Archive for May, 2020

Waiving salaries or dividends

Thursday, May 28th, 2020

HMRC advice for people choosing to give up their income to support their business or donate to charity during the coronavirus (COVID-19) pandemic has been published.

Business owners who have decided to give-up their rights to receive dividends, salary or bonuses from their companies need to follow HMRC’s guidelines to be effective.

To be effective tax-wise, the pay-back or waiving of remuneration needs to be done before they are paid and by following HMRC’s instructions. HMRC’s advice says:

During the COVID-19 pandemic, many people are choosing to give up part of their income to support their business or employers or donate to charity.

HMRC is keen to support people who choose to waive – or give up – part of their income, particularly when it comes to understanding any tax implications.

Employers, directors and employees have several options to support a business or employer, including:

  • waiving their salary or bonuses before they are paid
  • waiving the right to any dividends
  • giving salary or dividends back to their employer after they have been paid
  • Payroll Giving
  • Gift Aid

Waiving salary or bonuses before they are paid

A ‘waiver of remuneration’ happens when an employee gives up rights to remuneration and gets nothing in return. If an employee and employer agree to a reduction in the employee’s remuneration before they are paid, for example to support company cashflow during the pandemic, then no Income Tax or National Insurance contributions (NICs) will be due on the amount given up.

This is provided the agreement is not part of any wider arrangement to divert the amount to a particular recipient or a cause. For example, if it were waived on condition that the sum would be donated to a particular charity, this would still be liable to tax.

 

Waiving dividends

Directors or other shareholders, including employees, are able to waive their right to be paid a dividend.

For this to be effective, a Deed of Waiver must be formally executed, dated and signed by shareholders and witnessed and returned to the company.

The waiver must be in place before the right to receive a dividend arises. For final dividends, this is before they are formally declared and approved by the shareholders. For interim dividends, the waiver must be in place before the dividends are paid.

 

Giving salary or bonuses back to your business or employer after they have been paid

It is possible to give back salary or bonuses to a business or employer after they have been paid. However, it is not possible to claim back the Income Tax and NICs that would already have been deducted from the salary or bonuses on payment.

Bonuses must be waived before the date they are due to be paid. If they are waived on or after the due date then tax will still be payable on them, even if the bonus is not paid over.

Donating to charity

Payroll Giving is a way of giving money to charity without paying tax on it. It must be paid through PAYE from someone’s wages or pension. If you are an employee, you should select a registered charity to donate to, and let your employer’s payroll department know.

 

Employers should contact a Payroll Giving agency to set up a scheme. The donation will be taken from employees’ pay before Income Tax but after National Insurance. Any registered charity in the UK or the EU recognised by HMRC for tax purposes can receive donations through Payroll Giving.

Gift Aid

Donating through Gift Aid means charities and community amateur sports clubs can claim an extra 25p for every £1 donated.

This means that if you donate to an eligible charity, the charity can claim back from HMRC the basic rate tax you would have paid on the amount. This is a way of giving to charity tax efficiently even after you have been paid.

 

Coronavirus – Business update 27 May 2020

Wednesday, May 27th, 2020

This week, the formal process to claim back certain Statutory Sick Pay (SSP) payments is launched. From 26 May 2020, employers can register their claim using a new online process.

Making a claim

To use the online service, you will need the Government Gateway user ID you received when you registered for PAYE Online. If you did not register online you will need to enrol for the PAYE Online service.

If you use an agent who is authorised to do PAYE online for you, they will be able to claim on your behalf.

If you are unable to claim online an alternative way to claim will be available.

To make a claim you will need:

  • your employer PAYE scheme reference number
  • contact name and phone number of someone we can contact if we have queries
  • UK bank or building society details (only provide bank account details where a Bacs payment can be accepted)
  • the total amount of coronavirus SSP you have paid to your employees for the claim period – this should not exceed the weekly rate that is set
  • the number of employees you are claiming for
  • the start date and end date of the claim period

You can claim for multiple pay periods and employees at the same time. The start date of your claim is the start date of the earliest pay period you are claiming for. The end date of your claim is the end date of the most recent pay period you are claiming.

Records you must keep

You must keep records of SSP that you have paid and want to claim back from HMRC. You must keep the following records for 3 years after the date you receive the payment for your claim:

  • the dates the employee was off sick
  • which of those dates were qualifying days
  • the reason they said they were off work – if they had symptoms, someone they lived with had symptoms or they were shielding
  • the employee’s National Insurance number

You can choose how you keep records of your employees’ sickness absence. HMRC may need to see these records if there is a dispute over payment of SSP.

Cash boost for new business start-ups

Tuesday, May 26th, 2020

Innovative businesses and start-ups are set to benefit from a £40 million government investment to drive forward new technological advances. It was announced 20 May 2020, that government is doubling investment in the Fast Start Competition with an additional £20 million.

The competition aims to fast-track the development of innovations borne out of the coronavirus crisis while supporting the UK’s next generation of cutting-edge start-ups.

Among the successful projects to receive the funding to date, is a virtual-reality surgical training simulator and an online farmers’ market platform.

Innovate UK has received a record number of applications – over 8,600 to the Fast Start Competition and will now be able to distribute investment to over 800 projects.

