HMRC confirm self-assessment taxpayers will not receive a late filing penalty

Last updated: 1 October 2020, 14:00

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HMRC has today announced that self-assessment taxpayers will not receive a late filing penalty. What does this mean?

The initial late filing penalty of £100 will not be charged, as long as the tax return is filed online by 28 February 2021.

Taxpayers still need to pay their self-assessment tax bill by 31 January 2021 to avoid being charged late payment interest. Interest will be charged from 1 February on any outstanding liabilities at a rate of 2.6% per annum.

Filing deadline for 2019/20 tax returns, HMRC reminds taxpayers that using its time-to-pay system is an option. What’s different about it this year?

Last updated: 1 October 2020, 14:00

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With just over a week to go until the filing deadline for 2019/20 tax returns, HMRC has reminded taxpayers that using its time-to-pay system is an option. What's different about it this year?

HMRC has repeatedly resisted calls to move the filing deadline for 2019/20 tax returns, despite the coronavirus pandemic. Instead, it has indicated that taxpayers who are struggling to ascertain actual figures should use estimates wherever possible, rather than filing and paying late. It has also ramped up its time-to-pay system this year.

A taxpayer who owes less than £30,000 can now set up a time-to-pay arrangement online by logging into their Personal Tax Account, so there is no need to speak to anyone over the phone and answer potentially intrusive questions over the ability to pay. Previously, this was limited to £10,000. Additionally, if an individual deferred their payment on account due on 31 July 2020, this can also be included in the arrangement as well as the balancing payment. However, there are some further conditions. In order to use the online self-service the taxpayer:

  • must be up to date with their tax affairs
  • must not have any other payment plan or debts with HMRC; and
  • must set up the arrangement within 60 days of the payment deadline (i.e. from 31 January 2021).

It is also possible to set up an informal recurring payment to credit future liabilities. Any shortfall will be payable in the usual way.

Retail, hospitality and leisure businesses entitled to extra coronavirus support

Last updated: 1 October 2020, 14:00

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This morning it's been announced that retail, hospitality and leisure businesses will be entitled to extra coronavirus support. What details are available?

Although many businesses deemed “non-essential” were already closed due to being in Tier 3 or 4 areas, the Prime Minister’s announcement last night that the whole of England was being placed into a full stay-at-home lockdown (including closing schools to almost all children) still came as a huge blow. The new lockdown is set to last until at least the February half-term. Perhaps unsurprisingly, the announcement was quickly followed by an announcement of further support for affected businesses, namely those operating in retail, hospitality and leisure. Scotland had already announced similar national restrictions.

These businesses will be eligible to apply for a new one-off grant. The amount will be determined by the business property’s rateable value as follows:

  • £4,000 for businesses with a rateable value of £15,000 or under
  • £6,000 for businesses with a rateable value between £15,000 and £51,000
  • £9,000 for businesses with a rateable value of over £51,000

Business support of this type is a devolved matter, so it is likely that applications for the new grants will need to be made to local councils – as was the case with the funding made available in November 2020. Businesses should therefore check with their local authority over the coming days as more information is made available.

Coronavirus Job Retention Scheme (CJRS) extended until April

Last updated: 1 October 2020, 14:00

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Originally, the Coronavirus Job Retention Scheme (CJRS) had been due to finish at the end of March 2021. Today it's been announced that it will be extended until the end of April.

The Chancellor has today announced that the government’s support for businesses via the CJRS will stay at the current level until the end of April and that the Budget, on 3 March 2021, will set out what will happen from May onwards. This means that the government will continue to pay 80% of the salary of employees for hours not worked until this date (subject to a cap of £2,500 per month).  As now, you will only be required to pay wages, employers’ NI and pension contributions for any hours worked; and employers’ NI and pension contributions on the grant received to cover an employee’s unworked hours.

More information can be found here

Key points of the third self employment income support scheme (SEISS) grant.

Last updated: 1 October 2020, 14:00

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In an earlier announcement, the government outlined the key points of the third self employment income support scheme (SEISS) grant. Now we have the full details - what are they?

