28th May 2021 – Hillmans Weekly Update

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

• Self-Employment Income Support Scheme (SEISS) Update
• Tell HMRC and pay back a Self-Employment Income Support Scheme grant
• Changes to the CJRS from July
• Motor Vehicle Electrification Update

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 great bank holiday weekend.

Stay safe and well.

Cheers,

Steve

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

Changes to the CJRS from July

The government will continue to pay 80% of your furloughed employees' usual wages for the hours not worked, up to a cap of £2,500 per month, to the end of June.

In July, CJRS grants will cover 70% of employees' usual wages for the hours not worked, up to a cap of £2,187.50. In August and September, this will then reduce to 60% of employees' usual wages up to a cap of £1,875.

You will need to pay the 10% difference in July (20% in August and September) so that you continue to pay your furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month.

For the hours not worked you can continue to choose to top up your employees' wages above the 80% level or cap for each month, at your own expense.

Motor Vehicle Electrification Update

According to the Association of Fleet Professionals, concerns surrounding Clean Air Zones (CAZs) are two of the top three issues that car and van fleet operators believe they will face before 2026 and they are;

1) Introduction of the CAZs infrastructure - 35%
2) Increased creation of more CAZs - 30%
3) A number of car manufacturers have responded to the recent reduction in Electric Vehicle government grants by slashing list prices, in line with new Plug-in Grant thresholds, bringing them under the newly announced threshold of £35,000 OTR price. These models include derivatives of the Nissan Leaf, BMW i3, VW e-Up, Peugeot e-2008, Citroen e-C4, Vauxhall Mokka-e, Kia e-Niro and Hyundai Kona Electric and Huyndai Ioniq electric.

These price reductions do show that manufacturers have leeway to trim prices, which will help remove another barrier to Electric Vehicle market entry.

Businesses in the UK are planning to spend £15.8 billion on electric vehicles and charging infrastructure over the next 12 months, compared with £10.5 billion in the year to March 2021.

There was a 566% increase in pure electric vehicle registrations in April 2021, from 1374 units sold in April 2020 to 9152 units in April 2021, with an 80% increase in Electric Vehicle sales in Qtr 1 2021, versus Qtr1 2020, according to the Society of Manufacturer and Motor Traders, SMMT, who have also confirmed there are now well over 515,000 pure electric and plug-in Hybrids on UK roads.

Network operators installed an incredible 160 Electric Vehicle rapid chargers across the UK in April 2021, this is the second highest ever seen.

Ford has embarked on a major Electrification programme to transform its full range by 2026 and Land  Rover will launch six pure electric models within five years, including Range Rover.

For March 2021, the Top Ten pure Electric cars leased in the UK were;

1) Hyundai Ioniq
2) Tesla 3
3) VW ID.3
4) Hyundai Kona
5) Audi e-Tron
6) Nissan Leaf
7) Kia e-Niro
8) Vauxhall Corsa E
9) MG Motors UK Zs
10) Jaguar I-Pace

Blog Article Written by: Leon Wilce Fleet Electrification Specialist Consultant - Westcar Consulting leon@west-car.co.uk https://www.linkedin.com/pulse/electrification-update-leon-wilce

Tell HMRC and pay back a Self-Employment Income Support Scheme grant

Find out what to do if you need to pay back some or all of a SEISS grant. You must tell HMRC if, when you made the claim, you were not eligible for the grant. For example:

• for the first or second grant, your business was not adversely affected
• for the third or fourth grant, your business had not been impacted by reduced activity, capacity or demand or inability to trade in the relevant periods
• you did not intend to continue to trade
• you have incorporated your business
• You must also tell HMRC if you:
• received more than they said you were entitled to
• amended any of your tax returns on or after 3 March 2021 in a way which means you are no longer eligible or are entitled to a lower fourth grant than you received.

See:  Tell HMRC and pay back a Self-Employment Income Support Scheme grant https://www.gov.uk/guidance/tell-hmrc-and-pay-the-self-employment-income-support-scheme-grant-back

Penalties for not telling HMRC about coronavirus (COVID-19) support scheme overpayments - CC/FS11a

If you have received a grant but were not eligible or you have been overpaid, find out about penalties you may have to pay if you do not tell HRMC.

