Blog

September News Blog

 

Hello

 Here is our September newsletter/blog looking at some of what has happened over the month of August and a few items that come into place in September or later which I hope is of interest to our clients.

 

A picture containing person, indoorDescription automatically generatedThree quarters of adults in the UK have now received both doses of a COVID-19 vaccine, as the public continues to do what it can to protect themselves and their community. With the furlough scheme finishing at the end of September there will be a return back towards what was considered “normal” before the pandemic started.

 

I predict that there will not be a full return to the way things were pre-pandemic as many businesses have found that they can work just as effectively or with lower overheads during the past 18 months.

Many businesses have found other income streams and more efficient ways of working.

With the Government support winding down business will have to get back to trading fully again and this should give a boost to the economy. If you are not sure how you will restart or if you are having concerns about getting going again please get in touch so that we can hand hold you through the restart.

Don’t forget that we are here to assist you with any business queries you may have.

There are many new initiatives being put in place as restrictions finish and therefore there are a few more items in this month’s list of action points.

In this month’s issue:

Self-Employment Income Support Scheme (SEISS)

Coronavirus Job Retention Scheme (CJRS) – Last month!

Off-Payroll Working – Will HMRC accept CEST result?

Commercial rent debts: policy statement

Are you ready for Making Tax Digital?

Abolition of tax basis periods and new tax year end?

Eviction protection

Research & Development – Not for you 

 

National Minimum Wage

Getting back to business

Why don’t you ask us?

 

Self-Employment Income Support Scheme (SEISS)

The online claims service for the 5th SEISS grant opened in late July and closes on 30 September 2021. No late claims will be allowed.

The fifth grant will be determined by a turnover test for most taxpayers. The test considers how much a businesses’ turnover has gone down by in the 2020-21 tax year due to the pandemic. More information is given on the .GOV web site.

In summary you will need to have 2 turnover figures ready when making the claim:

·        The pandemic turnover is for the 12 months from 1 April 2020 to 31 March 2021 no matter your year end. (if you have a 5 April year end this is considered to be the same period).

·        The pre-pandemic turnover is the turnover declared in your 2019/20 tax return. This is can be a different accounting year that you are comparing to. If the 2020 figures are unusual then the turnover in the 2019 return should be taken.

Taxpayers who were not eligible for the fourth grant, will not be eligible for the fifth grant either as HMRC are using the same tax returns to determine eligibility for both grants. If you were eligible but did not claim the forth grant you should be able to claim the fifth grant.

The grant is taxable and will be paid out in a single instalment.

To be eligible for the grant you must be a self-employed individual or a member of a partnership.

For members of a partnership or LLP the turnover comparison is based on the turnover of the partnership. However, where the partner also has another business a proportion of partnership turnover is used.

We cannot make the claim on your behalf as agents. You have to make the claim yourself.

https://www.gov.uk/guidance/claim-a-grant-through-the-self-employment-income-support-scheme

 

Coronavirus Job Retention Scheme (CJRS) – last month!

 

 

The CJRS has finishes on 30 September 2021.

For September 2021, the government will pay 60% of wages up to a maximum cap of £1,875.00 for the hours the employee is on furlough.

Employers will top up employees’ wages to make sure they receive 80% of wages (up to £2,500) in total for the hours the employee is on furlough. The caps are proportional to the hours not worked.

Off-Payroll Working – Will HMRC accept CEST result?

 

Since 6 April 2021 large and medium-sized organisations, based on the Companies Act criteria, have had to determine whether or not a worker supplying his services via their own personal service company would be treated as an employee if directly engaged. This replaced the IR35 rules for these larger organisations.

HMRC suggest organisations use their Check Employment Status for Tax (CEST) tool on their website to check the worker’s status, although that is not obligatory. The tool is an interactive database of questions and will normally provide a ruling after 15 to 20 questions depending on the answers given about the contractual relationship.

See: Check employment status for tax - GOV.UK (www.gov.uk)

HMRC have recently confirmed that they will be bound by the result of the software provided the information is accurate and it is used in accordance with their guidance.

See: ESM11010 - Employment Status Manual - HMRC internal manual - GOV.UK (www.gov.uk)

HMRC have also stated that they will not stand by results achieved through contrived arrangements that have been deliberately created or designed to get a particular outcome. They would see that as deliberate non-compliance, and potentially levy financial penalties.

Note that the end-user organisation is required to issue a Status Determination Statement to the worker with a copy to any agency to be passed to any fee payer in the labour supply chain making payments to the personal service company.

