Coronavirus Job Retention Scheme

Coronavirus Job Retention Scheme

How much you’ll get
Your employer will get a grant to cover 80% of your monthly earnings, up to a maximum of £2,500.
Firms will be eligible for the grant once you have been furloughed, from 1 March.

Your employer

  • will pay you at least 80% of your usual monthly earnings, up to a maximum of £2,500, as your wage
  • can claim for a minimum of 3 weeks and for up to 3 months – but this may be extended
  • can choose to pay you more than the grant – but they do not have to

You’ll still pay Income Tax, National Insurance contributions and any other deductions from your wage.

If you are concerned that your employer is not paying you what you are entitled to, then you should raise this with your employer in the first instance, then with Acas (Advisory, Conciliation and Arbitration Service).

How your monthly earnings are calculated

If you’ve been employed (or engaged by an employment business in the case of agency workers) for a full year, employers will claim for the higher of either:

  • the amount you earned in the same month last year
  • an average of your monthly earnings from the last year

If you’ve been employed for less than a year, employers will claim for an average of your monthly earnings since you started work. The same arrangements apply if your monthly pay varies, such as if you are on a zero-hour contract.

If you started work in February 2020, your employer will pro-rata your earnings from that month.

Bonuses, commissions and fees are not included as part of your monthly earnings.

More information are available from the Government website about Coronavirus Job Retention Scheme

Capital Gains Tax- Changes In Rules For Property Sellers

Capital Gains Tax- Changes In Rules For Property Sellers

There is a major change coming up in April 2020 for those who property sellers in the UK.

Finance Act 2019 Sch 2 paras 1 and 2 stipulate that individuals must make a return to HMRC within 30 days. Where there is any direct/indirect disposal of UK land by a UK non-resident. Or disposal of UK residential land by UK residents resulting in a profit.

The new reporting rule for UK land return is in addition to reporting disposal. On the normal self-assessment tax return; it does not replace it.

FA 2019 sch 2 para 16

FA 2019 sch 2 para 16  only contains the standard wording that the return must include a declaration. Making it that the information is correct and complete to the best of the person’s knowledge. It contains information of a description specified by HMRC.

There is already a system in place (introduced in April 2015). Whereby when a non-resident individual disposes of a property in the UK. It has to file a return within 30 days.

The new rules for UK residents state that they only need to file a return if they make a gain on the disposal. They are not required to file a return if they incur a loss on disposal. The obligation for non-UK residents to file a return where no liability arises remains unchanged.

The question of being a UK resident is in itself a very complex one. The guidance is available is FA 2013 sch 45.

Generally, UK taxpayers tend to view their personal tax compliance obligations as an annual process. In the early days of the legislation, UK residents may have missed the 30-day filing deadline for residential property sales. Advisers and solicitors play a crucial role in ensuring that they stay on top of the process to prevent missing the deadline.

The seller of the property would need to calculate and pay the Capital Gains Tax after taking into account the other income as well. A problem will arise if an individual is unable to determine his income, especially for those who have fluctuating income each tax year.

Change In Eligibility For Employment Allowance For 2020 – 2021

There is a change coming up in rules for eligibility for Employment Allowance from 6th April 2020. It is the duty of each employer to check if they meet the new eligibility criteria to claim this allowance.

The salient eligibility rules are as follows:

  • An employer can only claim the Employment Allowances for the tax year 2020/2021. If the total for employers’ National Insurance contribution is below the threshold of £100,000 in the previous tax year.
  • An employer cannot claim the allowance for deemed payments of employment income. They are not included in the total cost of up to £100,000 for employers’ National Insurance contribution.
  • If there is more than one payroll scheme registered within the connected companies. The employer will need to add the total liabilities from all those companies to see they are still within the threshold.
  • An employer will have to check they will not exceed the de minimis state aid threshold, if applicable.

In Budget 2020 it was announced that the Employment Allowance would increase from £3,000 to £4,000 from 6th April 2020 thus helping to reduce the employers’ National Insurance contribution liabilities for SMEs.

In the tax years before 2020-21 the Employment Allowance claim auto-renewed, as in the employer did not have to make separate claims every tax year. But this is changing from 6th April 2020 onwards. The method of claiming through the Employer Payment Summary remains the same, but the employer will have to make a new claim for the Employment Allowance to HMRC each tax year.

HMRC Phone Line For Help

For those who are unable to pay due to corona-virus, HMRC will discuss your specific circumstances to explore, including the following:

  • agreeing on an installment arrangement
  • suspending debt collection proceedings
  • cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately

The helpline number is 0800 024 1222 – and is an addition to other phone contact numbers.

Opening hours are Monday to Friday from 8 am to 4 pm.