Projects receiving funding include:

  • I3d Robotics which is building a virtual-reality training/teaching platform to enable medical students to upskill remotely and perform simulation surgeries.
  • Volunteero Ltd has developed a social media app to connect local communities and allow volunteers to target support to the most vulnerable members in their neighbourhoods.
  • Elchies Estates Limited is setting up new virtual farmers’ markets to replace traditional markets which have had to close as a result of COVID-19, providing a platform for local businesses and farmers to sell produce.

 

The Fast Start Competition was launched in April in response to the outbreak and is being managed by Innovate UK.

 

 

Social distancing at work

Thursday, May 21st, 2020

The following guidelines have been released to cover social distancing concerns if working in offices or call centres. The objective being to maintain 2m social distancing whenever possible.

The published guidelines are:

You must maintain social distancing in the workplace wherever possible. Where the social distancing guidelines cannot be followed in full in relation to a particular activity, businesses should consider whether that activity needs to continue for the business to operate, and, if so, take all the mitigating actions possible to reduce the risk of transmission between their staff.

 

Mitigating actions include:

  • further increasing the frequency of hand washing and surface cleaning
  • keeping the activity time involved as short as possible
  • using screens or barriers to separate people from each other
  • using back-to-back or side-to-side working (rather than face-to-face) whenever possible
  • reducing the number of people each person has contact with by using ‘fixed teams or partnering’ (so each person works with only a few others)

Social distancing applies to all parts of a business, not just the place where people spend most of their time, but also entrances and exits, break rooms, canteens and similar settings. These are often the most challenging areas to maintain social distancing.

 

Coming to work and leaving work

Objective: To maintain social distancing wherever possible, on arrival and departure and to ensure handwashing upon arrival.

Moving around buildings and worksites

Objective: To maintain social distancing wherever possible while people travel through the workplace.

Workplaces and workstations

Objective: To maintain social distancing between individuals when they are at their workstations.

For people who work in one place, workstations should allow them to maintain social distancing wherever possible.

Workstations should be assigned to an individual and not shared. If they need to be shared they should be shared by the smallest possible number of people.

If it is not possible to keep workstations 2m apart then businesses should consider whether that activity needs to continue for the business to operate and if so take all mitigating actions possible to reduce the risk of transmission.

Meetings

Objective: To reduce transmission due to face-to-face meetings and maintain social distancing in meetings.

Common areas

Objective: To maintain social distancing while using common areas.

Accidents, security and other incidents

Objective: To prioritise safety during incidents. In an emergency, for example, an accident or fire, people do not have to stay 2m apart if it would be unsafe.

People involved in the provision of assistance to others should pay particular attention to sanitation measures immediately afterwards including washing hands.

Full details are available on the gov.uk website

The suggested actions that need to be taken to comply with the above objectives are listed here: https://www.gov.uk/guidance/working-safely-during-coronavirus-covid-19/offices-and-contact-centres

Title: Coronavirus – Business support updates 19 May 2020

Tuesday, May 19th, 2020

Trade credit insurance guarantee

Last week, the government announced that businesses with supply chains that rely on Trade Credit Insurance, and who are experiencing difficulties maintaining cover due to coronavirus disruption, will get support from government.

In a news story released 13 May 2020, the Treasury said:

Trade Credit Insurance provides cover to hundreds of thousands of business to business transactions, particularly in non-service sectors, such as manufacturing and construction. It insures suppliers selling goods against the company they are selling to defaulting on payment, giving businesses the confidence to trade with one another. But due to Coronavirus and businesses struggling to pay bills, they risk having credit insurance withdrawn, or premiums increasing to unaffordable levels.

To prevent this from happening, the government will temporarily guarantee business-to-business transactions currently supported by Trade Credit Insurance, ensuring the majority of insurance coverage will be maintained across the market. This will support supply chains and help businesses to trade with confidence as they can trust that they will be protected if a customer defaults on payment.

Retail businesses that can now open for business

The following list was updated (13 May 2020) for retail businesses in England that can now open for business.

  • Food retailers including supermarkets
  • Dental services, opticians, audiology services, chiropody, chiropractors, osteopaths and other medical or health services (including physiotherapy and podiatry services), and services relating to mental health.
  • Pharmacies and chemists, including non-dispensing pharmacies
  • Petrol stations
  • Bicycle shops
  • Homeware, building supplies and hardware stores, including where those stores supply equipment for hire
  • Garden centres and plant nurseries
  • Veterinary surgeries and pet shops
  • Agricultural supplies shops
  • Convenience stores, corner shops and newsagents
  • Off-licences and licensed shops selling alcohol, including those within breweries
  • Laundrettes and dry cleaners
  • Post offices
  • Taxi or vehicle hire businesses
  • Car repair and MOT services
  • Car parks
  • Banks, building societies, short-term loan providers, credit unions, savings clubs, cash points, currency exchange offices, businesses for the transmission of money, and businesses which cash cheques.
  • Storage and distribution facilities, including delivery drop off or collection points where they are on the premises of any of the above businesses
  • Public toilets
  • Shopping centres may stay open but only units of the types listed above may trade

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