 

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.

A sign on a windowDescription automatically generated with medium confidenceAs 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 - GOV.UK (www.gov.uk)

 

 

Are you ready for Making Tax Digital?

 

From 1 April 2022 a new tranche of businesses will need to comply with the Making Tax Digital (MTD) regime.

All businesses which are VAT registered will have to sign up for MTD and will need to submit their first VAT return that starts on or after 1 April 2022 digitally. This covers businesses who are under the registration threshold of £85,000 and have voluntarily registered. Maybe now is the time to review your VAT registration with us.

There will be a requirement for these businesses to keep digital records and for these digital records to be used to file the returns. It will be possible to use spreadsheets for record keeping but there will need to be some form of bridging software that is compatible with the HMRC gateway.

Our clients who have already signed up for MTD have found using the software easy to use and have also found other benefits in using the software.

Also be aware that other taxpayers will be required to join the MTD project from 2023 for matters such as property landlords and self assessment. Limited companies will be forced to join form around 2026.

If your VAT quarter end does not align with your year end then you could have to make returns in 8 different months during a year. If there is rental income as well then there could be as many as 12 monthly returns that need to be made. Now is the time to plan so that the number of months in which returns are required is minimised.

We urge all clients to move to a digital record keeping regime as soon as possible. At Stewart & Partners we are Xero Certified Advisors with qualifications in migrating to Xero software. We also are able to work with all other software providers so if you feel that another software is better for you we can work with you to make sure you are compliant.

Speak to us for more details.

 

Abolition of tax 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.

This would mean that businesses (not companies) would be taxed on their profits for the period 1 April to 31 March each year, no matter what their year end is. (6 April to 5 April is allowable). This has the potential to cause major problems for some clients who have, for example, December year ends meaning that the December accounts would have to be prepared and finalised in 1 month so that the appropriate information could be extracted. Quarterly reporting for MTD would help this but there would still be little time to get figures together for the return to be filed in January.

You may wish to consider whether a change in year end would be beneficial for your business.

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.

A picture containing text, building, outdoor, oldDescription automatically generatedThe 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.

 

 

Eviction protection

 

 

Tenants who have been hit hard by the pandemic maybe worried sick that they can’t pay the rent for their business premises and so face eviction.

The good news is that the moratorium against forfeiture of a commercial lease for non-payment of rent, which was due to end on 25 June 2021, has been extended to 25 March 2022.

The temporary restriction stopping landlords from bringing Commercial Rent Arrears Recovery (CRAR) proceedings against commercial tenants in arrears has also been extended to 25 March 2022.

The temporary prohibition that stops landlords from using statutory demands against commercial tenants who are in arrears of rent because of COVID-19 has also been extended, but only to 30 September 2021. This prevents the landlord from petitioning the court to have the tenant wound up if they do not pay a statutory demand for rent within 21 days.

The rent arrears don’t disappear once these restrictions are lifted, and businesses should pay their rent as soon as they are able to trade from their premises again. However, the government is proposing to bring in a new law to require landlords and tenants to go to arbitration to agree to waive some portion of the unpaid rent that built up during the pandemic.

Protection for tenants extended

  

Research & Development – Not for you?

 

For a number of years the Government have been generous in providing tax credits for expenditure on research and Development (R&D).

The grants are there to support companies that work on innovative projects in science and technology. It can be claimed by a range of companies that seek to research or develop an advance in their field. It can even be claimed on unsuccessful projects.

A few people in a labDescription automatically generated with low confidence

The amount that can be claimed as a small business is an additional 130% of the expenditure on the project on top of the actual expenditure incurred.

 

In order to be able to claim the grant the work must be part of a specific project to make an advance in science or technology. It cannot be an advance within a social science - like economics - or a theoretical field - such as pure maths.

 

The project must relate to the company’s trade - either an existing one, or one that you intend to start up based on the results of the R&D.

To get R&D relief you need to explain how a project:

  • looked for an advance in science and technology
  • had to overcome uncertainty
  • tried to overcome this uncertainty
  • could not be easily worked out by a professional in the field

Your project may research or develop a new process, product or service or improve on an existing one.

Many businesses have not even considered that they may be eligible for the R&D tax credits. However if you have recently carried out some research into a new process or system it may be worthwhile considering making a claim.

We have access to a number of specialists who deal with R&D claims and we would be happy to discuss your projects with you and put you in touch with the right specialist. Fees are normally success based so you have nothing to lose from talking to a specialist.

