Month: October 2020

Job Support Scheme For Closed Businesses

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The Job retention scheme is ending on 31 October 2020 and has been replaced by another support scheme called Job Support Scheme (JSS). This scheme is designed to help businesses and employees to deal with fresh spike of the virus and a winter of uncertainty.

The JSS is now split into two parts, the JSS Open for businesses which remain open and the JSS Closed for businesses that are forced to close because of local or national lockdown measures. The two parts of the scheme will run in parallel for 6 months until 30 April 2021.

The provisions of the JSS Closed are more generous and reflect the fact that the employee is unable to work. This would mean they are under Tier 3 restrictions in England or similar lockdown regulations in Scotland, Wales or Northern Ireland.

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Under the specific terms of the JSS Closed, the government will pay two-thirds (67%) of employees’ salaries, up to a maximum of £2,083.33 a month. Employees must be off work for at least 7 consecutive days to benefit from the expanded scheme. Businesses will only be able to use the JSS Closed whilst they are subject to specific lockdown measures that require the closure of their business premises.

Employers will have the discretion to top-up the payments if they so wish. This will help protect employee incomes, limit unemployment, and retain employer-employee matches so that these premises are able to reopen as quickly as possible when circumstances allow.

In line with the JSS Open, the grant will be paid in arrears, reimbursing the employer for the government’s contribution. An employer can claim the JSS Open and JSS Closed at the same time for different employees, for example a retailer with some premises that remain open and some that are forced to close.

Affected employees under the JSS Closed may also be entitled to additional financial support, including Universal Credit.

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JSS – Open Scheme For Employers

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The Job Support Scheme (JSS) Open scheme is available from 1 November 2020 for businesses that remain open but with employees working reduced hours. Employees must work at least 20% of their usual hours, paid as normal, in order to qualify for the JSS Open. The employee will then receive 66.67% of their normal pay for hours not worked. Employees will therefore forego one-third of their pay for the hours that they have not been working.

The contribution for hours not worked will be made up of contributions from the employer and government. The government will fund up to 61.67% of wages for hours not worked per employee whilst the employer will fund a further 5%.

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To be eligible for the grant for open businesses, employer must have confirmed employees in writing (or reached collective agreement with a trade union where the relevant terms are determined by collective agreement) that they have agreed and been put on a JSS Open temporary working agreement. The written agreement must be in place before the temporary working agreement commences. The agreement can be set out in advance of Health Protection Regulations being put in place by a UK government.

The JSS Open is available to all small and medium-sized businesses, but larger businesses have to meet a financial impact test to demonstrate that their turnover has fallen as a result of the pandemic.

A large employer is defined for this purpose as a legal entity with 250 or more employees across their payrolls on 23 September 2020. If the employer’s turnover has remained equal or has decreased compared to the previous year, then they will qualify. This test only needs to be taken once before the employer’s first claim for the Job Support Scheme.

Large employers who are VAT registered and submit quarterly VAT returns should compare the total sales figure on their VAT return, which is due to be filed and paid between 31 August 2020 and 7 November 2020, with the total sales figure from the same quarter in 2019. There are similar measures for employers who submit VAT returns on different staggers. Further guidance is expected to be published shortly for large employers who are not VAT registered.

Any charity with 250 or more employees that is registered with a UK charity regulator or are exempt from such registration is not required to carry out the test and will be considered eligible for the scheme.

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Disqualified Director Running A Company

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If someone is being disqualified from being director of a company; he / she cannot run the affairs of a company.

A recent investigation by the Insolvency Service has seen a husband and wife disqualified from being directors for a total of 17 years. The husband and wife team were directors of a company that provided conference and event organisation services across the UK.

https://www.gov.uk/government/news/events-companys-collapse-shines-light-on-directors-prior-ban

The male director had resigned as a director of the company in November 2014 after he was disqualified for 6 years. However, investigators discovered that the banned director had continued running the company behind the scenes in breach of his disqualification and his wife was fully aware of the misconduct. The company was eventually wound up in October 2018.

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The disqualification means that the directors cannot be involved, directly or indirectly, in the formation, promotion or management of a company without permission of the court for 11 and 6 years, respectively.

Commenting on the case the Chief Investigator for the Insolvency Service said:

‘The length of this ban for the director and the disqualification of his wife, demonstrates that we will tackle those who try to get around their bans by appointing their spouse as director, while continuing to run the business themselves behind the scenes.’

