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Business As Usual During Covid 19

Plan For Jobs: Latest Government Update

 

The government today announced it will increase the amounts and reach of its winter support schemes.

In recognition of the challenging times ahead, the Chancellor said he would be increasing support through the existing Job Support and self-employed schemes and expanding business grants to support companies in high-alert level areas.

H M Treasury states that open businesses which are experiencing difficulty will be given extra help to keep staff on as the Government will increase contributions to wage costs under the Job Support Scheme, and business contributions drop to 5%.

Business grants are expanded to cover businesses in particularly affected sectors in high-alert level areas.

Grants for the self-employed doubled to 40% of previous earnings

Job Support Scheme (JSS)

When originally announced, the JSS – which starts on 1 November, saw employers paying a third of their employees’ wages for hours not worked and required employees to be working 33% of their normal hours.

Today’s announcement reduces the employer contribution to those unworked hours to 5%, and reduces the minimum hours requirements to 20%, so those working just one day a week will be eligible. That means that if someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer £44.

Self-employed grant

Today’s announcement increases the amount of profits covered by the two forthcoming self-employed grants from 20 per cent to 40 per cent, meaning the maximum grant will increase from £1,875 to £3,750.

Business Grants

The Chancellor has also announced approved additional funding to support cash grants of up to £2,100 per month primarily for businesses in the hospitality, accommodation and leisure sector who may be adversely impacted by the restrictions in high-alert level areas. These grants will be available retrospectively for areas who have already been subject to restrictions and come on top of higher levels of additional business support for Local Authorities moving into Tier 3.

These grants could benefit around 150,000 businesses in England, including hotels, restaurants, B&Bs and many more who are not legally required to close but have been adversely affected by local restrictions.

See: https://www.gov.uk/government/news/plan-for-jobs-chancellor-increases-financial-support-for-businesses-and-workers?utm_source=923e5ab2-e10c-490d-ac93-4287f524ee0e&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

Please don’t hesitate to get in touch if you would like more details of any of this.

 

Corona Vat Deferral Update

Corona VAT

On 24 September 2020, the Chancellor announced that businesses who deferred VAT due from 20 March to 30 June 2020 will now have the option to pay in smaller payments over a longer period.

Instead of paying the full amount by the end of March 2021, HMRC have confirmed businesses can make smaller payments up to the end of March 2022, interest free.

You will need to opt-in to the scheme, and for those who do, this means that your VAT liabilities due between 20 March and 30 June 2020 do not need to be paid in full until the end of March 2022.

Those that can pay their deferred VAT can do so by 31 March 2021.

If you are still unable to pay the VAT due and need more time, you can contact HMRC by phoning: 0300 200 3835.

More information on the scheme will be available in the coming months and we will keep you up to date when changes occur.

See: https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19?utm_source=cad7c1fc-6225-4a8b-97b6-66507f6182c0&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

Please don’t hesitate to contact us if you would like more help with this.

Expansion of UK Government Job Support Scheme

In some good news for beleaguered hospitality businesses the Chancellor has announced extra support which will apply to businesses here in Scotland that are forced to close by local lockdowns.

The government news release states:

“The government’s Job Support Scheme (JSS) will be expanded to protect jobs and support businesses required to close their doors as a result of coronavirus restrictions, the Chancellor announced today, 9 October.

  • Job Support Scheme will be expanded to support businesses across the UK required to close their premises due to coronavirus restrictions
  • government will pay two thirds of employees’ salaries to protect jobs over the coming months
  • cash grants for businesses required to close in local lockdowns also increased to up to £3,000 per month

Under the expansion, firms whose premises are legally required to shut for some period over winter as part of local or national restrictions will receive grants to pay the wages of staff who cannot work – protecting jobs and enabling businesses to reopen quickly once restrictions are lifted.

The government will support eligible businesses by paying two thirds of each employees’ salary (or 67%), up to a maximum of £2,100 a month.”

Full details here: https://www.gov.uk/government/news/job-support-scheme-expanded-to-firms-required-to-close-due-to-covid-restrictions

If you need any help with your furlough claims don’t hesitate to get in touch.

