Claiming financial support under the Test and Trace Support Payment scheme

The guidance has been updated to reflect the impact that exemption from self-isolation will have on eligibility for the Test and Trace Support Payment Scheme.

The £500 Test and Trace Support Payment is for people on low incomes who have to self-isolate because they have:

• tested positive for COVID-19; or
• been notified as a close contact of someone who has tested positive for COVID-19, and, from 16 August, they are not exempt from self-isolation. The guidance sets out who is exempt.

You may be eligible if you are employed or self-employed, cannot work from home, and will lose income as a result. The parent or guardian of a child or young person who is self-isolating may also be eligible for the Test and Trace Support Payment.

If you have been told to self-isolate by NHS Test and Trace, you are legally required to do so. If you have been notified by the NHS COVID-19 app to self-isolate and you apply for the Test and Trace Support Payment, you will also be legally required to self-isolate.

See Claiming financial support under the Test and Trace Support Payment Scheme – https://www.gov.uk/government/publications/test-and-trace-support-payment-scheme-claiming-financial-support/claiming-financial-support-under-the-test-and-trace-support-payment-scheme

27th August 2021 – Hillmans Weekly Update

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

• Big Tax Bills for the Self-Employed in 2022/23
• Cyber Runway - support scheme to help grow the cyber sector
• Help to Grow: Digital
• Kickstart Scheme Grant

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

Big Tax Bills for the Self-Employed in 2022/23

Earlier this month we mentioned that draft legislation has been published to change the basis periods for the assessment of self-employed profits to coincide with the tax year. The proposed new rules provide that from 2023/24 onwards profits or losses will be apportioned to tax years where the period of account does not coincide with the tax year. This is intended to coincide with the start of Making Tax Digital for income tax.

The transitional rules proposed for the previous 2022/23 tax year could result in large tax bills for some sole traders and partners, particularly those with an existing 30 April year end.

The profits of year ended 30 April 2021 would be taxed in 2021/22 under the current rules with 2023/24 taxing profits arising between 6 April 2023 and 5 April 2024 under the new rules. But what about 2022/23?

The profits taxed in 2022/23 would be those for year ended 30 April 2022 plus the period 1 May 2022 to 5 April 2023 - in total 23 months profits!

The good news is that there would be a deduction for 11 months “overlap relief” which typically arose when profits were taxed twice at the start of the business - but those will often be much lower than the extra 11 months being taxed in 2022/23!

The transitional provisions allow the taxpayer to elect to spread the excess profits over the next 5 tax years to smooth out the excessive tax bill.

We can work with you to advise you on how much to set aside to cover these additional tax liabilities.

Cyber Runway - support scheme to help grow the cyber sector

Innovative cyber start-ups, small businesses and scaleups could benefit from a new scheme to help them launch and grow their businesses.

Cyber Runway will see entrepreneurs and businesses across the UK get access to business masterclasses, mentoring, product development support, networking events and backing to trade internationally and secure investment so they can turn their ideas into commercial successes.

The Cyber Runway programme is funded by the Department for Digital, Culture, Media and Sport (DCMS) and delivered by Plexal in partnership with CyLon, Deloitte and The Centre for Secure Information Technologies (CSIT). The programme aims to support at least 160 organisations and companies over the course of six months.

Companies participating in DCMS’s cyber growth initiatives in the past have, on average, more than tripled their revenues year on year.

Expressions of interest from applicants, mentors and investors can now be made.

See: Cyber Runway - https://www.plexal.com/cyber-runway/

Help to Grow: Digital

Help to Grow: Digital is a new UK-wide scheme to help small and medium size businesses (SMEs) adopt digital technologies that are proven to increase their productivity.

The scheme will offer SMEs free and impartial advice on how technology can help their business. An online platform will help them to:

• identify their digital technology needs
• assess technology purchasing options
• implement new technologies in their operations

The scheme will also offer eligible SMEs a grant token worth up to £5,000 to cover up to half of the costs of pre-approved, digital technology solutions.

The Help to Grow: Digital scheme will be launched in the Autumn. It will run for 3 years, taking a phased approach over a number of waves. Each wave will provide the opportunity to roll out new technologies and functionalities for SMEs and vendors.

See: Help to Grow: Digital – apply to become a vendor - https://www.gov.uk/guidance/help-to-grow-digital-apply-to-become-a-vendor

Kickstart Scheme Grant

If you are an employer looking to create jobs for young people, you can apply for funding as part of the Kickstart Scheme.

Recent changes have been made to the guidance including advertising vacancies yourself to ‘Getting the young people into the jobs’, the remittance advice employers receive when they get the funding in the section ‘How you will get the funding’ and updated instructions for adding more jobs to the grant agreement following launch of online route for employers.