Contact us to see if you could reduce your tax.

 

National Minimum Wage

HMRC have published a list of “excuses” employers have used to defend not paying the minimum wages to their employees.

Whilst some of these are humorous there is no excuse for not paying the minimum wage. Please make sure that you are complying with the legislation.

 

Getting back to business

Most businesses have now opened fully again and although things are slow they are getting back to earning money.

There is a temptation to reduce prices to bring in customers, both old and new. In my opinion this is an error. Your services or products have a value and you should be charging a fair price for what you are offering. If you discount now it will be difficult to raise prices for the same product later once things are starting to look up.

Most businesses will be focussing short term on their recovery and in the medium term on being resilient, improving profitability and growing turnover. If taxes rise to fund government spending, we recommend all businesses should map out a range of scenarios with “what if” analysis to understand their available future strategies for success. For example, here is a smaller business’s “what if” scenario planning results: 

 

Please talk to us about scenario planning – we have the tools to help you prepare for the future and set realistic and achievable targets.   

Why don’t you ask us?

Are you considering starting something new as you come out of Covid hibernation and your business opens up again or do you have a query about tax planning? Do you need advice about financing or cashflow, maybe you just need help in accessing a loan.

In addition to scenario planning mentioned above we have a broad range of experience that goes far beyond just preparing accounts and tax returns. Get in touch as we will probably have an answer to help you with your challenges.

 

I wish you the best for the next month.

If you have any queries you can book a free 15 minute zoom meeting with me.

Also there is the client zoom drop in session which continues for clients at 11.00am every Wednesday.

Zoom meeting details:

Meeting URL: https://us02web.zoom.us/j/83879726978  

Meeting ID: 838 7972 6978

 

 

v\:* {behavior:url(#default#VML);} o\:* {behavior:url(#default#VML);} w\:* {behavior:url(#default#VML);} .shape {behavior:url(#default#VML);} Normal 0 false false false false EN-GB X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; text-align:justify; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Arial",sans-serif; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi; mso-fareast-language:EN-US;}

August News Blog

 

Hello

  

 

Here is our August newsletter/blog looking at some of what has happened over the month of July and a few items that come into place in August or later which I hope is of interest to our clients.

  

Don’t forget that we are here to assist you with any business queries you may have.

 

In this month’s issue:

Self-Employment Income Support Scheme (SEISS)

Coronavirus Job Retention Scheme (CJRS) – update

National Minimum Wage rate reminder

Off-Payroll Working – Will HMRC accept CEST result?

Understanding the possession action process: guidance for landlords and tenants

Are you ready for Making Tax Digital?

Abolition of tax basis periods and new tax year end?

Getting back to business

Why don’t you ask us?

 

Self-Employment Income Support Scheme (SEISS)

Details of the fifth SEISS grant have now been announced. The online claims service opened in late July. If you are eligible HMRC should have contacted you with a date from which you can make the claim. This is the earliest date from which the claim can be made.

If you have not yet been contacted by HMRC then it is possible to check if you can claim on the HMRC web site.

The fifth grant will be determined by a turnover test for most taxpayers. The test considers how much a businesses’ turnover has gone down by in the 2020-21 tax year due to the pandemic. More information is given on the .GOV web site.

In summary you will need to have 2 turnover figures ready when making the claim:

·         The pandemic turnover is for the 12 months from 1 April 2020 to 31 March 2021 no matter your year end. (if you have a 5 April year end this is considered to be the same period).

·         The pre-pandemic turnover is the turnover declared in your 2019/20 tax return. This is can be a different accounting year that you are comparing to. If the 2020 figures are unusual then the turnover in the 2019 return should be taken.

 

Taxpayers who were not eligible for the fourth grant, will not be eligible for the fifth grant either as HMRC are using the same tax returns to determine eligibility for both grants. If you were eligible but did not claim the forth grant you should be able to claim the fifth grant.

The grant is taxable and will be paid out in a single instalment.

To be eligible for the grant you must be a self-employed individual or a member of a partnership.

For members of a partnership or LLP the turnover comparison is based on the turnover of the partnership. However, where the partner also has another business a proportion of partnership turnover is used.

We cannot make the claim on your behalf as agents. You have to make the claim yourself.

https://www.gov.uk/guidance/claim-a-grant-through-the-self-employment-income-support-scheme

HMRC have provided a new video about the SEISS fifth grant.