We are the UK’s tax, payments and customs authority, and we have a vital purpose. We collect the money that pays for the UK’s public services and help families and individuals with targeted financial support.

Apex Accountants do this by being impartial and increasingly effective and efficient in our administration. We help the honest majority to get their tax right and make it hard for the dishonest minority to cheat the system.

HMRC is a non-ministerial department, supported by 2 agencies and public bodies.

More information is available on the HMRC website

 

What do HMRC deal with?
The term Her Majesty’s Revenue and Customs (HMRC) refers to the tax authority of the U.K. government. The agency, also known as Her Majesty’s Revenue Services, is responsible for collecting taxes, paying child benefits, enforcing tax and customs laws, and enforcing the payment of minimum wage by employers.

Off-Payroll Working – IR35

The off-payroll rules will apply to work done under private sector contracts.

The government has put on hold on IR35 tax reforms for a year in the wake of coronavirus crisis.
Officials suggest that ‘This is a deferral, not a cancellation’.

It issued guidance on ‘Tax avoidance schemes aimed at contractors and agency workers’ ahead of the extension of the off-payroll working rules to the private sector.

HMRC are concerned about schemes that use umbrella companies and which claim to increase take-home pay.

HMRC is advising taxpayers to:

  •  Use the online tax calculator to check what their net pay should be after-tax and NICs.
  • Compare this figure with your current take-home pay.
  • Please breakdown how the entire arrangement works, including the pay rate, fees being charged, and their relevance. Have you deducted tax and NICs?

The guidance points out that:

  • Any scheme offering better take-home pay by converting income into something else (e.g. a loan), and which results in not paying. HMRC considers income tax and NICs as tax avoidance and will challenge it.
  • Those using schemes are likely to end up with a bill for tax and NICs, interest on tax paid late.
  • Any fees paid to the promoter of the scheme are unlikely to be recoverable. If the scheme does not work and may amount to 10% of the gross pay.

Workers should be wary of employers or agencies who tell them they must use a particular scheme. HMRC do not approve tax avoidance schemes.

Self-Employment Income Support Scheme From HMRC

Self-Employment Income Support Scheme From HMRC

As per the Government’s announcement, the scheme will allow self-employed to claim a taxable grant worth 80% (the same percentage as announced for employees) of trading profits up to a maximum of £2,500 per month (same amount as announced for employees) for the next three months. This may be extended if needed.

Who is eligible:
The Self-employed individual or a member of a partnership and those:

  • Who has submitted Income Tax Self-Assessment tax return for the tax year 2018-19; (HMRC has given time to file a tax return to those who have not filed for 2018/19)
  • Traded in the tax year 2019-20
  • Are trading at the time of application or would be except for the COVID-19
  • Intend to continue to trade in the tax year 2020-21
  • Have lost trading/partnership trading profits due to the COVID-19

To be eligible self-employed trading profits must also be less than £50,000 and more than half of the income comes from self-employment.
This is determined by at least ONE of the following conditions being true:
Trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of the total taxable income
Average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period
For those who have less than three years’ self-assessment, the average income will be calculated accordingly.

More information are available from the Government website

BUDGET UPDATE

BUDGET UPDATE In England

Personal allowance and national Insurance rates

Personal Allowance:

The personal allowance will remain the same at £12,500.

Basic rate band will remain at £37,500 which means that 40% tax rate will not start hitting until a taxpayer is earning more than £50,000.

National Insurance:

The primary threshold now stands at £9,500, resulting in employed taxpayers saving £104 and self-employed taxpayers saving £78. Budget Update

Off-payroll working rules:

This a big measure which was already announced but taking effect from 6th April 2020.

If a taxpayer is working for a medium or large organisation (as defined by the Companies Act) via an intermediary or personal service Company(PSC), the end client will be responsible for determining the taxpayer’s IR35 status and if applicable, deducting tax and national insurance before a payment is made, and paying this over to HMRC.

There was an allowable deduction of 5% for expenses this will be abolished.

The taxpayers working for small companies are exempt from these new rules and the responsibility for determining employment status still lies with them.

Debts towards HMRC:  (Please Put a suitable heading)

There is a good news for those who owe to HMRC.

The Government will invest an additional £12.5m in HMRC during the tax year 2020/21 so that they could work immediately on the implementation of ‘breathing space’ system.

From early 2021, this system will introduce a 60-day period wherein people in problem debt can engage with debt advice without facing enforcement action, incurring additional interest, or charges.

Making Tax Digital (MTD) for self employed

The good news for self employed tax payers that no announcement was made regarding the introduction of Making Tax Digital (MTD).