The Kickstart Scheme provides funding to create new jobs for 16- to 24-year-olds on Universal Credit who are at risk of long-term unemployment. Employers of all sizes can apply for funding which covers:

• 100% of the National Minimum Wage (or the National Living Wage depending on the age of the participant) for 25 hours per week for a total of 6 months
• associated employer National Insurance contributions
• minimum automatic enrolment pension contributions

Employers can spread the job start dates up until 31 December 2021. You will get funding until 30 June 2022 if a young person starts their job on 31 December 2021.

Further funding is available to provide support so that young people on the scheme can get a job in the future.

You can apply for a Kickstart Scheme grant by either:

• applying online yourself
• applying through a Kickstart gateway who is already working with the Kickstart Scheme

If you already have a Kickstart Scheme grant agreement and reference number, you can request to add more jobs to it. This is known as a ‘grant variation’.

See: Apply for a Kickstart Scheme grant - https://www.gov.uk/guidance/apply-for-a-kickstart-scheme-grant

20th August 2021 – Hillmans Weekly Update

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

• Going electric: building talent for the future
• Commercial rent debts: policy statement
• Cyber security training package for small businesses
• Accounting for Import VAT on your VAT return

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 weekend.

Stay safe and well.

Cheers,

Steve

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

Accounting for Import VAT on your VAT return

HMRC have recently updated their guidance on accounting for VAT on goods imported from outside the UK which, since Brexit, includes the European Union.

Businesses registered for VAT in the UK can account for import VAT on their VAT Return for goods imported into:

• Great Britain (England, Scotland and Wales) from anywhere outside the UK
• Northern Ireland from outside the UK and EU

Businesses can also account for import VAT for goods moved between Great Britain and Northern Ireland that are declared into a customs special procedure, when they are removed from that special procedure.

You do not need HMRC approval to account for import VAT on your VAT Return.

Accounting for import VAT on your VAT Return has significant cash flow benefits as you declare and recover import VAT on the same VAT Return, rather than having to pay it upfront when the goods are imported and recover it later.

For details see: Check when you can account for import VAT on your VAT Return - https://www.gov.uk/guidance/check-when-you-can-account-for-import-vat-on-your-vat-return

Going electric: building talent for the future

UK registered organisations can apply for a share of up to £250,000 for innovative skills, talent, and training projects, that quickly fill immediate gaps in skills, talent and training for the power electronics, machines and drives (PEMD) industry.

This competition is open to single applicants and collaborations.

To lead a project or work alone your organisation must be UK registered and a business of any size, charity, public sector organisation or research organisation.

Competition timeline:

• 9 August 2021 9.30am - opening date
• 10 August 2021 10am - online briefing date
• 15 September 2021 11am - closing date

See: Competition overview - Driving the electric revolution – building talent for the future - Innovation Funding Service (https://apply-for-innovation-funding.service.gov.uk/competition/969/overview#summary)

Commercial rent debts: policy statement

The government will legislate to ringfence rent debt accrued during the pandemic by businesses affected by enforced closures and set out a process of binding arbitration to be undertaken between landlords and tenants.

This is to be used as a last resort, after bilateral negotiations have been undertaken and only where landlords and tenants cannot otherwise come to a resolution. Ahead of the system being put in place, the government will publish the principles which they will seek to put into legislation in a revised Code of Practice, to allow landlords and tenants time to negotiate on that basis.

Section 82 (England and Wales) and Section 83 (Northern Ireland) of the Coronavirus Act 2020, which prevents landlords of commercial properties from being able to evict tenants for the non-payment of rent, will continue until 25 March 2022, unless legislation is passed ahead of this, to provide sufficient time for this new process to be put in place.

Government is clear that those tenants who have not been affected by closures and who have the means to pay, should pay. Additionally, government expects commercial tenants to begin paying rent as per their lease from the point of restrictions being lifted for their sector.

As soon as legislation is passed, the commercial tenant protection measures will only apply to ringfenced arrears. This includes rent debt accrued from March 2020 by commercial tenants affected by COVID-19 business closures until restrictions for their sector are removed.

This means that landlords will be able to evict tenants for the non-payment of rent prior to March 2020 and after the end of restrictions for their sector and who have not been affected by business closures during this period.

For the full policy statement see: Supporting businesses with commercial rent debts: policy statement - https://www.gov.uk/government/publications/resolving-commercial-rent-arrears-accumulated-due-to-covid-19/supporting-businesses-with-commercial-rent-debts-policy-statement

Cyber security training package for small businesses

Small businesses have access to a free e-learning package that will boost their ability to defend against threats posed by cyber criminals. The training, Cyber Security for Small Organisations and Charities, guides businesses through the actions they should take in order to dramatically reduce the risk of the most common cyber-attacks, such as ransomware and phishing.