 

 

 

Coronavirus Job Retention Scheme (CJRS) - update

The CJRS has been extended until 30 September 2021. From 1 July 2021, the government will pay 70% of wages up to a maximum cap of £2,187.50 for the hours the employee is on furlough.

Employers will top up employees’ wages to make sure they receive 80% of wages (up to £2,500) in total for the hours the employee is on furlough. The caps are proportional to the hours not worked.

 

From 1 August 2021, the government will pay 60% of wages for furlough employees up to £1,875. From 1 July 2021, employers will top up employees’ wages to make sure they receive 80% of wages (up to £2,500).

 

National Minimum Wage rate reminder for employers

 

 

All workers are legally entitled to be paid the National Minimum Wage (NMW). This includes temporary seasonal staff, who often work short-term contracts in bars, hotels, shops and warehouses over the summer.

The National Minimum Wage hourly rates from 1 April 2021 are:

  • £8.91 - age 23 or over (National Living Wage)
  • £8.36 - age 21 to 22
  • £6.56 - age 18 to 20
  • £4.62 - age under 18
  • £4.30 – apprentice

 

Employers who do not pay the NMW can be publicly ‘named and shamed’ and those who blatantly fail to comply can face criminal prosecution.

Employers can contact the Acas helpline for free help and advice or visit GOV.UK to find out more.

 

Off-Payroll Working – Will HMRC accept CEST result?

Since 6 April 2021 large and medium-sized organisations, based on the Companies Act criteria, have had to determine whether or not a worker supplying his services via their own personal service company would be treated as an employee if directly engaged. This replaced the IR35 rules for these larger organisations.

HMRC suggest organisations use their Check Employment Status for Tax (CEST) tool on their website to check the worker’s status, although that is not obligatory. The tool is an interactive database of questions and will normally provide a ruling after 15 to 20 questions depending on the answers given about the contractual relationship.

See: Check employment status for tax - GOV.UK (www.gov.uk)

HMRC have recently confirmed that they will be bound by the result of the software provided the information is accurate and it is used in accordance with their guidance.

See: ESM11010 - Employment Status Manual - HMRC internal manual - GOV.UK (www.gov.uk)

HMRC have also stated that they will not stand by results achieved through contrived arrangements that have been deliberately created or designed to get a particular outcome. They would see that as deliberate non-compliance, and potentially levy financial penalties.

Note that the end-user organisation is required to issue a Status Determination Statement to the worker with a copy to any agency to be passed to any fee payer in the labour supply chain making payments to the personal service company.

 

Understanding the possession action process: guidance for landlords and tenants

There has been a ban on residential property repossessions since the first lockdown started. Things have now changed since then.

Guidance for landlords and tenants in the private and social rented sectors explains the possession action process in the county courts in England and Wales has been updated to reflect changes to notice periods and bailiff enforcement in Wales.

 

Are you ready for Making Tax Digital?

From 1 April 2022 a new tranche of businesses will need to comply with the Making Tax Digital (MTD) regime.

All businesses which are VAT registered will have to sign up for MTD and will need to submit their first VAT return that starts on or after 1 April 2022 digitally. This covers businesses who are under the registration threshold of £85,000 and have voluntarily registered. Maybe now is the time to review your VAT registration with us.

There will be a requirement for these businesses to keep digital records and for these digital records to be used to file the returns. It will be possible to use spreadsheets for record keeping but there will need to be some form of bridging software that is compatible with the HMRC gateway.

Our clients who have already signed up for MTD have found using the software easy to use and have also found other benefits in using the software

Also be aware that other taxpayers will be required to join the MTD project from 2023 for matters such as property landlords and self assessment. Limited companies will be forced to join form around 2026.

We urge all clients to move to a digital record keeping regime as soon as possible. At Stewart & Partners we are Xero Certified Advisors with qualifications in migrating to Xero software. We also are able to work with all other software providers so if you feel that another software is better for you we can work with you to make sure you are compliant.

Speak to us for more details.

 

Abolition of tax 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.

 

Getting back to business

With the proposed lockdown restrictions being lifted on 21 June (hopefully!) many businesses are deciding how to recommence trading fully.

There is a temptation to reduce prices to bring in customers, both old and new. In my opinion this is an error. Your services or products have a value and you should be charging a fair price for what you are offering. If you discount now it will be difficult to raise prices for the same product later once things are starting to look up.

