Archive for October, 2020

Tax return reminder

Thursday, October 29th, 2020

HMRC have recently published a press release entitled “Just 100 days left for Self -Assessment”.

Before readers make the obvious connection, that this heralds the end of tax returns in the UK, it is purely a reminder that 2019-20 Self-Assessment returns need to be filed by 31 January 2021.

Gathering together the information to complete your return may have been a long way down your to-do list during the unprecedented period of COVID disruption. However, there is no sign that the 31 January 2021 filing deadline is being moved and so, readers who have not yet filed should start to consider what needs to be done.

 

In their press release HMRC confirm that:

Taxpayers must complete a Self-Assessment return if they:

  • have earned more than £2,500 from renting out property
  • have received, or their partner has received, Child Benefit and either of them had an annual income of more than £50,000
  • have received more than £2,500 in other untaxed income, for example from tips or commission
  • are a self-employed sole trader whose annual turnover is over £1,000
  • are an employee claiming expenses in excess of £2,500
  • have an annual income of over £100,000
  • have earned income from abroad that they need to pay tax on

 

Additionally, HMRC said:

The vast majority of Self-Assessment taxpayers complete their tax return by the 31 January deadline, but you don’t need to wait until January; you can send it back now and get it out of the way.

HMRC is determined to help customers during this difficult time. We know many customers will have been adversely affected by the coronavirus pandemic or will need help to spread the cost of their tax bill. That’s why we’ve made it quick and simple to set up a payment plan to spread the costs and help people get back on their feet. It’s easy to do online and there’s no need to call us to set it up.

Once Self-Assessment customers have completed their 2019-20 tax return, and know how much tax is owed, they can set up their own payment plan to help spread the cost of their tax liabilities, up to the value of £30,000.

They can use the self-serve Time to Pay facility to set up monthly direct debits and this can all be done online so there is no need to phone HMRC.

The Job Support Scheme options – open and closed

Tuesday, October 27th, 2020

** NECESSARY UPDATE AT NOVEMBER 1ST – JSS POSTPONED TO DECEMBER, JRS FURLOUGH GRANTS TO CONTINUE***

The revised Job Support Scheme (JSS) announced in the last few days comes in two varieties: Open and Closed.

JSS Open

Businesses in Tier 2 areas, that suffer the restrictions to sociability rules, never-the-less are not required to close. This is an insidious outcome for these traders, particularly those in the hospitality sector, as they may not be able to generate enough income to make their businesses financially viable.

One option available to these concerns was to lay-off staff.

To counter this, the Chancellor has now made two significant changes to his JSS scheme:

  1. As long as an employee can work a minimum 20% of normal working hours (previously this was 33%) they can be funded by the JSS. Employers will pay for these worked hours.
  2. Employees will also receive two-thirds of pay for normal hours not worked. Government will fund 61.67% and employers 5%. Previously, the employer’s contribution was one-third.

There is a cap to employer and employee contributions under this JSS Open initiative. They are:

  • Employer’s contributions are capped at £125 per month with the discretion to pay more if they wish, and
  • Government’s contribution will be capped at £1,541.75 per month.

Employees that are placed in this JSS Open scheme will also have the option to claim Universal Credits if their reduced earnings are insufficient to meet outgoings and they otherwise qualify.

 

JSS Closed

Businesses required to close by any of the four UK governments will have the option to claim under the so-called JSS Closed scheme. The key phrase here is “required to close”.

Eligible businesses will be able to claim as follows:

  • Employees who cannot work due to government restrictions will receive two thirds of their normal pay, paid by employer, and fully funded by government to a maximum £2,083.33 per month. Employers still retain the option to pay more if they wish.
  • Employees can also apply for Universal Credits if they qualify for this additional support.

Cash-flow issue

Both schemes, Open and Closed, will run from 1 November 2020 for six months. Employers should note that you will not be funded by the JSS when payments to employees are made. Claims will be processed and paid to employers in the month following a claim period.