 

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Tax Relief On Charitable Donations

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Tax Relief On Charitable Donations

The UK tax system is designed to give basic rate taxpayers automatic relief for charitable gifts made under the Gift Aid Scheme. The system then enables the recipient charity to reclaim the basic rate tax already paid by the donor.

https://www.gov.uk/income-tax-reliefs/charity-donations-tax-relief

Charities and community amateur sports clubs (CASCs) can register with HM Revenue and Customs (HMRC) to be part of the Gift Aid scheme. When they’re registered, they can claim back the tax you’ve already paid on your donation.

If you pay Income Tax at the basic rate no additional relief is due on your charitable donations. However, if you are a higher rate or additional rate taxpayer then you can claim tax relief on the difference between the basic rate and your highest rate of tax. This relief is given by increasing your basic rate and higher rate band by the grossed-up amount of your gifts. Click here to know more about our Tax services

If you are a higher rate or additional rate taxpayer, you have the option to carry back your charitable donations to the previous tax year. A request to carry back the donation must be made before or at the same time as your previous year’s self-assessment return is completed.

This means that if you made a gift to charity in the current 2020-21 tax year that ends on 5 April 2021, you can accelerate repayment of any tax associated with your charitable giving. This can be a useful strategy to maximise tax relief if you will not pay higher rate tax in the current tax year but did in the previous tax year.

You can only claim if your donations qualify for gift aid. This means that your donations from both tax years together must not be more than 4 times what you paid in tax in the previous year. If you do not complete a tax return you can submit a claim using HMRC’s P810 form.

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Help To Buy Scheme Extended

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The Help to Buy equity loans scheme is a government initiative for those who are either looking to buy their first home or are home movers on new-build homes in England with a purchase price of up to £600,000. The Help to Buy equity loans provide a low-interest loan towards the deposit. The loan is interest free for the first 5 years. New home buyers need a 5% deposit, and the government lends up to 20% of the value of the home (up to 40% for London).

The Help to Buy equity loan scheme has helped more than a quarter of a million people to buy a home. Since the start of the scheme on 1 April 2013, 272,852 property sales have been completed.

The government is also announcing an extra measure to protect existing customers who have experienced severe delays as a result of coronavirus.

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The deadline for the homes to have been finished in order to comply with the equity loan scheme has been extended from 31 December 2020 to 28 February 2021 to ensure home buyers do not miss out if there has been a delay in construction due to the pandemic. The deadline for the legal completion of the sale will remain the same – 31 March 2021. The completion of sale deadline may be extended further to 31 May 2021 if a reservation was in place by 30 June 2020. These changes apply to the equity loans scheme in England and not to similar schemes in Northern Ireland, Scotland or Wales.

Separately, the government’s new Help to Buy scheme, which will replace the current scheme, will come into place from 1 April 2021 and run until March 2023 as planned and there are no plans for further extensions. The new scheme introduces property price caps and is restricted to first-time buyers only, supporting people onto the housing ladder.

 

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JSS Fraudulent Claims Combat

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HMRC has claimed that they have put certain procedures to control the abuse of newly announced JSS. There are significant concerns that between 5%-10% of claims made under the CJRS were fraudulent or made in error.

There are additional anti-fraud measures in place to help prevent fraudulent claims made under either the JSS Open or JSS Closed. In order to help make the new JSS more secure, checks will be put in place and payments claimed may be withheld if HMRC suspects a claim to be ineligible. Whilst this may help reduce fraudulent claims it leaves the employer having to fund the government grant which will be paid in arrears.

https://www.gov.uk/guidance/check-if-you-can-claim-the-job-support-scheme#who-can-claim

Other measures announced by HMRC to combat fraud under the JSS include:

The amount of any overpayment by the employer must be paid back to HMRC where a claim contains incorrect information.

The full amount of any grant must be repaid if a claim is found to be fraudulent. Penalties of up to 100% of the amount over claimed may be applied where appropriate. Click here for our Payroll Services

HMRC will consider publishing the details of employers who are charged a penalty because of a deliberately incorrect Job Support Scheme grant claim.

HMRC intends to publish the names of employers who have used the scheme.

The public can report fraud to HMRC if they have evidence to suggest an employer is abusing the scheme.

Employees will be able to check if their employer has made a claim relating to them via their Personal Tax Account.

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Important Tax Dates November/December 2020

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Following are the important Tax Dates November/December 2020 for your diary:

1 November 2020 – Due date for Corporation Tax due for the year ended 31 January 2020.

19 November 2020 – PAYE and NIC deductions due for month ended 5 November 2020. (If you pay your tax electronically the due date is 22 November 2020.)