Most businesses will be focussing short term on their recovery and in the medium term on being resilient, improving profitability and growing turnover. If taxes rise to fund government spending, we recommend all businesses should map out a range of scenarios with “what if” analysis to understand their available future strategies for success. For example, here is a smaller business’s “what if” scenario planning results: 

Please talk to us about scenario planning – we have the tools to help you prepare for the future and set realistic and achievable targets.   

 

 

Why don’t you ask us?

Are you considering starting something new as you come out of Covid hibernation and your business opens up again or do you have a query about tax planning? Do you need advice about financing or cashflow, maybe you just need help in accessing a loan.

In addition to scenario planning mentioned above we have a broad range of experience that goes far beyond just preparing accounts and tax returns. Get in touch as we will probably have an answer to help you with your challenges.

 

 

I wish you the best for the next month.

 

If you have any queries you can book a free 15 minute zoom meeting with me.

 

Regards

 

Simon

Normal 0 false false false EN-GB X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; text-align:justify; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Arial",sans-serif; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi; mso-fareast-language:EN-US;}

 

 

v\:* {behavior:url(#default#VML);} o\:* {behavior:url(#default#VML);} w\:* {behavior:url(#default#VML);} .shape {behavior:url(#default#VML);} Normal 0 false false false false EN-GB X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; text-align:justify; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Arial",sans-serif; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi; mso-fareast-language:EN-US;}

July News Blog

 

Here is our July blog looking at some of what has happened over the month of June and a few items that come into place in July or later which I hope is of interest to our clients.

 As predicted in our June newsletter/blog the Covid 19 restrictions due to be lifted on 21 June have been delayed. This only goes to prove the saying that in life you prepare for the worst but hope for the best. Many times, on the television and radio, I have heard this business owner or that moan that the delay in lifting the restrictions will permanently damage their business.

 The date was a target, not set in stone. Whilst these businesses should have been ready to start full trading again, they should also have had a fall back plan in case things did not occur as they thought. Nothing is ever certain in life. It is always best to plan for the future. If these businesses had cash flow predictions for the next few months they could have planned to see what might happen to the business if the restrictions were not raised on the target date.

 We help our clients plan for the future by assisting with cashflow forecasts and discussions about what might happen if…

 If you don’t want to be caught out and totally unprepared for the future have a discussion with us about planning and cashflows.

 Don’t forget that we are here to assist you with any business queries you may have.

 

 In this month’s issue:

 Take advantage of the Super Deduction

 Self-Employment Income Support Scheme (SEISS)

 Changes to CJRS grant scheme

 Output VAT on the supply of private road fuel

 Recovery of VAT on Electric car charging

 Working safely during coronavirus (COVID-19)

 Are you ready for Making Tax Digital?

 

 Getting back to business

 Why don’t you ask us?

 Portal closing

 

 

Take advantage of the Super Deduction

 

 From 1 April 2021 until 31 March 2023 the Government have introduced a super deduction for capital allowances for companies. This means that for all fixed asset purchases that qualify for capital allowances a business will be able to claim 130% of the cost of the assets as a deduction from its taxable profits for ordinary assets and 50% for assets that qualify for a special writing down allowance.

To benefit from the relief the assets purchased must be new and not second hand or refurbished equipment.

The relief is only available to incorporated companies, but unincorporated businesses continue to benefit from the Annual Investment Allowance (AIA) which permits a deduction of 100 per cent for qualifying plant or machinery expenditure up to the threshold of £1 million.

If you are looking to invest in plant and machinery talk to us first as timing is important. It may be a good time to invest with government loans available at good interest rates.

  

Self-Employment Income Support Scheme (SEISS)

 

 Details of the fifth SEISS grant have now been announced, although full details are not yet available.

 A fifth grant covering May 2021 to September 2021 will be open to claims from late July 2021.

 The grant is taxable and will be paid out in a single instalment. Guidance for claiming the grant will be available by the end of June 2021.

 To be eligible for the grant you must be a self-employed individual or a member of a partnership.

 You must have traded in the tax years:

        2019 to 2020 and submitted your tax return on or before 2 March 2021

        2020 to 2021

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 

To work out your eligibility for the fifth grant, HMRC will first look at your 2019 to 2020 Self-Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.

 If you’re not eligible based on your 2019 to 2020 tax return, HMRC will then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020.

 You must declare that:

        you intend to continue to trade

        you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus from May 2021 to September 2021

You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.

 How the fifth grant works

The amount of the fifth grant will be determined by how much your turnover has been reduced in the year April 2020 to April 2021. HMRC provide more information and support by the end of June 2021 to help you work out how your turnover was affected.