Business Support Guide Updated 26th October

Monday, October 26th, 2020

Our business support guide has been updated to include the most recent announcements : –

26thOct Autumn Newsletter

As ever, just get in touch with your usual office contact if you have any questions or email

donald.parbrook@milnecraig.co.uk

Job Support Scheme (or JRS, the sequel?) – More Changes

Friday, October 23rd, 2020

NEW SUPPORT FOR EMPLOYERS AND EMPLOYEES

Many of you will be aware that the Chancellor announced a reduced support package for employers to follow on after the end of the Job Retention Scheme (“JRS”, or furlough) at 31st October 2020.  The furlough scheme was widely used and allowed employees to receive 80% of pay whilst not working, with a reducing amount of that funded by Government grant for the employer.

From 1st November, rather than continuing JRS (perhaps targeted to closed businesses, or certain sectors), the Treasury decided upon a whole new scheme called the Job Support Scheme (“JSS”) which will run for six months.

Having struggled through JRS with our clients, our payroll and tax team (and clients) are all mighty tired of it but there is no doubt it saved many jobs and businesses.  The question hangs in the air as to why we are being asked to struggle with another wholly new scheme, rather than an amended JRS.  However, we play the game with the hand we are being dealt.

Initially, a few weeks ago the announcement of the JSS scheme said that employers whose staff were working a minimum one third of their time could claim a grant if they paid their staff two thirds of their wages.  Of the element “unworked”, the grant would cover one third up to £697 per month.  In approximate terms the employee lost a third of their pay, received two thirds and it would cost the employer around half of their pay to achieve that (pension and national insurance costs not covered by grant).  It was pointed out by many that as the employer would still have to fund considerably more salary cost than the hours worked would normally cost, this scheme was not going to be widely attractive.  It felt like it was a political signal that support was in place, but without much real scope for large public funding or widespread appeal.

So, the Chancellor, seeing the new lockdown restrictions being introduced, clearly realised more was required.  Last week he announced that businesses that were closed would be eligible for a grant of two thirds of wages (and the employee would be expected to receive only two thirds), up to a maximum of £2,083.33 per month per employee.  So employees could get up to 2/3rds of employee regular pay.  For closed businesses this announcement, if imperfect to some, is surely very valuable.  That said, the employer must continue to pay the pension and national insurance costs and the employee loses a lot of their income.  Also, the grants are claimed AFTER payment of the wages going forward, whereas JRS allowed the most needy to claim the grant ahead of their payroll date.  And we are very much mindful that a grant to pay some wages hardly replaces the lost turnover for a busy restaurant or bar.

Finally, under further pressure, Mr Sunak has gone further.   The JSS for “open” businesses was revised on 22nd October, hardly more than a week before the scheme starts and hardly weeks after it was announced.  Surely everybody is now confused by these schemes?   Even now, the guidance issued by the Treasury states that the full rules will follow in “late October”.  It is understood that HMRC and the Treasury are working hard to bring this new scheme into place but we find it hard to understand why they didn’t just adjust the existing one for the sake of credibility and the sanity of payroll bureau, software companies, employment lawyers and the struggling businesses likely to need the money.

So the new “JSS Open” scheme widens the grant claim element for open businesses but clearly doesn’t offer the employer the sum of two thirds of pay (and 100% of what is being paid whilst closed) that is available from the “JSS Closed” scheme.  But it will have a greater appeal than originally anticipated a few weeks ago.   Although welcome, this new scheme now creates all sorts of pressure for employers and their advisers.  It is a requirement that the employees must have agreed in writing to the reduction in hours required for the grant to be relevant and with a week to go that’s not easy for employers.  Meeting employment law conditions for hours/wage reduction will be important.  So, if you want to use it, think quickly what agreement you need, in writing, for your file so your staff can be employed for at least 20% of their hours.

We will be writing more about the scheme as the rules are released in more detail, but HMRC’s own guidance is here and this is worth reading if you are going to use the scheme:

https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme

By way of a quick summary, again we start by stating that employers wishing to use the scheme must agree with the employee in writing that they have reduced hours and this is for a minimum seven day period and they must employ the person for at least 20% of their regular hours for a grant to be available for the unworked element.

