26th February 2021 – Hillmans Weekly Update

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

• Pre 6 April Tax Planning
• Don't be late in paying your personal tax bill
• Receipt Bank is now called Dext
• Health and Safety Spot Checks and Inspections During Coronavirus
• European Property Owners Face Higher Tax Bills

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.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100

Health and Safety Spot Checks and Inspections During Coronavirus

We have heard from a number of clients that the Health and Safety Executive (HSE) is carrying out spot checks and inspections on all types of businesses in all areas to ensure they are COVID-secure.

HSE are making calls to businesses so they can give advice on how to manage the risks and protect workers, customers and visitors. They are also working closely with local authorities, assisting them in the sectors they regulate such as hospitality and retail.

HSE state that Inspectors will make COVID-secure checks as part of their normal role in visiting workplaces during the pandemic. To ensure they reach as many workplaces as possible nationally and support the core work of inspectors, they are working with trained and approved partners to deliver the spot check calls and visits.

Officers that visit premises will be carrying identification from their business and a letter of authorisation from HSE. If you wish to verify an officer that calls or visits your organisation, please call 0300 790 6896.

See: https://www.hse.gov.uk/coronavirus/regulating-health-and-safety/spot-inspections.htm

Pre 6 April Tax Planning

With 6 weeks to go until the end of the Tax Year, it is time to make the most of your tax allowances this year.  The first step to making the most of your tax allowances can mean looking closely at your pension. UK residents under 75 can add money to a pension and receive tax relief on it. You’ll automatically get basic rate tax relief (currently 20%) paid into your pension by the government.

If you pay tax at a higher rate you could get up to a further 25%, but you’ll need to claim it by declaring any pension contributions you’ve made on your tax return.

To make the most of your pension, you need to know the Pension allowances that you are entitled to. If you have not used them to the full, there may still be time to top them up – and start planning on how you will use them next tax year.

The annual allowance is the maximum you can invest in your pension each year that would be eligible for tax relief. It is currently £40,000, or your entire income, whichever is the smaller and there are lifetime allowances to consider.

If you run a limited company then there are some actions you could consider such as dividend and salary planning, purchasing capital items to maximise capital allowances, research and development tax credits and a range of other matters.   

Please talk to us about pre-tax year end planning for your business and for specific pension planning advice, we can refer you to an independent financial adviser. 

Receipt Bank is now called Dext

As many of our clients will know, we've been big fans of Receipt Bank for a while now. It's a brilliant time-saving and cost-cutting add-on to Xero.

This morning we learnt that Receipt Bank has had a rebrand, and changed its name to Dext Prepare.

Reading their website, we're told Dext is a fusion of two words: the dexterity that accountants and bookkeepers bring to their clients' challenges and the next generation attitude that so many have. 

All the functionality we've become accustomed to with Receipt Bank will remain the same, albeit under the new Dext branding (you can still use the existing Receipt Bank app).

As always, if you need any help using Dext (Receipt Bank) please drop us a line.

You can view the Dext website here: https://dext.com/uk  

European Property Owners Face Higher Tax Bills

Now that the UK has finally left the EU some taxpayers will start to see additional tax costs. One example is where UK residents own holiday homes in EU countries that they rent out for part of the year.

Owners of EU rental properties may now be required to pay more tax in those countries, having previously benefited from a lower rate of tax for EU nationals. Those renting out Spanish properties for example will see the rate of tax they pay in Spain increase from 19% to 24%. There would be double tax credit relief for the overseas tax suffered against the UK tax liability on the rental income, but those who pay UK tax at 20% will see their overall tax bill increase as a result. The UK leaving the EU may also have the effect of increasing the amount of capital taxes and social security taxes payable by property owners.

The property tax rules vary from country to country, so contact us if you are likely to be affected by these changes.

Don't be late in paying your personal tax bill

2019/20 income tax, CGT, class 2 and 4 NIC liabilities should have been paid by 31 January 2021 unless you have agreed a payment plan with HMRC.

HMRC has announced that self-assessment taxpayers won’t be charged the March 5% late payment penalty if they pay their tax or set up a payment plan by 1 April 2021.

Note that if the balance is still unpaid at midnight on 1 April 2021, a 5% surcharge penalty is added in addition to the normal interest charge unless a payment plan has been agreed.

