A reminder that It is possible to make small tax-free payments to employees, including directors, and this might be an appropriate time to make a small tax-free bonus in advance of the annual Christmas, New Year holidays. Employers and employees don’t have to pay tax on small benefits provided they comply with the following rules: it cost you £50 or less to provide, it isn’t cash or a cash voucher, it isn’t a reward for work or performance related activity it isn’t in the terms of an employees’ contract. HMRC describes these payments as a ‘trivial benefit’. Based on the national mood following months of COVID disruption, these so-called trivial benefits now seem a possible means to spread a little good cheer. A word of caution Where the employer is a close company, and the benefit is provided to an individual who is a director or other office holder of the company (or a member of their family or household) the exemption is capped at a total cost of £300 in the tax year. Secondly, if you provide a benefit to a group of employees and it is impractical to work out the exact cost per head, then it is acceptable to average the cost per employee.

If you have still not submitted all of the information we need to complete your 2019-20 tax return, could we ask you to respond as soon as you can as the deadline is fast approaching – 31 January 2021. HMRC has made no announcement that this deadline will be extended. Accordingly, the initial £100 late filing penalty will apply to any 2019-20 return filed electronically after 31 January 2021. If you are having difficulties tracking down information, lost P60s etc, please call so that we can agree on a strategy to secure the missing data. None of us need any additional pressure at this point in time as we all grapple with the effects of COVID disruption. However, we hope you can respond to this request – if it applies to you – in good faith and in the knowledge that our first priority is to keep you compliant and to avoid penalties. Finally, can we thank readers who have supplied the required tax return information prior to this reminder.

Most employers who are eligible will be aware that the furlough scheme (the Coronavirus Job Retention Scheme) has been extended for five months – from 1 November 2020 to 31 March 2021. The general terms for the first quarter to 31 January 2021 are: Maximum claim per employee is 80% of hours not worked. Furlough claims will be capped at £2,500 per employee per month for hours not worked. Employers will remain responsible for paying for any hours worked, albeit on a flexible basis, and for any pension and National Insurance costs. Employers can top-up wages for hours not worked at their discretion. This is a welcome extension for many businesses that were facing difficult choices as the previous furlough scheme ended 31 October 2020. Readers should note that the amounts of government support – 80% capped at £2,500 for hours not worked – only applies to 31 January 2021. During January, these rates may be changed, and much will depend on the economic challenges at that time. We will of course publish any changes announced in the new year. Employers claiming under the new scheme should also note: The previously announced £1,000 Job Retention Bonus has been withdrawn now that the furlough scheme is extended to 31 March 2021. One condition of the new scheme is that employers accept that HMRC will publish information about their claim on the internet. This will include the name of the employer and a reasonable indication of the amount claimed. Furlough agreements must be in place before the start of a claims period. These agreements can be subsequently varied. Claims cannot be made if an employee is serving a notice period between 1 December 2020 and 31 January 2021.

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.

Brits will be able to get cashback from shops without needing to buy anything under new proposals to protect the UK’s cash system announced 15 October 2020.

Under the government proposals, cashback without a purchase could be widely available from retailers of all sizes in local communities across the UK.

Although cash use is declining, with people increasingly choosing cards, mobile and e-wallets to make payments, it remains crucial for at risk groups across the UK – including the elderly and vulnerable. Many find that cash is more accessible than digital payment methods or that it helps them to budget and manage their finances.

Current EU law makes it difficult for businesses to offer cashback when people are not paying for goods and this has been a barrier to widespread adoption. The government is now considering scrapping these rules once the transition period ends on 31 December 2020.

The government is also considering giving the FCA overall responsibility for maintaining a well-functioning retail cash system given its existing regulatory role and consumer protection objective.
At present, The Bank of England, the Financial Conduct Authority, the Payment Systems Regulator and HM Treasury each have specific roles and responsibilities for oversight of the cash system. Close coordination between these authorities has been highly effective, particularly in managing risks to cash through COVID-19, but there may be significant benefits to giving a single authority overall responsibility for setting requirements to meet the cash needs of consumers and SMEs.

Readers with children at university should pass on this message as students starting university this year are being warned by HMRC that they could be targeted by a fresh wave of tax scams.

As new students start the academic year, they can be particularly vulnerable to cybercrime. With universities taking a blended approach to online and face-to-face tuition this year, and an increase in remote working due to the pandemic, students could be left particularly exposed to the work of fraudsters.