The advice, which is also suitable for sole traders and the voluntary sector, empowers small organisations to identify any possible weaknesses in their online infrastructure and act to strengthen them, focusing on five areas:

• Backing up an organisation’s data correctly.
• Protecting an organisation against malware.
• Keeping the devices used by employees secure.
• The importance of creating strong passwords.
• Defending an organisation against phishing.

For further information visit: New Top Tips for staff - charities small business: https://www.ncsc.gov.uk/news/new-cyber-security-training-for-charities-and-small-businesses

13th August 2021 – Hillmans Weekly Update

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

• The Queen's Awards for Enterprise
• National Insurance for workers from the UK working in the EEA or Switzerland
• Notify Option to Tax Land and Buildings within 30 days of decision
• Personal Pension age to increase to 57 from April 2028

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.

Stay safe and well.

Cheers,

Steve

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

The Queen's Awards for Enterprise

The Queen's Awards for Enterprise recognise and encourage the outstanding achievements of UK businesses in the fields of:

• innovation
• international trade
• sustainable development
• promoting opportunity (through social mobility)

Businesses of all sizes and from all sectors can apply. The awards are free to enter, and you can apply for more than one award. The deadline for applications is midday on 8 September 2021.

Find out how to apply for The Queen's Awards for Enterprise here: https://www.gov.uk/queens-awards-for-enterprise/how-to-apply

National Insurance for workers from the UK working in the EEA or Switzerland

Individuals who are employees or self-employed, pay social security contributions depending on their personal circumstances and the country they are going to work in.

The liability of the employer to pay social security contributions will follow the liability of their employees.

If you go to work in:

• the EU, you’ll only have to pay into one country’s social security scheme at a time
• Iceland, Norway or Switzerland, you may only have to pay into one country’s social security scheme at a time

This will usually be in the country where the work is being done.

In the UK, social security contributions are called National Insurance contributions.

Individuals continue to pay National Insurance contributions only in the UK if HMRC has issued you with the relevant certificate as evidence that this is the case.

You, or your employer, should apply for a certificate if you’re:

• going to work temporarily in the EU for up to 2 years
• a worker working in the UK and one or more EU countries
• a civil servant working for the UK government
• working onboard a vessel at sea, with a UK flag
• working as a flight or cabin crew member, where your home base is in the UK

For more details see the recently updated HMRC guidance:

See: National Insurance for workers from the UK working in the EEA or Switzerland - https://www.gov.uk/guidance/national-insurance-for-workers-from-the-uk-working-in-the-eea-or-switzerland

Notify Option to Tax Land and Buildings within 30 days of decision

Supplies of land and buildings, such as freehold sales, leasing or renting out the property, are normally exempt from VAT. This means that no VAT is payable, but the person making the supply cannot normally recover any of the VAT incurred on property expenses.

However it is possible to waive the exemption, or “opt to tax” the land. For the purposes of VAT, the term ‘land’ includes any buildings or structures permanently affixed to it. You do not need to own the land in order to opt to tax. Once you have opted to tax all the supplies you make of your interest in the land or buildings will normally be standard-rated, and you will normally be able to recover any VAT you incur in making those supplies. See updated HMRC Notice 742a for details: See: Opting to tax land and buildings (VAT Notice 742A) - https://www.gov.uk/guidance/opting-to-tax-land-and-buildings-notice-742a

If you are notifying HMRC of a decision to opt to tax land and buildings, you are normally required to notify HMRC within 30 days by either:

• printing and sending HMRC the notification, signed by an authorised person within the business
• emailing a scanned copy of the signed notification

The 30 day deadline was temporarily extended to 90 days to help businesses and agents during the pandemic. That temporary extension has now ended so for decisions made from 1 August 2021 onwards, you must notify HMRC within 30 days.

See: Changes to notifying an option to tax land and buildings during coronavirus (COVID-19: https://www.gov.uk/guidance/changes-to-notifying-an-option-to-tax-land-and-buildings-during-coronavirus-covid-19

Personal Pension age to increase to 57 from April 2028

Draft legislation has been published with the intention of increasing normal minimum pension age (NMPA), which is the minimum age at which most pension savers can access their pensions without incurring an unauthorised payments tax charge unless they are retiring due to ill-health, from age 55 to 57 in 2028.

There follows a consultation on the implementation of the increase and a proposed framework of protections for pension savers who already have a right to take their pension at a pre-existing pension age. This consultation was launched on 11 February 2021 and closed on 22 April 2021.