The amount of the grant

Turnover reduction     How much you will get                              Maximum grant

 

30% or more               80% of 3 months’ average trading profits      £7,500

less than 30%             30% of 3 months’ average trading profits      £2,850

 

When can you claim the grant?

The online claims service for the fifth grant will be available from late July 2021.

If you are eligible based on your tax returns, HMRC will contact you in mid-July 2021 to give you a date that you can make your claim from.

 

Changes to CJRS grant scheme

From the start of July 2021 the amount of CJRS grant paid to employers will reduce as the Government and HMRC start to reduce the grant until it ends.

For the month of July 2021 and until the end of the furlough scheme employers will still need to pay their employees who remain on furlough at least 80% of their “normal” salary for the hours not worked.

The grant paid by Government will start to reduce from 1 July 2021.

For the month of July the repayment will be 70% of the normal salary, subject to a  maximum of £2,187.50 per employee, meaning that employers will need to fund not only the employers NI and pension but also 10% of the normal salary paid to their employees.

For the months of August and September the amount to be refunded will reduce to 60% of the normal salary subject to a maximum of £1,875.00 per employee.

The scheme currently is due to end on 30 September 2021.

 

Output VAT on the supply of private road fuel

HMRC have amended the VAT road fuel scale charges with effect from 1 May 2021.

Businesses must use the new scales from the start of the next prescribed accounting period beginning on or after 1 May 2021.

The valuation rate tables:

        set out the new scale charges (a VAT inclusive amount)

        show the VAT to be charged if you account for VAT on an annual, quarterly or monthly basis

        must be operated in accordance with the notes to the valuation table

You will need to check your car’s CO2 emissions figure if you cannot get this from your log book.

 

Recovery of VAT on Electric car charging

HMRC have issued Revenue and Customs Brief 7 (2021) which explains HMRC’s policy concerning the VAT treatment of charging of electric vehicles when using charging points situated in various public places.

Supplies of electric vehicle charging through charging points in public places are charged at the standard rate of VAT.

Additionally input tax can be recovered on electricity used to fuel a car intended for business use where:

           The charging takes place at the business premises of the VAT-registered business

           The charging is at the home of a sole proprietor

VAT cannot be recovered where the charging is at the home of an employee (director) as the supply is then not made to the company.

Where employees charge an employer’s electric vehicle (for both business and private use) at the employer’s premises the employee needs to keep a record of their business and private mileage so that the employer can work out the amounts of business use and private use for the vehicle.

Speak to us if you have any questions on this.

 

Working safely during coronavirus (COVID-19)

There are 14 guides issued by the Government to cover a range of different types of work. Many businesses operate more than one type of workplace, such as an office, factory and fleet of vehicles. You may need to use more than one of these guides as you think through what you need to do to keep people safe. Priority actions are outlined at the top of each guide. The guide for hotels and other guest accommodation has been updated to reflect changes to Step 3 which apply from 21 June.

See: Working safely during coronavirus (COVID-19) - Guidance - GOV.UK (www.gov.uk)

 

Are you ready for Making Tax Digital?

From 1 April 2022 a new tranche of businesses will need to comply with the Making Tax Digital (MTD) regime.

All businesses which are VAT registered will have to sign up for MTD and will need to submit their first VAT return that starts on or after 1 April 2022 digitally.

There will be a requirement for these businesses to keep digital records and for these digital records to be used to file the returns. It will be possible to use spreadsheets for record keeping but there will need to be some form of bridging software that is compatible with the HMRC gateway.

Our clients who have already signed up for MTD have found using the software easy to use and have also found other benefits in using the software.

Also be aware that other taxpayers will be required to join the MTD project from 023 for matters such as property landlords and self assessment. Limited companies will be forced to join form around 2026.

We urge all clients to move to a digital record keeping regime as soon as possible. At Stewart & Partners we are Xero Certified Advisors with qualifications in migrating to Xero software. We also are able to work with all other software providers so if you feel that another software is better for you we can work with you to make sure you are compliant.

Speak to us for more details.

 

Getting back to business

With the proposed lockdown restrictions being lifted on 21 June (hopefully!) many businesses are deciding how to recommence trading fully.

There is a temptation to reduce prices to bring in customers, both old and new. In my opinion this is an error. Your services or products have a value and you should be charging a fair price for what you are offering. If you discount now it will be difficult to raise prices for the same product later once things are starting to look up.