Time to Pay Tax Service

Because of COVID-19, Self-Assessment tax payers can now apply online to HMRC to spread the cost of their tax bill into monthly payments without the need to call them. 

The online self-serve 'Time to Pay' service is designed to help ease any potential financial burden tax-payers may be experiencing due to the coronavirus pandemic.

If you would like to spread your tax payment, you can use the online self-serve 'Time to Pay' service through www.gov.uk to set up a direct debit and pay the tax that is owed in monthly instalments, up to a 12-month period.

If you set up a 'Time to Pay' arrangement, you will have to pay interest on the tax paid late. Interest will be applied to any outstanding balance from 1 February 2021. 

If you need any assistance doing this please do not hesitate to contact us, we will be pleased to assist.

19th February 2021 – Hillmans Weekly Update

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

• Help to Buy scheme extended
• Pay VAT deferred due to COVID-19
• Bounce back loan borrowers can delay repayments by extra six months
• Film & TV Production Restart Scheme

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.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100

Help to Buy scheme extended

The deadline to buy a home under the current Help to Buy scheme in England has been extended to the end of May 2021.

Help to Buy makes new build homes available to all home buyers (not just first-time buyers) who wish to buy a new home but may be constrained in doing so – for example as a result of deposit requirements – but who could otherwise be expected to sustain a mortgage. Up to a maximum of 20% in England and up to 40% in London, of the purchase price is available to the buyer through an equity loan funded by the Government through Homes England. 

Help to Buy is available in England from house builders registered to offer the scheme. Help to Buy has been available since 2013.

For details of the scheme see: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/895107/Help-to-Buy-Buyers-Guide-June2020-FINAL.pdf

Pay VAT deferred due to COVID-19

Information has been added by HMRC about how to join the VAT deferral new payment scheme – with the online service being open between 23 February and 21 June 2021.

If you deferred VAT payments due between 20 March and 30 June 2020, and still have payments to make, you can:

• pay the deferred VAT in full, on or before 31 March 2021.
• join the VAT deferral new payment scheme – the online service is open between 23 February and 21 June 2021.
• contact HMRC on Telephone: 0800 024 1222 by 30 June if you need extra help to pay.

You may be charged interest or a penalty if you do not:

• pay the deferred VAT in full by 31 March 2021.
• opt into the new payment scheme by 21 June 2021.
• agree extra help to pay with HMRC by 30 June 2021.

See: https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19

Bounce back loan borrowers can delay repayments by extra six months

Businesses that took out government-backed Bounce Back Loans to get through Covid-19 will now have greater flexibility to repay their loans.

Bounce Back Loan borrowers will now have the option to tailor payments according to their individual circumstances with the option to delay all repayments for a further six months. 

Pay as You Grow will be available to over 1.4 million businesses, which collectively took out nearly £45 billion through the Bounce Back Loan Scheme.

See: https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan

Film & TV Production Restart Scheme

Many film and television productions have been paused during the pandemic due to a lack of insurance against Coronavirus-related losses, such as filming delays when cast or crew members are ill. The £500 million Film and TV Production Restart Scheme, launched in October 2020, means productions are protected against these delays, giving them the confidence to resume filming.

So far, more than 160 productions from across the UK have been approved by the scheme, supporting over £680 million of economic activity and 19,460 direct jobs on productions – from actors and directors, to hairstylists, runners and set designers. New film, Boxing Day and Sky’s Breeders, are just two of the many projects which have been able to continue filming.

Productions signing up to the scheme are required to pass eligibility checks and supply evidence to show that they cannot return to work without this support, as well as adhere to the scheme rules and industry guidance on safe working:

The Film and TV Production Restart Scheme is available to compensate productions starting or restarting production and covers losses due to delays or abandonment as a result of Coronavirus.

This is a temporary measure, supporting productions which commence filming before 30 April 2021 and for coronavirus-related losses through to the end of June 2021. The deadline for claims if registered is 30 June 2021.

There will be a total cap on claims per production of £5 million, and productions will need to pay an appropriate excess when seeking to claim under the scheme, as well as an appropriate fee when joining the scheme. Productions will also need to purchase insurance to cover non-coronavirus risks to ensure their production is adequately insured.

Productions will need to provide evidence that they cannot return to work because of a lack of insurance.