Currently registered pension schemes must not normally pay any benefits to members until they reach NMPA. From 6 April 2010 the NMPA has been age 55 (before 6 April 2010 it was age 50).

Registered pension schemes are also not permitted to have a normal pension age lower than age 55 and this applies equally to individuals in occupations that usually retire before 55 (for example, professional sports people).

See: Increasing the normal minimum pension age for Pensions Tax - https://www.gov.uk/government/publications/increasing-the-normal-minimum-pension-age-for-pensions-tax

6th August 2021 – Hillmans Weekly Update

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

• Coronavirus Job Retention Scheme – Update
• Self-Employment Income Support Scheme update
• Abolition of Basis Periods and New Tax Year End?
• MTD Coming Soon for Income Tax

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 weekend. 

Stay safe and well. 

Cheers,

Steve

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

Coronavirus Job Retention Scheme – Update

The Coronavirus Job Retention Scheme has been extended until 30 September 2021. From 1 August 2021, the government will pay 60% of wages up to a maximum cap of £1,875 for the hours the employee is on furlough.

Claims for furlough days in July 2021 must be made by 16 August 2021.

How to report grant payments in Real Time Information

Find out how to report Coronavirus Job Retention Scheme grant payments on Real Time Information submissions: https://www.gov.uk/guidance/reporting-payments-in-paye-real-time-information-from-the-coronavirus-job-retention-scheme

Tax Treatment of the Coronavirus Job Retention Grant

Payments you have received under the scheme are to offset the deductible revenue costs of your employees. You must include them as income when you calculate your taxable profits for Income Tax and Corporation Tax purposes.

Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

Individuals with employees that are not employed as part of a business (such as nannies or other domestic staff) are not taxable on grants received under the scheme. Domestic staff are subject to Income Tax and National Insurance contributions on their wages as normal.

See more here: Claim for wages through the Coronavirus Job Retention Scheme: https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme

Self-Employment Income Support Scheme update

The online service for the fifth grant is now available.

If you're eligible, you can claim the fifth grant if you think that your business profit will be impacted by coronavirus (COVID-19) between 1 May 2021 and 30 September 2021. You will need to confirm that you meet other eligibility criteria when you make your claim. You should make your claim on or after the personal claim date HMRC has given you.

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

Abolition of Basis Periods and New Tax Year End?

We are awaiting further information on MTD from HMRC this summer but one significant announcement on 20 July was draft legislation to abolish basis periods for unincorporated businesses for the 2023/24 tax year to simplify MTD reporting.

That change would apply to sole traders, partnerships, as well as trusts with trading and property rental income. There would also be complicated transitional rules for 2022/23 which could result in a big tax bill that year for some traders.

The Treasury are also consulting on changing the tax year itself from the archaic 5 April year end to 31 March or even 31 December. A calendar tax year would bring the UK into line with most other countries at last!

We will keep you updated when more information comes available.

MTD Coming Soon for Income Tax

VAT registered business making taxable supplies above the £85,000 registration threshold have been grappling with Making Tax Digital (MTD) since April 2019. The next roll-out will be the introduction of MTD for income tax which is scheduled to start in April 2023.

The obligation to keep records in a digital format and report information quarterly will apply to unincorporated businesses and property landlords with gross income in excess of £10,000 a year. Businesses operating MTD for VAT will already have MTD compliant accounting software but the extension of MTD to income tax will mean a major change for property rental businesses who are outside of the current rules.

There are a number of MTD compliant accounting software packages that you might wish to consider and we can of course advise you on the one that is most appropriate for your business. There are even relatively cheap software packages specifically designed for property rental businesses.

INFORMATION IN QUARTERLY MTD FOR INCOME TAX REPORTS

The precise details of what needs to be reported each quarter have yet to be finalised, but the categories of income and expenditure are likely to be the same as currently reported for self-assessment.

The accounting software will need to record income and expenditure into the following main categories:

• Turnover/gross rents
• Costs of goods sold
• Materials
• Wages and salaries of employees
• Sub-contractor costs
• Rent, rates, power, insurance
• Repairs and renewals
• Professional fees
• Telephone and other office costs
• Interest on bank and other loans
• Motor and travel expenses

It is unclear at this stage how loans to finance residential lettings will be reported as those costs are no longer deducted in arriving at rental profits as relief is now given by way of a basic rate tax deduction.

TIMING OF MTD FOR INCOME TAX REPORTS

It is currently proposed that there will be 4 quarterly reports to HMRC followed by a finalisation return when end of year adjustments will be made. For a buy to let business that would mean quarterly returns made up to 5 July, 5 October, 5 January and 5 April. There would then be a MTD finalisation submission the following 31 January.