Freshers might also be more vulnerable to these types of scams due to their limited experience of the tax system.

HMRC has written to universities, through Universities UK, asking them to help ensure their students know how to spot a scam.

In August, HMRC received reports from the public of more than 74,800 scam emails, text messages and phone calls. Nearly 41,300 of these specifically offered bogus tax rebates. Thousands of these scams were targeted at students and the criminals involved appear to have obtained their personal university email addresses by unlawful means. These scams often offer fake tax refunds or help with claiming COVID-related financial support.

Phishing email messages can also provide a gateway for criminals. Students who provide personal details in response can end up inadvertently giving access to important accounts, like email or online banking, leaving scammers free to commit fraud and steal their money.

Criminals also use phone scams to threaten taxpayers into handing over cash. Some 651,600 scams have been referred to HMRC since August last year. Of those, more than 215,660 were voice or phone scams, known as vishing.

If someone calls, emails or texts claiming to be from HMRC, saying that you can claim financial help, are due a tax refund or owe tax, and asks for bank details, it might be a scam. Check GOV.UK for how to recognise genuine HMRC contact.

 

For many years Chancellors have threatened to reduce the Income Tax relief that can be claimed for payments into a private pension scheme.

There have been reductions in the amount of contributions that can be made and the size of the pension fund that can be accumulated, but thus far, allowable contributions may still attract Income Tax relief at your highest rate (20%, 40% or 45%) subject to regional differences.

It is this higher rate tax relief that may now be subject to change.

Our present Chancellor, Rishi Sunak, has publicly declared that he wants to recoup some of the recent government COVID expenditure by increasing the Treasury’s tax take. As we have already suggested, one of the proposed weapons in his tax-increase arsenal is to remove or reduce the higher rate Income Tax relief on pension contributions.

For example, he could restrict tax relief to basic rate (20% subject to regional differences) or cap at a hybrid rate of say 33%.

As the next budget is just around the corner, likely to be February or March 2021, now may be a good time to consult with your pensions adviser and maximise your contributions for this year.

The present rate of Inheritance Tax (IHT) that is payable by your executors on your taxable estate is 40%.

The good news is that you can reduce the impact of this tax, which effectively reduces the amount of your hard-won assets that is received by your beneficiaries.

For example:

• The first £325,000 is tax-free. This may increase to £500,000 if you leave your home to your children or grandchildren, and
• If you leave your estate to your spouse, civil partner or charities there is normally no IHT to pay.

Additionally:

• IHT is reduced to 36% if you leave more than 10% of your “net-value” estate to charity.
• Chargeable gifts made within the last seven years may be bought into account for IHT but are subject to a decreasing rate of IHT based on a sliding scale over the seven year period.
• Business assets relief may apply in which case those business assets would pass tax-free or be subject to a reduced rate. The same may also apply to agricultural property.

Ironically, you don’t have to die to determine how much tax your estate will pay. It is possible to organise your affairs to reduce the future IHT bill by careful planning.

If you are interested in considering the options available to ensure more not less of your estate passes to your family, please call to discuss your options.

The Prime Minister, Boris Johnson speaking at a press conference on Saturday night, 31 October 2020, confirmed widespread expectations of a second national lockdown in England to help stem the growing resurgence of the coronavirus. The Government was faced with significant concerns that if they took no action, the NHS could be overwhelmed with death rates far exceeding those seen in the first lockdown.

The four week lockdown came into effect on Thursday 5 November and applies until Wednesday 2 December 2020. This lockdown will close pubs, restaurants, entertainment venues, hotels and non-essential shops and people will be advised to work from home if possible. In a marked departure from the first spring lockdown, schools, colleges and universities remain open. The exit strategy from this lockdown remains unclear and there are fears that the lockdown could continue beyond this period if the infection rate does not reduce significantly.

We have set out below the most up-to-date support measures available to businesses following the announcement of these new restrictions.

Coronavirus Job Retention Scheme 

The Coronavirus Job Retention Scheme (CJRS) commonly known as the furlough scheme will be extended until the 31 March 2021. The most recent update (further extending the life of the scheme) was announced by the Chancellor Rishi Sunak when delivering his fourth Winter Economic Plan to the House of Commons on 5 November 2020.

