We wish you and those close to you the happiest and safest of Christmases.
Our Christmas Opening Hours
Our office will be closed for the Christmas and New Year period from 5pm on Tuesday 22nd December, re-opening at 9am on Monday 4th January.
We think most clients will be glad to see the
back of 2020. Let us have hope that later in 2021 we return to a more normal
way of life.
How do we make sense of what’s happened this
year?
This year will be remembered for the
destruction Coronavirus has caused to our lives, especially the 79,000 who died
from the virus. We have had to change the way we work and communicate. One of
the greatest costs has been the restrictions on civil liberties in peacetime.
We now wear face masks and socially distance. Schools have been closed and
pupils now learn part of the time remotely and in some areas of the country,
attendance has been below 80%. There are nearly 1.5 million patients waiting
more than six months from appointment to referral for hospital treatment. The
criminal court backlog has grown significantly and mental health amongst all
elements in our population has worsened.
Economically, the country has been devastated
and sectors such as hospitality, travel, the Arts and high street retail hit
hardest. The number of people claiming Universal Credit has doubled to 5.7
million people. For many business
owners, 2020 has been the worst of the worst years, and the UK economy is
expected to shrink by 11.3% this year and not return to its pre-Covid size
until the end of 2022. Government borrowing will rise to its highest outside of
wartime to deal with the economic impact.
A “No Deal” Brexit will have a further
negative impact on the economy in early 2021 and any recovery will take longer
as a result. The Confederation of British Industry (CBI) predict the UK won’t
get back to its pre-pandemic level until the end of 2022 and if there is “No
Deal” this could take up to 2024.
Below I have summarised all the main tax related updates we have seen this week.
If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.
I hope you have a good weekend.
Stay safe and well.
Kind regards,
Steve
Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100
Chancellor Rishi Sunak has today extended the Governments furlough scheme for another month until the end of April 2021.
The Government will continue to pay up to 80% of an employees wage who has been furloughed.
Bounce Back Loan Scheme
The Chancellor also confirmed the Government guaranteed COVID-19 business loan schemes would be extended until the end of March 2021.
Budget
Finally the chancellor has also confirmed the next budget would take place on 3rd March 2021.
HMRC have announced that they will be imposing penalties of up to 100% of the amounts overclaimed on CJRS, SEISS and Eat Out to Help Out Grants.
The penalties depend on whether or not the overclaim is the result of a deliberate error and whether or not the disclosure was prompted by HMRC. The penalty may be reduced where the taxpayer assists HMRC in correcting the error.
Many overclaims may be the result of careless errors or a misinterpretation of the rules which have changed many times in the last 9 months so we hope that HMRC will apply the rules with a light touch and focus on those that have abused these schemes.
We understand that HMRC are writing to 4,000 catering establishments that they suspect may have overclaimed under the “Eat out to help out” scheme that ran in August. Traders are being asked to check their claims and respond within 60 days or face an HMRC compliance check.
Christmas is a time for giving. This often extends beyond family and friends to charity donations. Where possible taxpayers should “Gift Aid” any payments to charity to provide additional benefit to the charity. Higher rate taxpayers obtain additional tax relief on the grossed up amount donated.
For example, where an individual makes a £20 cash donation to charity the charity is able to reclaim a further £5 from HMRC making a gross gift of £25. Where the individual is a 40% higher rate taxpayer he or she is able to claim a further £5 tax relief under self-assessment, reducing the net cost of their donation to £15.
Note that the donor is required to make a declaration that they are a UK taxpayer and those that have not suffered sufficient UK tax to support the Gift Aid amount will taxed on the shortfall.
Remember that Gift Aid does not just apply to gifts of cash. Many charity shops will now sell donated items on your behalf and are able to treat the sale proceeds as Gift Aided donations. It is also possible to gift quoted securities and land and buildings to charity and claim Gift Aid on the market value of those assets.
Business owners affected by the pandemic will be protected from eviction until the end of March 2021.
The Government states: “The majority of commercial landlords have shown flexibility, understanding and commitment to protect businesses during an exceptionally challenging time.
This final extension to protections from the threat of eviction will give landlords and tenants 3 months to come to an agreement on unpaid rent. The government is clear that where businesses can pay any or all of their rent, they should do so.”
Further guidance to support negotiations between landlords and tenants will also be published shortly.
See: https://www.gov.uk/government/news/business-evictions-ban-extended-until-march
Output is expected to shrink again in November after England's second shutdown forced many businesses to close.
October 2020 saw the sixth consecutive month of growth, but the rate of recovery has slowed each month since the largest rise of 9.1% in June 2020. Across services, the monthly growth was driven by health, wholesale, retail and motor trades, and education, while accommodation and food and beverage service activities declined. Within manufacturing there was widespread growth, led by a rise of 6.8% in motor vehicle production. Monthly construction output growth slowed to 1.0% in October 2020, the sixth consecutive month of growth but the lowest rise in that time, with the level of construction output in October 2020 still 6.4% below the February 2020 level.