 

September Changes To Furlough Scheme

The CJRS grant claim changes again on the 1st of September. Please talk to us if you would like us to help estimate your claim.

  • From 1 September CJRS will pay 70% of usual wages up to a cap of £2,187.50 per month for the hours furloughed employees do not work.
  • You will still need to pay your furloughed employees at least 80% of their usual wages for the hours they do not work, up to a cap of £2,500 per month. You will need to fund the difference between this and the CJRS grant yourself.
  • The caps are proportional to the hours not worked. For example, if your employee is furloughed for half their usual hours in September, you are entitled to claim 70% of their usual wages for the hours they do not work up to £1,093.75 (50% of the £2,187.50 cap).
  • You will continue to have to pay furloughed employees’ National Insurance (NI) and pension contributions from your own funds.

You can find ourt which employees you can put on furlough and claim for through the Coronavirus Job Retention Scheme here.

MTD for VAT cheatsheet

MTD for VAT is fast approaching. This cheatsheet shows some helpful information and resources that should assist a smooth transition.

Who has to register and what records do you need to keep:

From April 2019 VAT registered businesses and organisations with taxable turnover above the VAT threshold of £85,000 will be required to:

    • Maintain their accounting records digitally in a software product or spreadsheet. Maintaining paper records will cease to meet the legal requirements in tax legislation.
    • Submit their VAT returns to HMRC using a functional compatible software product that can access HMRC’s API (Application Program Interfaces) platform.

The requirements do not apply to VAT registered businesses with taxable turnover below the VAT threshold (eg, those that have registered voluntarily).

What does this mean in practice:

  • You must be doing your book keeping in a package. Ideally a cloud package like Xero, Quickbooks Online, or Freeagent. Or on the desktop with MTD enabled software like Sage 50. You must then use this software to submit your returns.
  • You must register with HMRC for MTD VAT. This is a new requirement so everyone must do this.
  • You must configure your software to use the MTD portal.

What are the key dates?:

We recommend that assuming you have suitable software you take action the day after the submission of your last non MTD VAT return. This will give you 3 months to ensure you have registered with HMRC and switched your software to use the new system.

  • March/June/September/December VAT periods
    • First mandatory VAT period: 1st April to 30th June 2019
    • Deadline for first MTD VAT return: 7th August 2019
    • Take action date: 8th May 2019
  • April/July/October/January VAT periods
    • First mandatory VAT period: 1st May to 31st July 2019
    • Deadline for first MTD VAT return: 7th September 2019
    • Take action date: 8th June 2019
  • May/August/November/February VAT periods
    • First mandatory VAT period: 1st June to 31st August 2019
    • Deadline for first MTD VAT return: 7th October 2019
    • Take action date: 8th July 2019

How to register with HMRC:

HMRC have published a handy video on Youtube to show how to register with HMRC:

HMRC MTD VAT Video

How to switch your software to using MTD:

We will Publish seperate articles on this as the software vendors publish information.

If you need more information please get in touch: Contact Us

Making Tax Digital Latest

Making Tax Digital – The Short Version

Making Tax Digital sounds complex but in the first phase all that it means is that all VAT registered businesses must be submitting VAT returns straight from Software starting in April next year.

Making Tax Digital – The Slightly Longer Version

HMRC’s Making Tax Digital initiative is edging ever closer. So with just six months to go until it comes in here is a review of where we are.

Here is HMRC’s take on it https://www.gov.uk/government/publications/making-tax-digital-how-vat-businesses-and-other-vat-entities-can-get-ready/making-tax-digital-how-vat-businesses-and-other-vat-entities-can-get-ready

Whilst the later phases are still clouded in confusion, the initial phase which covers VAT is now coming and clients will need to submit their VAT returns straight from software. No more totting up invoices on a calculator and then typing the VAT return numbers in to the HMRC VAT portal. It isn’t even clear if a spreadsheet will suffice.

So the bottom line is that in practice all VAT registered businesses should be converting to electronic book keeping by the end of 2018 to be ready for the change. Clients using old unsupported versions of Sage will either have to upgrade to the latest version or even better convert to a cloud accounting package.