See: https://www.gov.uk/government/news/almost-20000-jobs-protected-by-film-tv-production-restart-scheme

12th February 2021 – Hillmans Weekly Update

 

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

• Possible Inheritance Tax Changes
• Will CGT Rates Go Up?
• What to do if you’re employed and cannot work – guidance for employees
• VAT on purchases from the EU

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.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100

Possible Inheritance Tax Changes

The Office of Tax Simplification (OTS) has suggested simplifying Inheritance Tax (IHT) on lifetime gifts including reducing the period of potential exemption from 7 to 5 years. Such a change would mean that the donor would only be required to survive for 5 years following a gift for the transfer to be exempt from IHT.

The OTS also suggested that the conditions for Business Property Relief might be tightened up by aligning the rules with the definition of a trading company for CGT. This relief currently provides 100% relief on the transfer of shares in an unquoted company.

The suggested change would mean that more transfers of shares would potentially be liable to inheritance tax and may require a careful review of your plans if you are looking to pass on your business.

What to do if you’re employed and cannot work – guidance for employees

The Department for Work and Pensions has updated its guidance for employees if they are employed and cannot work.

In addition to the Furlough scheme it details that employees might also be able to get:

• New Style Jobseeker’s Allowance (JSA) if you’re under State Pension age, you usually work less than 16 hours a week and have made enough National Insurance contributions over the last 2 to 3 years.
• Universal Credit if you or your partner are under State Pension age and you have less than £16,000 in savings – you might be able to get it at the same time as New Style JSA.
• Pension Credit if both you and your partner have reached State Pension age.

See: https://www.gov.uk/guidance/coronavirus-covid-19-what-to-do-if-youre-employed-and-cannot-work

VAT on purchases from the EU

Here is a quick reminder of the post Brexit VAT rules if you purchase goods from the EU either privately or as a business.

Before Brexit, if anyone purchased goods from the EU on an online platform (say Amazon or E-bay), VAT was paid at the rate charged by the country you purchased the item from. VAT would have been applied at the point of purchase and customers paid the price they saw advertised. In addition many EU businesses selling goods online were below the VAT threshold and there was no VAT charged.

Now all EU sellers have UK VAT charged automatically by online platforms that they use, and this is why some prices have increased by 20%. In addition any purchases from the EU over £135 will have VAT payable by the purchaser at the point of delivery, which could be your doorstep!

In addition because of the customs documentation required some sellers have increased their prices to cover the costs. Some have ceased selling to the UK completely. 

Will CGT Rates Go Up?

The Office of Tax Simplification (OTS) report highlighted the mismatch between Capital Gains Tax (CGT) and income tax rates which currently encourages taxpayers to prefer to take profits as capital rather than income. This potential opportunity has been addressed recently in the case of company liquidations where there is now a targeted anti-avoidance rule. There has also been increased scrutiny of share for share exchanges and company share buy backs by HMRC. Both of these transactions, if properly structured, can currently be taxed as capital gains instead of income.

The CGT annual exempt amount is currently £12,300 which is considered a very generous de minimis. It is important that taxpayers do not need to report trivial disposals of capital assets but perhaps we will need to get used to a more modest limit going forward. Consider making use of the current generous limit whilst it is still there.

A possible change that has featured in a couple of OTS reports recently concerns the treatment of property passing on death. Although the value of the property is subject to IHT, there is currently no CGT and also a tax free uplift to market value for CGT purposes.

The OTS recommendation is that the value for CGT purposes should be the deceased person’s base cost. Although there would still be no CGT to pay on death, the reduced base cost would mean a larger gain and CGT liability on subsequent sale.

We are hoping that the current business asset disposal relief that provides business owners with a 10% CGT rate on disposals will continue to apply as this encourages entrepreneurs to build successful businesses.

5th February 2021 – Hillmans Weekly Update

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

• Budget Day is 3rd March
• Pension Tax Relief Under the Spotlight
• How trading conditions affect eligibility for the Self-Employment Grant
• Coronavirus Job Retention Scheme has been extended until 30 April 2021
• Get Ready For New Off-Payroll Working Rules (IR35)

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.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100

Budget Day is 3rd March

There has been a lot of speculation on what will be in Rishi Sunak’s second Budget in early March and whether there is any tax planning that you should consider before then.

The government will have to start paying down the massive £2 trillion of borrowings at some stage. Increasing tax rates would send the wrong message when the government is trying to stimulate economic recovery.