Most businesses will be focussing short term on their recovery and in the medium term on being resilient, improving profitability and growing turnover. If taxes rise to fund government spending, we recommend all businesses should map out a range of scenarios with “what if” analysis to understand their available future strategies for success. For example, here is a smaller business’s “what if” scenario planning results: 

 

Please talk to us about scenario planning – we have the tools to help you prepare for the future and set realistic and achievable targets.   

 

Why don’t you ask us?

Are you considering starting something new as you come out of Covid hibernation and your business opens up again or do you have a query about tax planning? Do you need advice about financing or cashflow, maybe you just need help in accessing a loan.

In addition to scenario planning mentioned above we have a broad range of experience that goes far beyond just preparing accounts and tax returns. Get in touch as we will probably have an answer to help you with your challenges.

 

Portal closing

As I have previously advised, the old portal will be closing on 5 July 2021. This is the last chance for you to download any documents you have saved there before they are lost.

Don’t delay.

To log into the new portal follow this link.

v\:* {behavior:url(#default#VML);} o\:* {behavior:url(#default#VML);} w\:* {behavior:url(#default#VML);} .shape {behavior:url(#default#VML);} Normal 0 false false false false EN-GB X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; text-align:justify; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Arial",sans-serif; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi; mso-fareast-language:EN-US;}

New tax briefing gudes online

I have today added two new tax briefing guides to the Free Stuff part of the web site.

Claim tax free allowance for working from home. Normal 0 false false false EN-GB X-NONE X-NONE MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman",serif;}

Who is gong to pay for your social care?

Check out these briefings for important information that could affect you.

June news blog

 

Here is our June newsletter/blog looking at some of what has happened over the month of May and a few items that come into place in June or later which I hope is of interest to our clients.

 

With businesses being able to open up indoors in a limited way from 17 May we hope that all our clients and contacts are now making a return to a more normal business environment.

 

From 21 June the remaining lockdown restrictions are due to be lifted. However, there is a chance that this will be delayed with the number of Covid19 cases starting to rise again. This date has always been a target date but with the caveat that it may need to be moved. Business should be planning to fully re-open form 21 June but should also have scenarios planned if the lifting of restrictions is delayed.

 

Don’t forget that we are here to assist you with any business queries you may have.

 

In this month’s issue:

New off-payroll rules

National Insurance and company directors.

Latest version of CEST to check employment status of workers.

Is your main source of income dividends from your company?

Help to grow your business

Getting back to business

Why don’t you ask us?

 

New off-payroll rules

It is now 2 months since the new off-payroll working rules came into place. If you are a contractor or other worker who has had deductions made under these new rules then you should already have talked to us about the deductions being made. If you have not done so, then you should contact us as soon as possible.

 

National Insurance and company directors

Regardless of their actual pay interval, company directors have an annual earnings period. If you are a company director, it is important that you understand the special rules for company directors, and the options open to them for calculating National Insurance throughout the tax year.

Under the annual earnings period rules, National Insurance for the tax year is worked out by reference to the annual rates and limits on a cumulative basis. For 2021/22, the annual lower earnings limit is £6,240, the primary threshold is £9,568 and the annual upper earnings limit is £50,270, and the annual secondary threshold is £8,840.

Where an annual earning period is used, the director will pay no employee’s National Insurance until earnings for the year reach £6,240. Contributions are then payable at a notional zero rate until earnings reach £9,568. Thereafter, contributions are paid at the rate of 12% until earnings for the year reach £50,270. Contributions on any further earnings are payable at the rate of 2%. The contributions that are deducted from a payment of earnings are found by working out the total contributions due on the earnings for the year to date, and deducting the total contributions already deducted from earnings previously paid in the tax year.

A similar approach is adopted for secondary (employer) contributions; no employer contribution are paid until earnings for the year to date reach £8,840, with contributions being paid at the rate of 13.8% on all further earnings in the tax year.

The disadvantage of this approach is that while the director may be paid the same amount each month, the contributions deducted can vary significantly. To overcome this, the client may prefer to take advantage of the Alternative Arrangements. Under these arrangements, National Insurance is worked out on a non-cumulative basis for each pay period (as for other employees) until the last pay period. When the director is paid for the final time in the tax year, the liability is recomputed on an annual basis, with any balance owing being deducted from earnings paid in that final period. This allows the liability to be spread more evenly throughout the year.