The figures are gradually improving although it is going to be a long haul. It is clear the hospitality, travel, arts and retail sectors are hardest hit and whilst there are regional grants to support them we believe these sectors will take the longer to recover.
A “No Deal” Brexit will have a negative impact on the economy in early 2021 and any recovery will take longer as a result. The Confederation of British Industry (CBI) predict the UK won’t get back to its pre-pandemic level until the end of 2022 and if there is “No Deal” this could take up to 2024.
Despite the pandemic and the possibility of “No Deal”, we still continue to be impressed with the resilience of our clients and how they have energetically repurposed or pivoted their businesses into new areas, products and services.
Please do talk to us about planning for 2021 and beyond, we have considerable experience in helping businesses project their figures forward and perform “What if” analysis to look at a range of scenarios.
Below I have summarised all the main tax related updates we have seen this week.
If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.
I hope you have a good weekend.
Stay safe and well.
Kind regards,
Steve
Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100
The Local Restrictions Support Grant (LRSG (Open) supports businesses that have been severely impacted due to temporary local restrictions.
Businesses that have not had to close, but which have been severely impacted due to local tier 2 or tier 3 restrictions, may be eligible for LRSG (Open).
Eligible businesses may be entitled to a cash grant from their local council for each 14-day period under local restrictions.
Local councils have the discretion to provide grant funding for businesses under this scheme. They will use their discretion in identifying the right businesses to receive this funding, based on their application process.
See: https://www.gov.uk/guidance/check-if-youre-eligible-for-the-coronavirus-local-restrictions-support-grant-for-open-businesses
The third grant for SEISS is now open. To make a claim for the grant, your business must have been impacted by coronavirus on or after 1st November 2020. You can make a claim for the third grant if you are eligible, even if you did not make a claim for the first or second.
What you will need to make your claim
You will need your:
• Self-Assessment Unique Taxpayer Reference (UTR)
• National Insurance number
• Government Gateway user ID and password
• UK bank details including account number, sort code, name on the account and address linked to the account
You may also need to answer questions about your passport, driving licence or information held on your credit file.
You must make your claim between 30th November 2020 and 29th January 2021 using the government website below.
See: https://www.gov.uk/guidance/claim-a-grant-through-the-self-employment-income-support-scheme
Government guidance has been updated to reflect the extension of the VAT reduced rate for tourism and hospitality from 12th January to 31st March 2021.
The government made an announcement on 8th July 2020 allowing VAT registered businesses to apply a temporary 5% reduced rate of VAT to certain supplies relating to:
• hospitality
• hotel and holiday accommodation
• admissions to certain attractions
The temporary reduced rate will apply to supplies that are made between 15th July 2020 and 31st March 2021.
See: https://www.gov.uk/guidance/vat-reduced-rate-for-hospitality-holiday-accommodation-and-attractions
Prime Minister, Boris Johnson, has announced an additional £1,000 Christmas grant for ‘wet-led pubs’ in tiers 2 and 3 in England, who will miss out on turnover during the busy Christmas period.
Pubs that predominantly serve alcohol rather than provide food, have been asked to make sacrifices over the festive season and will be eligible for a one-off £1,000 to help make ends meet.
The payment will be a one-off for December and will be paid on top of the existing £3,000 monthly cash grants for businesses. This will cover those in tiers 2 and 3 forced to reduce their operations as a result of the latest regional measures put in place to contain transmission of the virus.
See: https://www.gov.uk/government/news/prime-minister-announces-1000-christmas-grant-for-wet-led-pubs
4th December 2020 – Hillmans Weekly Update
Below I have summarised all the main tax related updates we have seen this week.
If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.
I hope you have a good weekend.
Stay safe and well.
Kind regards,
Steve
Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100
HMRC are not the Grinch after all. They have recently announced that employers may arrange a “virtual” Christmas party this year and there will be no taxable benefit for employees provided that all staff are invited and the cost per head does not exceed the normal £150 limit.
Maybe keep it to a modest affair and have a big bash when the Coronavirus pandemic is over as we are allowed more than one event a year within the £150 limit.
Certain gifts to staff at Christmas are tax free if structured correctly. Employers are allowed to provide their directors and employees with certain “trivial” benefits in kind tax free.
This exemption applies to small gifts to staff at Christmas, on their birthday, or other occasions and includes gifts of food, wine, or store vouchers.
There are of course a number of conditions that need to be satisfied to qualify for the exemption.
Conditions for the exemption to apply
• the cost of providing the benefit does not exceed £50
• the benefit is not cash or a cash voucher
• the employee is not entitled to the benefit as part of any contractual obligation such as a salary sacrifice scheme
• the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)