Capital gains tax (CGT)

From 6th April 2020, individuals must submit a return within 30 days of completing the sale of a residential property if they dispose of a reportable capital gain.. It will be necessary to submit a provisional calculation of the gain to HMRC and pay the tax within 30days.

The changes to Principle Private Residence (PPR) relief withdraw lettings relief of £40,000 unless the letting occurred while the property was being occupied by the owner.

In addition, the final period of ownership on which PPR relief is reduced from 19 months to 9 months.

Increase in Minimum Wage Rates/ STATE PENSIONS

Minimum wage increases, from April 2020, the new rates are as follows:

  • National Living Wage for ages 25 and above – £8.72 per hour
  • National Minimum Wage for 21 to 24 year – £8.20 per hour
  • For 18-20 year – £6.45 per hour
  • For under-18s – £4.55 per hour
  • For apprentices – £4.15 per hour

Increase in State Pension rates

The full new state pension will go up from £168.60 a week to £175.20 per week.

For those who are still on the older basic state pension will increase from £129.20 to £134.25 per week.

Statutory Sick Pay (SSP)

Statutory sick pay will now be payable from day one for employees, rather than day four. For employers with fewer than 250 employees, the cost of statutory sick pay for two weeks per employee will refund.

Benefits for the self-employed

Since Statutory Sick Pay (SSP) is for employed individuals, the Government has announced the following benefits for the self-employed individuals:

The government will pay Contributory Employment and Support Allowance (ESA) to individuals affected by COVID-19 or self-isolating from day one, rather than day eight.

Entitlement is dependent on the national insurance record of the individual.

  • People affected by COVID-19, or self-isolating, will be able to claim Universal Credit and access advance payments without attending a jobcentre.

BUDGET UPDATE In England

A Roadmap to COVID-19 Financial Relief

We are following all the guidance and advice issued and are maintaining our services with business as usual (which is continually under review as we monitor the situation).

Given this will be a time of need for many businesses and individuals, we are committed to the preservation of businesses/employment and keen to continue this support.

As expected, we are seeing a number of sectors being massively impacted already if you are one of them do not hesitate to get in touch. COVID-19 Summaries

COVID-19 – Emergency Economic Measures as of 18 March 2020

Key points: –

  • £350bn of Loan Guarantees
  • Business Rates Holidays
  • Business Grants
  • Time to Pay Schemes
  • SSP Relief
  • Business Interruption Insurance
  • Mortgage Payment Holiday

Loan Guarantees (The COVID-19 Business Interruption Loan Scheme) (‘CBILS’)

Much of the detail remains unclear,  the government is proposing to guarantee up to £350bn of loans made to UK companies, via the British Business Bank.

Companies big and small across the UK are under pressure, with cash-flow being a particular concern as a result of reductions in turnover.

CBILS

Nevertheless, CBILS is not a grant.  It is a loan, and companies will have increased debt as they (hopefully) emerge the other side.

The government has confirmed that they will limit the guarantee to 80% of the value of the loan, and there will be no charge to either businesses or banks for providing the guarantee.

The government has advised that CBILS will offer favorable interest rates, with the government covering the first six months of interest on the loan.

Business Rates Holidays

They have scrapped business rates on all commercial properties in the retail, leisure, and hospitality sectors.

The Chancellor explicitly stated that this would extend to all shops, pubs, theatres, music venues and restaurants. From this, we can infer that cinemas, clubs, leisure centers, hotels, and entertainment venues will also receive exemptions.

Business Grants

The Chancellor announced that retail, leisure, hospitality businesses will receive grants of £25k, having value between £15k and £51k.

The ‘smallest’ businesses in the country, across all sectors, will also be able to seek grants of £10k.

 

  • Small business rate relief applies to companies with a property with a rateables value of less than £15k. The rates ordinarily payable on these properties are reduced, with properties having a rateable value of £12k or less paying nil rates, and tapered rates applying between £12k and £15k.
  •  Rural rate relief applies in rural communities with a population below 3,000, and your business is either the only shop or post office (with a rateable value of up to £8.5k) or the only petrol station or pub (with a rateable value of up to £12.5k).  In these cases, no business rates are payable.

We should also expect that these grants will be subject to conditions, as otherwise, they will be open to abuse.

Time to Pay Schemes

There has been no official extension to TTP schemes, or any obvious relaxation of the criteria applied by HMRC.

SSP Relief

The legislation is to be brought forward to allow employers to recover COVID-19 related SSP from the government.

This will be limited to employers with fewer than 250 employees (as at 28 February 2020) and will cover up to two weeks’ SSP.

This will only apply once the new regulations are in force.

Mortgage Payment Holiday

The government has announced that there will be a 3 months’ holiday for residential and BTL properties.

Please don’t hesitate to contact us.

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