Many of our clients wont notice the difference as the are already on Xero, Freeagent or Kashflow either supported by us or with us doing their book keeping. However the few that are still calculating VAT returns manually and then giving us a shoe box at the end of the year will need to convert as soon as possible.

If you are unsure about what you need to do give us a call and we will point you in the right direction.

There is more detail on Making Tax Digital here from the Tax Institute. https://www.tax.org.uk/policy-technical/technical-news/making-tax-digital-vat-main-issues-consideration

New VAT Reverse Charge for Construction Industry Labour

The Autumn Budget of 2017 announced that there would be a change to the VAT regime for Contractor Labour starting in October 2019. Similar to the existing CIS scheme this will mean that VAT charged on labour will be paid over by the recipient of the labour service rather than the supplier.

This means yet another scheme for contractors to run alongside CIS when using subcontractors.

The government published a response to their consultation on the 1st of December 2017. In it they confirmed that:

  • The scope of the reverse charge will follow the Construction Industry Scheme definition of construction services.
  • There will be no threshold applicable to the measure and no exemption for Flat Rate Scheme users (even though they will effectively have to leave the scheme to be able to recover VAT on the costs).
  • Sales to the final customer in the chain will not be covered by the reverse charge. Respondents to the initial consultation warned that there may be particular definition issues for joint ventures and special purpose vehicles in the voluntary and public sectors so the definition of ‘the final customer’ will be subject to further consultation in Spring 2018.

If you would like any advice on how this will affect your Contracting business please get in touch!

Accelerated Capital Gains Tax on Property Sales from 2020

A change in coming in April 2020 that will affect landlords and second home owners when they come to sell up.

In the past a Capital Gain on the sale of a second property could be  reported in a self assessment return. This meant that if a gain was made on the 6th of April that the tax would not be due for nearly 22 months! The gain would be reported at the end of the tax year and the tax wouldn’t be due until January 31st of the following year.

Full details here.

Consultation has just finished on a change that will mean that payment will be due withing 30 days of the disposal. The seller will have to submit a “payment on account” return at the same time.

Obviously this wont affect people selling their main residence as Principle Primary Residence Relief normally applies.

Get in touch if you are thinking of selling a rental or holiday home.

Click here to go to our homepage and fill in the contact form and we will get back to you.

 

VAT Flat Rate Scheme – Limited Cost Traders

As noted before in summary a change to the Flat Rate VAT scheme was announced in the Autumn Statement. This change comes in to effect on the 1st of April 2017.

This change is intended to target businesses on the Flat Rate Scheme who would only be reclaiming a minimal amount of VAT if they were calculating VAT as normal. Thes businesses will be classed as Limited Cost Traders. A new rate of 16.5% for the flat rate scheme will be introduced which potentially means that people will be better reverting to the standard VAT schemes.

HMRC has defined a Limited Cost Trader as:

A limited cost trader will be defined as one whose VAT inclusive expenditure on goods is either:

  • less than 2% of their VAT inclusive turnover in a prescribed accounting period
  • greater than 2% of their VAT inclusive turnover but less than £1000 per annum if the prescribed accounting period is one year (if it is not one year, the figure is the relevant proportion of £1000)

Goods, for the purposes of this measure, must be used exclusively for the purpose of the business but exclude the following items:

  • capital expenditure
  • food or drink for consumption by the flat rate business or its employees
  • vehicles, vehicle parts and fuel (except where the business is one that carries out transport services – for example a taxi business – and uses its own or a leased vehicle to carry out those services)

These exclusions are part of the test to prevent traders buying either low value everyday items or one off purchases in order to inflate their costs beyond 2%.

So as you can see this is definitely targeted at contractors and the like who are operating through Limited Companies with low costs.

If you are on the Flat Rate Scheme and would like some help transitioning please do not hesitate to contact us. We will be writing to HMRC on behalf of our clients who are affected and helping them transition if they need to.

HMRC reference is here: https://www.gov.uk/government/publications/tackling-aggressive-abuse-of-the-vat-flat-rate-scheme-technical-note/tackling-aggressive-abuse-of-the-vat-flat-rate-scheme-technical-note

 

 

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