Third grant. The grant is payable for the three month period beginning on 1 November 2020. It is equal to 80% of average trading profits, capped at £7,500. Claims can be made through the existing SEISS website from 30‌ ‌November 2020 to 29‌ ‌January 2021. Basic conditions for eligibility are that profits must have been adversely affected by coronavirus in the period from 1 November 2020 to 29 January 2021 and that the claimant must have traded in both 2018/19 and 2019/20. Note that reduction in profits due to increased costs, such as having to buy masks, does not count for the purposes of the grant.   

Additionally, claimants must confirm that they are: 

  • trading but at a reduced capacity or demand, or have been previously trading but are temporarily unable to because of coronavirus   
  • intend to continue to trade and believe that the impact on their business will cause a significant reduction in their trading profits 

Claimants must keep evidence to show the impact and reduction in their business activity over the qualifying period.  For more information and examples to help you check eligibility click here 

Fourth grant.  There will be a fourth SEISS grant covering the three-month period from Feb‌‌ruary 2021 to April 20‌‌21. HMRC will announce further details nearer the time.  

Businesses that took up HMRC’s offer to defer some or all of their VAT liability due for payment between 20 March and 30 June 2020 are to be given more time to pay.

Last updated: 1 October 2020, 14:00

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Businesses that took up HMRC's offer to defer some or all of their VAT liability due for payment between 20 March and 30 June 2020 are to be given more time to pay.

 

Originally, the terms of the offer required the deferred VAT to be paid in full by no later than 31 March 2021.  However, because of continued tough trading conditions HMRC will allow extra time through a new scheme that it will launch in early 2021. HMRC will shortly announce further information about the scheme and how to sign up for it.  

If you have deferred VAT your options for settling it are:  

  • pay in full on or before 31 March 2021 
  • opt in to the new VAT deferral payment scheme when it launches in early 2021; or 
  • make a “time to pay arrangement” with HMRC.

The new scheme will allow you to settle what you owe over a maximum of eleven monthly instalments ending no later than 31 March 2022. HMRC will not charge any interest over that period. To use the scheme you must be up to date with your VAT returns and be able to pay the deferred VAT by direct debit. 

HMRC has confirmed that if you opt in to the new scheme you can still set up a time to pay arrangement for other tax debts. More information on these arrangements is available here

Further increase in coronavirus help for the self-employed.

Last updated: 1 October 2020, 14:00

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In October, the government announced that grants under the Self-Employment Income Support Scheme (SEISS) for the period from 1 November 2020 to 31 January 2021 would be 40% of profits. A further increase has been announced along with other changes to the SEISS.

What's the full story?

The amount of grant, which applies across all the UK, is increased to 80% of average trading profits for the month of November 2020 alone. The grant for December and January remains at 40%. The effect of the November increase is to raise the total level of the grant available from 40% to 55% of trading profits across the period 1 November 2020 to 31 January 2020.  

SEISS grants will be paid faster – you will be able to make a claim via HMRC’s site from 30 November rather than 14 December, as originally planned. The previous HMRC site for claiming SEISS grants has been closed. A new one will be available on 30 November.  The grants can be claimed by self-employed individuals and members of partnerships whose income has been adversely affected by coronavirus. 

The Coronavirus Job Retention Scheme has now been extended for a month.

Last updated: 1 October 2020, 14:00

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The Coronavirus Job Retention Scheme has now been extended for a month. What are the terms of the extension and where does this leave the new Job Support Scheme?

What are the terms of the extension and where does this leave the new Job Support Scheme?

Under the terms of the Coronavirus Job Retention Scheme (CJRS) extension, employees will continue to receive 80% of their usual pay for hours not worked, up to a maximum cap of £2,500, and you will retain the flexibility to bring furloughed employees back to work on a part-time basis (flexible furlough) or furlough them full time (full furlough). The government will pay the 80% and you will only be asked to cover employers’ NI and pension contributions for furloughed hours, which is effectively the same level of CJRS grant as applied in the month of August. You must also continue to pay the employee for any hours worked in the normal way. The other key points are:

  • the extended CJRS will operate in much the same way as the current CJRS, with employers being paid upfront to cover wage costs, but there will be a short delay in payment whilst the government updates its systems and so you’ll be paid in arrears for that period
  • all employers with a UK bank account and UK PAYE scheme can claim the extended CJRS grant – neither you nor the employee needs to have previously used the CJRS
  • to be eligible to be claimed for under the extended CJRS, employees must be on your PAYE payroll by 23:59 on 30 October 2020 – this means an RTI submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020
  • as under the current CJRS rules: employees can be on any type of contract and you’ll be able to agree any working arrangements with them; you can claim the grant for the hours your employees aren’t working,
  • you can choose to top up employees’ wages above the extended CJRS grant at your own expense if you wish, but you don’t have to do so
  • there will be no gap in eligibility for support between the previously announced end-date of the current CJRS and the extension.