See:  Penalties for not telling HMRC about coronavirus (COVID-19) support scheme overpayments - CC/FS11a - https://www.gov.uk/government/publications/penalties-for-not-telling-hmrc-about-coronavirus-covid-19-support-scheme-overpayments-ccfs11a

Self-Employment Income Support Scheme (SEISS) Update

The online service for the fourth grant is now available. The Self-Employed Income Support Scheme (SEISS) has been extended to September 2021 and details of claims for the fourth grant have now been released. This fourth grant covers February, March and April 2021.

The fourth grant must be claimed by 1 June.

There will then be a fifth grant covering May to September 2021. 

The latest grant allows the self-employed to claim 80% of their average profits for the period up to 2019/20 and is again limited to £2,500 a month.

Like CJRS there are lots of conditions that need to be satisfied, such as being self-employed in 2019/20 and continuing to trade in 2020/21 or would be doing so, if it the business had not been impacted by coronavirus.

In order to be able to make a successful claim, the self-employed profits in 2019/20 must not exceed £50,000 and must be more than 50% of the individual’s total income. If that test is not met, then the same £50,000 and 50% tests are applied to average profits and total income over the four years (or shorter period) to 5 April 2020. This means that those who commenced trading in 2019/20 will now potentially be eligible for SEISS grants, having not previously qualified for the first three grants.

Although we cannot make the claim on your behalf, we can help you determine whether you are eligible and assist you with your claim if required.

Conditions for the fifth grant will be linked to a reduction in business turnover. Self-employed individuals whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500. People whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850. We are still awaiting further details of the fifth grant calculation.

See: Check if you can claim a grant through the Self-Employment Income Support Scheme - https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

21st May 2021 – Hillmans Weekly Update

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

• ONS confirms economy growing
• Employers’ NICs Relief for employees working in Freeport tax areas
• HMRC urge businesses to carry out due diligence into their labour supply chain
• Paying CJRS Grants Back

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

Employers’ NICs Relief for employees working in Freeport tax areas

The government have announced a new zero rate of secondary Class 1 National Insurance contributions (NICs) for eligible employers on the earnings of eligible employees working in a Freeport tax site.

In Great Britain (England, Scotland and Wales), this measure will provide those employers with physical premises in a Freeport tax site (Freeport employers) with a zero rate of secondary Class 1 National Insurance contributions on the earnings of new employees who spend 60% or more of their working time within Freeport tax site. This rate can be applied on the earnings of all new hires up to £25,000 per annum from 6 April 2022 for 36 months per employee. Legislation to introduce the relief is included in the National Insurance Contributions Bill 2021.

This measure is in addition to the tax breaks and Customs Duty exemptions announced in the March Budget for businesses operating in these designated areas.

The first 8 Freeports announced in the Budget are located at East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth and South Devon, Solent, Teesside and Thames.

See: Zero-rate of secondary NICs for Freeport employees - https://www.gov.uk/government/publications/zero-rate-of-secondary-national-insurance-contributions-for-freeport-employees/zero-rate-of-secondary-nics-for-freeport-employees

HMRC urge businesses to carry out due diligence into their labour supply chain

HMRC is warning organisations about the use of mini umbrella companies in the labour supply chain and the need to carry out due diligence to protect the organisation from financial and reputational damage.

Without a careful review of their labour supply chain the end user could find themselves liable for tax, national insurance and VAT avoided by entities inserted in the labour supply chain between them as end user and the workers engaged via the umbrella structure. This was highlighted in a recent BBC programme which identified 48,000 umbrella companies set up to exploit the £4,000 employment allowance. These companies were set up to supply workers to the NHS Covid testing programme outsourced to G4S. Similar arrangements continue to be marketed to allegedly sidestep the new “off-payroll” working rules.

If you use agency or temporary workers or are an agency providing workers, you or one of the other parties in the labour supply chain may need to operate PAYE on the workers’ earnings – you should check who needs to do this. HMRC have provided the following advice on due diligence procedures:

See: Advice on applying supply chain due diligence principles to assure your labour supply chains - https://www.gov.uk/government/publications/use-of-labour-providers/advice-on-applying-supply-chain-due-diligence-principles-to-assure-your-labour-supply-chains 

What are the risks?