The Employer pays the 20% of normal pay for the hours actually worked.  The employee then has to receive 66.67% of the pay rate for unworked hours, of which 5% is paid for by the employer and 61.67% by government grant.  Actually it is all paid by the Employer, but he then claims a grant for the 61.67%.  The Employer pays pension and national insurance on the total paid.  Of course it can be more than 20% worked hours (20% is the minimum).  And there is a maximum grant based on reference pay of £3125 per month.  The sums must be paid BEFORE the grant is claimed (claim system starts early December).

There is a somewhat cumbersome set of rules for variable pay workers (those who are not on fixed monthly pay are inevitably more complicated e.g. weekly paid shift working bar staff) as the reference pay that is used is the higher of three historic figures.  Some considerable complexity arises for the very types of payroll that are most likely to require the scheme.  Pay periods that straddle both JRS and JSS will no doubt cause those claiming the grants some anxiety.

Large employers (250 staff +) require to show turnover has fallen – the Government wants claims to be made only where the Employer requires it.

Overall, we can see that the scheme is now moving into a position where closed businesses will use it if they feel that is preferable to redundancy /rehiring options.  We can see some businesses that may have to operate on reduced hours/ capacity might use the general scheme to help cover the costs of staff who are not fully utilised.

If you have any questions, contact your usual Milne Craig contact, or email or senior payroll manager,  john.cuthbert@milnecraig.co.uk

We might also take this chance to mention there are other grant announcements in the news, we imagine most businesses are keeping an eye on these.  For the self employed HMRC will again directly liaise with taxpayers eligible for claims for the Self Employed Income Support Scheme.  The first two claim periods have elapsed but two more are to come.  For scheme three and four it will be necessary to show how your business has been impacted more specifically – so we imagine less grants being paid but the sum payable is 40% of the average three months profit, up to £3750 which is helpful for many.  Guidance can be found here (link below) and karen.morrison@milnecraig.co.uk is the contact point if you wish our firm to check your eligibility.  Unfortunately HMRC expect taxpayers, not agents, to make their claims.  https://www.gov.uk/government/publications/self-employment-income-support-scheme-grant-extension/self-employment-income-support-scheme-grant-extension

As ever, we wish our clients and colleagues, all families and friends, the very best at these times.  We know it is terribly hard for people who are personally affected by the virus, and distressing for those trying to keep their businesses going.  We are committed to doing our best to help.

Best wishes,

The Directors, Milne Craig

23.10.2020

Export Growth Plan to help businesses

Friday, October 23rd, 2020

A package of measures to help businesses in England build back better following the pandemic was recently announced by the Government.

The Department for International Trade’s (DIT) Export Growth Plan provides additional financial support and expertise, some of which is targeted towards specific regions that are most in need.

The plan includes a £38 million Internationalisation Fund for small businesses, which will help up to 7,600 SMEs in England grow their overseas trading and strengthen their business.

Additional support for exporters will be provided by 64 new International Trade Advisors (ITAs), many of them working closely with Local Enterprise Partnerships (LEPs), who will lend their expertise to small businesses in the Northern Powerhouse, Midlands Engine and South West.

A new pilot Export Academy will also be introduced to support smaller businesses in the same areas. The Academy will deliver a series of activities to build the capabilities of smaller

These new measures are the latest in a series of measures already announced by DIT since the Coronavirus outbreak.

Full list of measures included in the scheme are:

 

  1. New £38m Internationalisation Fund from 2020-23 for SMEs in England that will help 7,600 SMEs to internationalise. The fund is supported by the European Regional Development Fund (ERDF) and is managed through four regional projects: The Northern Powerhouse Internationalisation Fund, Midlands Internationalisation Fund, South Internationalisation Fund and London Internationalisation Fund.
  2. 64 new International Trade Advisers (ITAs) to provide direct support to SME businesses in the Northern Powerhouse, Midlands Engine and South West.
  3. A new, pilot, Export Academy to support smaller businesses in the Northern Powerhouse, Midlands Engine and South West who want to export.
  4. 24 new Overseas Champions across the world to promote trade and investment for the Northern Powerhouse, Midlands Engine.
  5. A refreshed cohort of over 100 additional Export Champions across different industries in England, to help promote and support exports.

 

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