It’s not clear yet whether the extended CJRS will cover just the calendar month of November, or whether it will run until 2 December, which is the date when the new national restrictions are due to end.

The commencement of the Job Support Scheme (JSS), which comprises JSS Open (for open business premises) and JSS Closed (for closed business premises), has been postponed until the CJRS ends. The JSS will then be introduced following the end of the CJRS.

 

HMRC Self-Employment Income Support Scheme update – What do you need to do?

Last updated: 1 October 2020, 14:00

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HMRC is contacting businesses which claimed a grant under the Self-Employment Income Support Scheme to check whether they have stopped trading. What do you need to do?

ACTION REQUIRED
HMRC has contacted some businesses which received a grant under the Self-Employment Income Support Scheme (SEISS), asking them to confirm whether they are still trading. If your business has stopped trading, HMRC will need to check whether you were eligible for the grant and whether the grant needs to be repaid. If your business is continuing to trade, you still need to respond to HMRC’s request and may be asked to provide evidence.

Those who received the grant before 22 July 2020 must inform HMRC by 20 November 2020 and those who received the grant on or after 22 July 2020 must inform HMRC within 90 days of receiving the grant. If you do not inform HMRC on time, you may be charged a penalty.

WHO WILL NEED TO REPAY THE GRANTS?
One of the criteria to receive the grant was that the business was continuing to trade or would be except for coronavirus and intended to continue trading. Therefore, if your business permanently stopped trading during the months that the grants covered, you may not have been eligible for part or all of the payment. If you need to repay the grant, HMRC will contact you with further details and you will have 30 days to pay. If you are not able to pay, you can call HMRC to discuss setting up a payment plan.

The Job Support Scheme

Last updated: 1 October 2020, 14:00

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The job support scheme will replace the furlough scheme which end in October, the new scheme will run from 1 November 2020 until April 2021 and is designed to protect viable jobs in businesses.

The company will continue to pay its employee for time worked, but the burden of hours not worked will be split between: 

  1. The employer  
  2. The Government (through wage support)  
  3. The employee (through a wage reduction) 

The Government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.  

Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria this being £1,000 for every furloughed employee kept on until at least the end of January 

Who is eligible?  

  1. All employers with a UK bank account and UK PAYE schemes can claim the grant.  
  2. Employees must be on an employer’s PAYE payroll on or before 23 September 2020.  
  3. In order to support viable jobs, for the first three months of the scheme the employee must work at least 33% of their usual hours. 
  4. Employees will be able to cycle on and off the scheme and do not have to be working the same pattern each month, but each short-time working arrangement must cover a minimum period of seven days.  

What does the grant cover?  

  1. For every hour not worked by the employee, both the Government and employer will pay a third each of the usual hourly wage for that employee.  
  2. The Government contribution will be capped at £697.92 a month. 
  3. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.  
  4. Employers must pay employees their contracted wages for hours worked, and the Government and employer contributions for hours not worked.  

Example: 

Bob works 8 hours a day or 40 hours a week, from November his hours will be reduced to 5 hours a day or 35 hours a week. 

Worked hours -25 hours 

The employer will pay Bob for the 25 hours a week he works 

Un-worked hours – 15 hours 

The employer will pay a third of the unworked hours – 5 hours 

The government will pay a third of the unworked hours – 5 hours 

Bob – will be unpaid for the rest

 
If you need Savvy to manage your claim for the Job support Scheme then we can do this for you, our fee will be £30 plus VAT per month.
 
Please email hello@savvyaccounting.co.uk before the 20th of November and we will look after this for you.