 

Latest version of CEST to check employment status of workers

With the extension of the “off-payroll” working rules to large and medium-sized organisations from 6 April 2021, HMRC have updated their Check Employment Status for Tax (CEST) diagnostic tool to assist those organisations in determining whether the new rules apply to workers supplying their services through personal service companies (PSCs).

Note that once the determination has been carried out the end user organisation is required to issue the worker, and the fee payer making payments to the PSC, with a Status Determination Statement.

Although it has been updated there are still areas which have not been dealt with such as mutuality of obligation (MOO) and the substitution section is still very black or white.

HMRC have said that they will stand by a result if the questions have all been answered correctly so if you get an outside of IR35 result then that is great. However if you do not get the answer you want then there is still a reasonable chance you will be able to dispute a ruling under the new rules. If you are in any doubt or have received a notification from an end user that you are caught then speak to us ASAP.

 

Is your main source of income dividends from your company?

If your income is set up so that you receive a small salary and then substantial dividends from your company there could be concerns with the way you pay yourself.

Dividends must be paid out of retained profits after Corporation Tax has been deducted. If the company does not have sufficient, or any, retained profits it cannot pay a dividend. With the challenges that the pandemic has caused many businesses will make losses this year which will reduce the retained profits that the company has. Once the reserves have been used up then it will not be possible to pay dividends.

In many cases our clients will confirm that they will pay a dividend just before the year end to cover amounts the shareholders/directors have taken out of the company during the year. Dividends cannot be back dated but in many cases the quantum of the dividend cannot be determined at the time it is declared. The level of dividend is often confirmed at a later date.

If there are insufficient reserves from which to take a dividend then the level may not be sufficient to cover the amounts drawn from the company. This can lead to an overdrawn Director’s loan account which has tax implications for both the director and the company.

If your company has reduced its income and profits and you rely on dividends to cover the amounts drawn from your company then you should speak to us urgently so that we can advise you of how to best resolve your situation.

 

Help to grow your business

The government’s new Help to Grow programme is now open for registrations and will launch in June. The programme will help small and medium sized businesses across the UK learn new skills, reach new customers and improve profits.

The Help to Grow Management scheme offers small businesses a 12 week programme delivered by leading business schools across the UK, accredited by the Small Business Charter. The programme will combine a practical curriculum, with 1:1 support from a business mentor, peer-learning sessions and an alumni network. Designed to be manageable alongside full-time work, this programme will support small business leaders to develop their strategic skills with key modules covering financial management, innovation and digital adoption. By the end of the programme participants will develop a tailored business growth plan to lead their business to its full potential.

30,000 places will be available over 3 years. The programme is 90% subsidised by government – participants will be charged £750.

Register your interest here: Help to Grow - Management - Small Business Charter

 

Getting back to business

With the proposed lockdown restrictions being lifted on 21 June (hopefully!) many businesses are deciding how to recommence trading fully.

There is a temptation to reduce prices to bring in customers, both old and new. In my opinion this is an error. Your services or products have a value and you should be charging a fair price for what you are offering. If you discount now it will be difficult to raise prices for the same product later once things are starting to look up.

Most businesses will be focussing short term on their recovery and in the medium term on being resilient, improving profitability and growing turnover. If taxes rise to fund government spending, we recommend all businesses should map out a range of scenarios with “what if” analysis to understand their available future strategies for success. For example, here is a smaller business’s “what if” scenario planning results: 

 

Please talk to us about scenario planning – we have the tools to help you prepare for the future and set realistic and achievable targets.   

 

Why don’t you ask us?

Are you considering starting something new as you come out of Covid hibernation and your business opens up again or do you have a query about tax planning? Do you need advice about financing or cashflow, maybe you just need help in accessing a loan.

In addition to scenario planning mentioned above we have a broad range of experience that goes far beyond just preparing accounts and tax returns. Get in touch as we will probably have an answer to help you with your challenges.

 

I wish you the best for the next month.

 

Simon

v\:* {behavior:url(#default#VML);} o\:* {behavior:url(#default#VML);} w\:* {behavior:url(#default#VML);} .shape {behavior:url(#default#VML);} Normal 0 false false false false EN-GB X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; text-align:justify; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Arial",sans-serif; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi; mso-fareast-language:EN-US;}

CONTACT

Kinetic Business Centre, Theobald Street
Elstree, Herts, WD6 4PJ
Contact Us: mail@stewartpartners.co.uk | Call: 07738 242299

SEE LOCATION ON MAP

Book an online meeting