HMRC can ask you to account for unpaid tax and National Insurance contributions. For example, if an offshore agency supplies you with workers and they do not account for tax and National Insurance contributions payable through the PAYE system, then you may have to.

To increase compliance with the off-payroll working rules in the private and voluntary sectors, organisations receiving an individual’s services (where the individual works through their own intermediary, most commonly their own limited company) are now responsible for assessing that individual’s employment status and determining whether the rules apply from April 2021. This reform already applies in the public sector where an individual works through their own intermediary.

The off-payroll working reform from April 2021 will also provide HMRC with the power to recover unpaid tax and National Insurance contributions from you, or the agency you contract with in some circumstances – if, for example, a UK-based agency lower down in your labour supply chain fails to account for tax and National Insurance contributions payable through the PAYE system under the off-payroll working rules and there is no realistic prospect of recovering the tax and National Insurance contributions from them. This change will apply to the public, private and voluntary sectors.

See: 10 things about due diligence: supply chain assurance - https://www.gov.uk/government/publications/use-of-labour-providers/10-things-about-due-diligence-supply-chain-assurance

ONS confirms economy growing

The Office for National Statistics (ONS) have published their latest figures on the economy showing that:

• Monthly gross domestic product (GDP) grew by 2.1% in March 2021, but remained 5.9% below its level in February 2020, which was the most recent month not affected by the coronavirus (COVID-19) pandemic.

• The rise in GDP was led by a month-on-month rise of 1.9% in services in March 2021, but this sector remained 7.2% below its February 2020 level; the monthly rise in services was led by the education sector (contributing 0.54 percentage points of the growth).

• Monthly production grew by 1.8% between February 2021 and March 2021 but remained 1.8% below its February 2020 level; the monthly rise in production was led by manufacturing (contributing 1.51 percentage points of the growth).

• Monthly manufacturing grew by 2.1% between February 2021 and March 2021 but remained 2.2% below its February 2020 level; the monthly rise was led by manufacturing of machinery and equipment not elsewhere classified.

• Monthly construction grew by 5.8% between February 2021 and March 2021, meaning it was 2.4% above its February 2020 level.

We expect these positive figures to continue as we go through the summer, lock down restrictions are eased and if you need any help in planning for growth with your business and the incentives and finance available please call us.  

Paying CJRS Grants Back

If you have claimed too much through the Coronavirus Job Retention Scheme, or you would like to make a voluntary repayment because you do not want or need the grant to pay your employees’ wages, tax and National Insurance and pension contributions, you can either:

• correct it in your next claim (your new claim will be reduced, and you’ll need to keep a record of the adjustment for 6 years)
• get a payment reference number and pay HMRC back within 30 days (only if you’re not correcting it in your next claim)

https://www.gov.uk/guidance/pay-coronavirus-job-retention-scheme-grants-back

14th May 2021 – Hillmans Weekly Update

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

• Business New Update
• HMRC Guidance on moving goods between GB and the EU
• Making Tax Digital Extended to More Businesses
• Making Tax Digital (MTD) for VAT – end of “soft landing”

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

HMRC Guidance on moving goods between GB and the EU

HMRC have recently sent letters to VAT-registered businesses in Great Britain trading with the EU, or the EU and the rest of the world.

They explain what businesses need to do to comply with the new rules and processes for moving goods between Great Britain and the EU, including:

• making sure they have a UK Economic Operator Registration and Identification (EORI) number
• ensuring they are ready to make customs declarations
• checking if their goods are eligible for the preferential zero duty rates
• preparing for the end of staged import controls on 1 January 2022

https://www.gov.uk/government/publications/letters-to-businesses-about-importing-and-exporting-goods-between-great-britain-and-the-eu

Making Tax Digital (MTD) for VAT – end of “soft landing”

MTD for VAT currently applies to VAT registered businesses with taxable turnover in excess of £85,000, the current VAT registration threshold. From 1 April 2022, MTD for VAT is being extended to all VAT registered businesses.

HMRC have updated their guidance in VAT Notice 700/22 regarding MTD for VAT:

https://www.gov.uk/government/publications/vat-notice-70022-making-tax-digital-for-vat

This publication is essential reading for all VAT registered business as some of the content has the force of law.