What the Chancellor is more likely to do is abolish or restrict some of the generous tax reliefs that we have got used to taking advantage of. That would have the effect of raising tax revenue without increasing headline rates.

Although likely to be unpopular with Conservative party voters and backbenchers, it is possible that the Chancellor will target pension tax relief and capital taxes in his Budget. The changes may well be announced as a “simplification” of the rules but that often hides tax raising measures in the small print!

Those buying property might also want to speed up those transactions if they can as the beneficial stamp duty land tax rates are scheduled increase from 1 April 2021.

Listen out in the Budget as the chancellor might possibly announce an extension of the SDLT relief to support the property sector for a few more months.

Another bit of good news to listen out for would be yet further extensions in the CJRS furlough and SEISS grant schemes. These grant schemes are currently scheduled to end on 30 April and it would be nice to get a bit more notice this time.

PENSION TAX RELIEF UNDER THE SPOTLIGHT?

One area where the Chancellor could raise a substantial amount of tax would be to restrict higher rate tax relief on pension contributions.

There have been recent consultations with the pensions industry and it has been suggested that the government top up might be increased to 30% but with no further tax relief. That would continue to encourage people to save for their own pension but the better off would get less tax relief.  The pension rules continue to be complex and this may be announced as a simplification measure.

If you have spare cash that you are considering investing in your pension you might want to consider bringing that investment decision forward. 

How trading conditions affect eligibility for the Self-Employment Grant

HMRC has updated its guidance to define what it means by reduced activity, capacity or demand or temporary closure and gives examples of how this could affect eligibility.

Claims for the third Self-Employment Income Support Scheme (SEISS) grant have now closed. The last date for making a claim for the third grant was 29 January 2021. This guidance applies to claims made during the third grant period. Details about the fourth grant will be announced on 3 March 2021.

To be able to claim for the third grant, you must either:

• be currently trading but are impacted by reduced demand due to coronavirus.
• have been trading but are temporarily unable to do so due to coronavirus.
• You must also:
• intend to continue to trade.
• reasonably believe there will be a significant reduction in your trading profits due to reduced demand or your inability to trade.

You must also meet all other eligibility criteria to make a claim.

HMRC expects claimants to make an honest assessment about whether they reasonably believe their business will have a significant reduction in profits.

Please do talk to us about making a claim or any concerns you may have.

See: https://www.gov.uk/guidance/how-your-trading-conditions-affect-your-eligibility-for-the-self-employment-income-support-scheme

Coronavirus Job Retention Scheme has been extended until 30 April 2021

If you cannot maintain your workforce because your operations have been affected by coronavirus (COVID-19), you can furlough employees and apply for a grant to cover a portion of their usual monthly wage costs where you record them as being on furlough.

The Coronavirus Job Retention Scheme has been extended until 30 April 2021. You can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month.

You can claim for employees who were employed on 30 October 2020, as long as you have made a PAYE RTI submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. This may differ where you have made employees redundant, or they stopped working for you on or after 23 September 2020 and you have subsequently re-employed them.

All employers with a UK, Isle of Man or Channel Island bank account and UK PAYE schemes can claim the grant. You do not need to have previously claimed for an employee before the 30 October 2020 to claim.

Employers can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked. Employers must pay for employer National Insurance contributions and pension costs.

Claims for furlough days in January 2021 must be made by 15 February 2021. You can no longer submit claims for claim periods ending on or before 31 October 2020.

Talk to us about helping you claim a CJRS grant – we have been helping our clients for many months and we can estimate claims in advance to help your cash flow planning.

See:  https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

Get Ready For New Off-Payroll Working Rules (IR35)

This time last year businesses were preparing for important changes to the rules where workers supply their services via their own personal service companies. The start date was then deferred from 6 April 2020 to 6 April 2021.

The new rules are scheduled to apply to large and medium-sized businesses as defined by the Companies Act. Those businesses will be required to consider whether or not the worker would be regarded as an employee if directly engaged and so deduct tax and national insurance from payments as if they were an employee. This change does not apply where the end user is a small business under the Companies Act rules, where the current IR35 rules will continue to apply.

Thus, small organisations will not yet be required to consider the status of the worker or deduct tax.

Please contact us if you are affected by these changes as we may be able to help you with the determination of your workers’ employment status. If you are a worker supplying your services through your own company, we will also be able to advise you on the implications of these changes.