19 November 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 November 2020.

19 November 2020 – CIS tax deducted for the month ended 5 November 2020 is payable by today.

1 December 2020 – Due date for Corporation Tax payable for the year ended 28 February 2020.

19 December 2020 – PAYE and NIC deductions due for month ended 5 December 2020. (If you pay your tax electronically the due date is 22 December 2020)

19 December 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 December 2020.

19 December 2020 – CIS tax deducted for the month ended 5 December 2020 is payable by today.

30 December 2020 – Deadline for filing 2019-20 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2021-22.

Important Tax Dates November/December 2020

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Routes For Closing A Limited Company

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A company could face numerous situations when the shareholders might decide to close the limited company. This could be because a limited company structure is not relevant to the requirements of shareholder, the business is no longer active, or the company is insolvent. You will usually need the agreement of all the company’s directors and shareholders to close down the company.

https://www.gov.uk/strike-off-your-company-from-companies-register

The method for closing down a limited company depends on whether it is solvent or insolvent. If the company is solvent, you can apply to get the company struck off the Register of Companies or start a members’ voluntary liquidation. The former method is usually the cheaper option.

Members’ Voluntary Liquidation is the most tax-efficient method for most directors, as shareholders can obtain the value of the company instead of being charged income tax and capital gains tax.

It is the responsibility of the company directors to ensure that all of a company’s assets and liabilities are dealt with before it is dissolved. For example, you have settled any outstanding bills and collected all debts owed to the business. Any assets or rights (but not liabilities) remaining in the company at the date of dissolution can pass to the Crown as ownerless property.

Where a company is insolvent, the creditors’ voluntary liquidation process must be used. There are also special rules where the company has no director, for example if the sole director has died.

A company can also elect to become dormant. A company can stay dormant indefinitely, however there are costs associated with this option. This might be done if for example a company is restructuring its operations or wants to keep hold of a company name, brand or trademark. The costs of restarting a dormant company are typically less than starting from scratch again.

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Lower Tax On Savings Income

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Lower Tax On Savings Income

Due to the Personal Allowance most people can benefit from paying no tax on interest on their savings. There is also a Starting Rate for Savings for those on low income.

In the current tax year, anyone with taxable income of less than £17,500 will have no tax to pay on their savings income – interest received. This figure is calculated by adding the £5,000 starting rate limit for savings (where 0% of the interest is taxable) to the current £12,500 personal allowance. However, this £5,000 starting rate limit for savings will be reduced by £1 for every £1 of non-savings income in excess of £12,500. Accordingly, when non-savings income amounts to £17,500 all savings income will be taxable.

https://www.gov.uk/apply-tax-free-interest-on-savings

There is also a Personal Savings Allowance (PSA) which means that for basic-rate taxpayers the first £1,000 interest on savings income is tax-free. For higher-rate taxpayers the tax-free personal savings allowance is £500. Anyone earning over £150,000 does not benefit from the PSA.

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Interest from savings products such as ISA’s and premium bond wins do not count towards the limit. Taxpayers with tax-free accounts and higher savings can continue to benefit from the relevant PSA limits.

Banks and building societies no longer deduct tax from your account interest as a matter of course. Taxpayers who still need to pay tax on savings income will need to declare this as part of their annual Self-Assessment tax return.

Taxpayers that have overpaid tax on savings interest can submit a claim to have the tax repaid. Claims can be backdated for up to four years after the end of the current tax year. The deadline for making claims for the 2016-17 tax year is 5 April 2021.

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Cash Accounting Scheme For VAT

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Cash Accounting Scheme generally, VAT is payable on sales irrespective of the customer has paid and can lead to a claim for Bad Debt Relief. There VAT schemes available as below:

  • Flat rate scheme
  • Annual accounting VAT scheme
  • Cash accounting scheme

In this article we will explain some salient features of the Cash Accounting Scheme as follows:

Under the Cash Accounting Scheme, VAT does not need to be paid over until the customer has paid. With cash accounting, you account for VAT when you’re paid as opposed to the date you invoice a customer.

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A business can enter this scheme provided their estimated VAT taxable turnover for the next VAT year is not more than £1.35 million in the next 12 months. The business can continue to use the scheme until their VAT taxable turnover exceeds £1.6 million.

Businesses can’t use the Flat Rate Scheme together with the (CAS). However, the Flat Rate Scheme has its own cash based method for calculating turnover. Businesses are also ineligible to use the scheme if they are behind with their VAT payments, late filing returns or have committed a VAT offence in the last 12 months.

Businesses do not need to complete an application form or advise HMRC to start using the (CAS). They can commence using the Cash Accounting Scheme at the beginning of any VAT period or if they are not already registered for VAT from the day their VAT registration starts.

Businesses can leave the (CAS) voluntarily at the end of any VAT accounting period. They do not need to notify HMRC. They can then re-join the scheme at the beginning of any VAT accounting period, provided they continue to meet the necessary criteria.

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