The Chancellor confirmed that employees will receive up to 80% of their salary for hours not worked. There will be a review date of the CJRS in January 2021 which may see employers taking on an increased financial contribution if the economic and health outlook of the country show signs of improvement.

It had been announced that the CJRS would be replaced by the Job Support Scheme (JSS), a scheme that would have topped up wages for people returning to work on reduced hours. The introduction of the JSS has now been put on hold.

A bullet-point summary of the main details of the CJRS extension announced is set out below:

• People who are unable to work will receive up to 80% of their wages. This payment is subject to a monthly maximum of £2,500 per employee (for hours not worked). Employers will have the discretion to top-up the payments if they so wish.
• The scheme will apply across the UK, in England, Wales, Scotland and Northern Ireland even where the regions are subject to different lockdown restrictions.
• Employers will be required to pay employer NICs and pension contributions for their employees whilst on furlough.
• Flexible furloughing, whereby employers can bring back employees to work part-time will be allowed. Employers will have to pay employees for the hours they work but can still use the scheme to cover any normal hours where employees are furloughed.
• To be eligible, employees must have been registered on their employers PAYE payroll by 23:59 on 30 October 2020.  The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.
• Employees employed as of 23 September 2020 and on payroll, who were made redundant or stopped working for the employer afterwards can also qualify for the scheme if they are re-employed and placed on furlough.
• All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS.
• The first claims under the extended CJRS can be made from 8am on Wednesday 11 November. Claims for November must be submitted to HMRC no later than 14 December 2020.
• There will be no gap in eligibility between the previously announced end date of the scheme on 31 October 2020 and this extension.

Mortgage holidays

It has also been confirmed that mortgage payment holidays will no longer end as planned on 31 October 2020. Borrowers who have been impacted by coronavirus and have not yet had a mortgage payment holiday will be entitled to a six month holiday, and those that have already started a mortgage payment holiday will be able to top up to six months without this being recorded on their credit file.

Cash grants

It had been previously announced that businesses in England that are forced to shut as a result of a lockdown will be eligible for grants of up to £3,000 per month payable every two weeks. Businesses will be eligible to claim after two weeks of closure.

The amount businesses will be able to claim from their local authority depends on their rateable value:

• Small businesses with a rateable value of or below £15,000 will be able to claim £1,334 per month or £667 per two weeks.
• Medium-sized businesses with a rateable value between £15,000 and £51,000 will be able to claim £2,000 per month, or £1,000 per two weeks.
• Larger businesses will be able to claim £3,000 per month, or £1,500 per two weeks.

Further support for businesses

The government is providing an additional £1.1bn to Local Authorities in England, distributed on the basis of £20 per head. These payments are designed to help Local Authorities to support businesses more broadly.

Self Employed Income Support Scheme Extension (SEISS)

The Government has also confirmed that there will be additional help for the self-employed during Lockdown 2.0.

It had previously been announced that the grants for the self-employed would be based on 40% of previous qualifying earnings for the months of November, December and January. The November figure was then increased to 80%. It has now been confirmed that the self-employed will receive 80% of average trading profits for the entire three month period. This will increase the grant for the three months to a maximum of £7,500 made available to those who meet the eligibility requirements.

It has also been confirmed that the claims window for the grant is being brought forward from 14 December to 30 November to allow payments to be made more quickly.

An additional second grant will be made available from 1 February 2021 to 30 April 2021. The level of this second grant amount is subject to review and will be set in due course.

Government-backed loan schemes

The deadline for applications for government-backed loan schemes and the Future Fund have been extended until 31 January 2021.

It will also be possible for businesses to ‘top up’ existing Bounce Back Loans should they need additional finance. This will apply to businesses who borrowed less than their maximum allowance.

Devolved administrations

There has also been an increase in the upfront guarantee of funding for the devolved administrations from £14 billion to £16 billion. This uplift will continue to support workers, business and individuals in Scotland, Wales and Northern Ireland.

Job Retention Bonus

The Job Retention Bonus was meant to provide a £1,000 bonus payment to employers that brought back employees that were furloughed under the CJRS from November 2020 to January 2021. Following the extension of the CJRS, it has been confirmed that the Job Retention Bonus will not be paid in February. The government will instead redeploy a retention incentive at the appropriate time.

1 October 2020 – Due date for Corporation Tax due for the year ended 31 December 2019.

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

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

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

31 October 2020 – Latest date you can file a paper version of your 2020 Self-Assessment tax return.

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.