFFECTED YOUR ELIGIBILITY FOR THE SELF-EMPLOYMENT INCOME SUPPORT SCHEME

If you are self-employed or a member of a partnership, and having a new child affected the trading profits or total income you reported for the tax year 2018 to 2019, use the HMRC form to ask them to verify that you had a new child.

If you are already eligible for the grant based on your 2016 to 2017, 2017 to 2018 and 2018 to 2019 Self-Assessment tax returns, how HMRC will work out your grant amount will not be affected.

If you are not already eligible you can ask HMRC to check if you had a new child which either:

• affected your trading profits or total income you reported for the tax year 2018 to 2019

• meant you did not submit a Self-Assessment tax return for the tax year 2018 to 2019

For this scheme having a new child is any of the following:

• being pregnant

• giving birth (including a stillbirth after more than 24 weeks of pregnancy) and the 26 weeks after giving birth

• caring for a child within 12 months of birth if you have parental responsibility

• caring for a child within 12 months of adoption placement

You must have been self-employed in the tax year 2017 to 2018 and have submitted your Self-Assessment tax return on or before 23 April 2020.

You must also meet all other eligibility criteria.

See:  https://www.gov.uk/guidance/ask-hmrc-to-verify-you-had-a-new-child-which-affected-your-eligibility-for-the-self-employment-income-support-scheme?utm_source=d0c58b1c-9412-4027-9cb7-8868b1c199b5&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

Job Retention Bonus

The government is introducing a new Job Retention Bonus to provide additional support to employers who keep on their furloughed employees in meaningful employment, after the government’s Coronavirus Job Retention Scheme ends on 31 October 2020.

The Job Retention Bonus is a one-off payment to employers of £1,000 for every employee who they previously claimed for under the scheme, and who remains continuously employed through to 31 January 2021. Eligible employees must earn at least £520 a month on average between the 1 November 2020 and 31 January 2021. Employers will be able to claim the Job Retention Bonus after they have filed PAYE for January and payments will be made to employers from February 2021.

An employer will be able to claim the Job Retention Bonus for any employees that were eligible for the Coronavirus Job Retention Scheme and they have claimed a grant for. Where a claim for an employee was incorrectly made, a Job Retention Bonus will not be payable.

All employers are eligible for the scheme including recruitment agencies and umbrella companies.

Employers should ensure that they have:

• complied with their obligations to pay and file PAYE accurately and on time under the Real Time Information (RTI) reporting system for all employees

• maintained enrolment for PAYE online

• a UK bank account

Employers must keep their payroll up to date and accurate and address all requests from HMRC to provide missing employee data in respect of historic Coronavirus Job Retention Scheme claims. Failure to maintain accurate records may jeopardise an employer’s claim.

See:  https://www.gov.uk/government/publications/job-retention-bonus/job-retention-bonus

How to Apply for the Local Enterprise Partnership Small Business Grants of £1,000 to £5,000

Small businesses will be able to access grants between £1,000 to £5,000 to help them use new technology and equipment as well as accessing professional, legal, financial, or other advice to get their businesses back on track.

The grants will be fully funded by the government from the England European Regional Development Fund (ERDF) and distributed through Local Enterprise Partnership (LEP) Growth Hubs across England.

To apply for a grant, you will need to register your interest in the scheme direct with your local area LEP Growth Hub. 

For Weston-super-Mare, Bristol, Bath & North East Somerset, North Somerset, and South Gloucestershire clients visit: https://www.wearegrowth.co.uk/ 

For Taunton and Somerset clients visit: https://www.heartofswgrowthhub.co.uk/ 

For all other areas you can locate your local Hub here: https://www.lepnetwork.net/about-leps/location-map/