The notice:

• explains the digital records businesses must keep, and ways to record transactions digitally in certain special circumstances
• explains what counts as compatible software, and when software programs do and do not need to be digitally linked where a combination of programs is used
• gives examples of when digital links are required

Section 4 alerts businesses to the end of the “soft landing” period:

HMRC gave a period of time (known as the soft landing period) during the first 2 years of Making Tax Digital, to help businesses put digital links in place between all parts of their functional compatible software. Businesses were not required to have digital links in place until their first VAT Return period, starting on or after 1 April 2021.

During the soft landing period, if a digital link was not established, HMRC accepted the use of ‘cut and paste’ or ‘copy and paste’ as being digital links.

The soft landing period has now ended.

Business News Update

This week we learnt that more than 35 million people have had at least one jab and following the recent elections, Prime Minister Boris Johnson, has called for a Covid recovery summit.  In letters sent to regional leaders, the Prime Minister highlighted the Covid vaccine rollout as an example of "Team UK in action", with the UK procuring doses at scale, and he urged them to continue the "cooperative spirit".

There is more unease over the India Covid variant in the UK which has been made a variant of concern. Scientists also believe it is at least as transmissible as the variant detected in Kent last year. The current vaccines used in the UK are thought to offer some protection against variants but can never completely stop all infections, particularly among the vulnerable or elderly. News of a booster jab, probably from September for the over 50’s is awaited.

Bank of England latest Monetary Policy Report

The latest Bank of England (BOE) monetary policy report published last week set out their economic analysis and inflation projections. Their initial analysis that Covid has hit spending, incomes and jobs in the UK, stating the Pandemic has put a big strain on UK businesses’ cash flow and is threatening the livelihoods of many people. This analysis is not unsurprising because all regions of the UK are still in some form of lockdown and have been for some time. The BOE then confirm vaccines are now helping the UK economy recover rapidly as more people are vaccinated, restrictions to control the spread of the virus are being lifted. They also comment that inflation is 0.7%, but they expect it to rise to around the 2% target this year as people may also become more confident about spending and as the high street opens back up. Interest rates remain at 0.1% to help keep inflation within target.

The good news in the BOE report!

The good news is the BOE predicts the economy to expand by 7.25% this year, with Government spending helping to limit job losses.  There is also the good news that fewer jobs are being lost and earlier predictions of 7.75% unemployment will not happen, and they predict around 5.5% later this year.

The Office for National Statistics (ONS) business impacts and insights report

The ONS latest figures show the percentage of businesses currently trading has increased from 77% in early April to 83% in late April 2021. This is now at a similar level to that seen in mid-December 2020 (Business Insights and Conditions Survey (BICS)).

In the period ending 3 May 2021, the proportion of working adults that had travelled to work (both exclusively and in combination with working from home) in the last seven days was 60%. This proportion has been gradually increasing since mid-February (44% in the period 10 to 14 February 2021).

Estimates for UK seated dinner reservations on Saturday 1 May 2021 were at 71% of the level seen on the same Saturday of 2019, up 9 percentage points from the equivalent figure in the previous week. This follows the reopening of restaurants, cafés and bars in Scotland and Wales on 26 April 2021, and Northern Ireland on 30 April 2021.

Are you ready for the “Bounce back”?

All of us must agree that the “Bounce back” in the economy is good news and many of our clients are reporting increased activity as the lockdown eases and economy returns to somewhere near normal over the next few months. Of course there are uncertainties about new virus variants, but all the indicators are pointing to a summer recovery, with the economy being repaired by the end of this year.

Please talk to us about planning for the future, we are here to help drive your business forward!

Making Tax Digital Extended to More Businesses

Currently only VAT registered businesses making taxable supplies in excess of the £85,000 VAT registration threshold are mandated to comply with Making Tax Digital (MTD) rules. Those rules require the business to keep digital business records and send VAT returns using MTD-compatible software.

MTD for VAT is now being rolled out to all VAT registered businesses from April 2022 which may cause some traders who are VAT registered but below the threshold to consider deregistering to avoid having to comply with MTD for VAT. If you decide to do so you will need to complete Form VAT7 and account for output VAT on the market value of stock and assets still owned at the date of deregistration. This is where input VAT has been reclaimed on those assets.

There is however a £1,000 de-minimis which means that output VAT does not need to be accounted for where the combined market value of the assets is less than £6,000.

Unfortunately, deregistering for VAT will not necessarily sidestep MTD as the requirement to keep business records digitally will be introduced for income tax from April 2023. From then MTD for income tax will apply to businesses with gross income in excess of £10,000 a year which will include property landlords as well as traders and professionals.

7th May 2021 – Hillmans Weekly Update

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

• New scheme to give people in problem debt breathing space launched
• Beware Bogus HMRC Phishing Scams
• The end of the landline?
• Employees can continue to claim tax relief if working from home

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

New scheme to give people in problem debt breathing space launched

Hundreds of thousands of people struggling with debt problems will be supported through a new debt respite scheme that was announced 4 May 2021. Around 700,000 people struggling with problem debt to benefit from Breathing Space this year as the scheme will give those facing financial difficulties 60 days to get finances back on track – without debts piling up, worrying letters or enforcement action.

People will also have access to professional debt advice, with stronger protections for people in mental health crisis treatment. 

Under the scheme, people will be given legal protections from their creditors for 60 days, with most interest and penalty charges frozen, and enforcement action halted. They will also receive professional debt advice to design a plan which helps to get their finances back on track.

Recognising the link between problem debt and mental health issues, these protections will be available for people in mental health crisis treatment – for the full duration of their crisis treatment plus another 30 days.

People across England and Wales who are struggling to repay their debts could be eligible, and the Government expects 700,000 people to benefit in the first year of the scheme.

See: New scheme to give people in problem debt breathing space launched - GOV.UK (www.gov.uk)

Beware Bogus HMRC Phishing Scams

HMRC is aware of a phishing campaign telling customers they can claim for the fourth Self-Employment Income Support Scheme (SEISS) grant as support during the coronavirus pandemic.

Do not reply to the email and do not open any links in the message. The email has been issued in various formats like the one below:



See here for an examples of the scams: Examples of HMRC related phishing emails, suspicious phone calls and texts - GOV.UK (www.gov.uk)

There are also text scams:

‘Due to the new lockdown support plan’ SMS

HMRC is aware of coronavirus text scams telling customers they are entitled to funding due to the new lockdown support plan. Do not reply to the text and do not open any links in the message.

‘COVID-19 refund’ SMS

Report suspicious HMRC emails, text messages and phone calls here: Report suspicious HMRC emails, text messages and phone calls - GOV.UK (www.gov.uk)

The end of the landline?

Last week an opinion survey of 2,001 UK adults, which was conducted in mid-March 2021 and commissioned by Uswitch, has revealed that 26% of people with a residential landline do not have a phone attached to it and 35% of respondents said they only have a landline because it’s needed for their broadband connection. The number of homes with a landline has fallen by c.4 million (down 15%) since the year 2000 to about 22 million connections in 2021.

The decline in landline use should at least make it easier for homes to handle the pending removal of traditional phone services, which is due to complete on Openreach’s (BT) UK network by the end of December 2025.

In their place operator’s will be providing digital (VoIP) style solutions, which most people will be able to take as an optional extra alongside broadband (in the past, broadband was the optional extra).

Employees can continue to claim tax relief if working from home

Employees can be paid £6 a week tax free Home Working Allowance whilst working from home. The amounts are free from income tax and Class 1 national insurance contributions (‘EEs and ‘ERs). The normal rule to take advantage of this exemption is that the employee is required by their employer to work from home from time to time and is normally not available where the employee works from home as a matter of choice.

£6 a week tax free for a higher rate taxpayer is equivalent to £538 gross pay (after 40% income tax and 2% employee NICs). The employer would also save 13.8% NICs.

This rule was temporarily relaxed due to the COVID-19 pandemic for 2020/21. HMRC have advised that as long as an employee has been required to work from home at some point during 2020/21 as a result of the COVID19 pandemic they will accept a claim for home-working for the whole 2020/21 tax year. This has now been extended to 2021/22 up until the end of the pandemic.

Where the employer does not pay the allowance, the employee may make a claim for a deduction of £6 a week from their earnings and this has also been extended to 2021/22. That would result in a tax refund of £124.80 for a higher rate taxpayer.

The quickest way to make a claim is to use the HMRC online claims service which requires the employee to set up a Government Gateway account. Alternatively, employees should use HMRC form P87 to make their claim.

See: Claim tax relief for your job expenses - GOV.UK (www.gov.uk)