PWA Tax Update (October 16th 2020)

Coronavirus Job Retention Scheme

From 1 October HMRC will pay 60% of usual wages up to a cap of £1,875 per month for the hours furloughed employees do not work.

You will continue 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.

You will also continue to pay your furloughed employees’ National Insurance and pension contributions from your own funds.

This scheme closes on 31 October and you will need to make any final claims on or before 30 November.

You will not be able to submit or add to any HMRC claims after this date.

 

Job Retention Bonus

The Job Retention Bonus allows you to claim a one-off payment of £1,000 for every eligible employee you have furloughed and claimed for through the CJRS and kept continuously employed until at least 31 January 2021.

You do not have to pay this money to your employee.

To be eligible, employees must earn at least £1,560 between 6 November 2020 and 5 February 2021 and have received earnings in the November 2020, December 2020 and January 2021 tax months.

Employees must also not be serving a contractual or statutory notice period for you on 31 January 2021.

You will be able to claim the bonus from 15 February until 31 March, after you submit PAYE information for the period up to 5 February 2021.

You can still claim the Job Retention Bonus if you make a claim for that employee through the Job Support Scheme, as long as you meet the eligibility criteria for both.

 

New COVID-19 support schemes

The government has announced additional support for businesses and employees impacted by COVID-19 across the UK.

A new Job Support Scheme will be introduced from 1 November. Under the scheme, which will run for six months, the government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand.

You will continue to pay the wages for the hours your staff work.

For the hours not worked, you and the government will each pay one third of their usual wages (capped at £697.92 per month).

You will need to meet your share of the pay for unworked hours, and all your National Insurance contributions and statutory pension contributions, from your own funds.

This means that employees will receive at least two thirds of their usual wages for the hours not worked.

You will be able to claim in December and grants will be paid on a monthly basis.

The Job Support Scheme will be open to employers across the UK even if you have not previously applied under the CJRS.

The scheme will operate in addition to the Job Retention Bonus.

 

Extension to the reduced rate of VAT for Hospitality and Tourism

The Government has extended the temporary reduced rate of VAT (5%) to tourist attractions and goods and services supplied by the hospitality sector. This relief came into effect on 15 July 2020 and will now end on 31 March 2021 across the UK.

 

VAT Deferral New Payment Scheme

If you deferred payments that were due between 20 March and 30 June 2020, then these payments need to be made to HMRC by 31 March 2021.

You can now use the New Payment Scheme to spread these payments over equal instalments up to 31 March 2022.

Alternatively, you can make payments as normal by 31 March 2021 or make Time to Pay arrangements with HMRC if you need more tailored support.

 

New Self-Assessment Self-Serve Time to Pay Scheme

If you deferred paying your July 2020 Payment on Account, you will need to pay the deferred amount, in addition to any balancing payment and first 2020-2021 Payment on Account, by 31 January 2021.

This may be a larger payment than you usually pay in January.

If you’re unable to pay your Self Assessment (SA) bill in full by 31 January 2021, you can set up a Time to Pay payment plan of up to 12 months online without speaking to HMRC.

If you have SA tax debts of up to £30,000, you’ll able to access this Time to Pay facility through GOV.UK and will get automatic and immediate approval.

If your SA debts are over £30,000, or you need longer than 12 months to repay your debt in full, you will still be able to use our Time to Pay arrangement but you will need to ring HMRC.

 

Employees working from home because of COVID-19

If you have asked your employees to work at home because of COVID-19 then they may have additional expenses. If you’ve not reimbursed your employees, they can claim tax relief on £6 per week or £26 per month for these extra costs.

This can be paid to each employee free of tax and NIC.

 

Off-Payroll Working Rules (IR35)

From 6 April 2021, there are important changes to the off-payroll working rules.

You need to prepare for the changes if you are:

  • A medium or large sized non-public sector organisation which engages contractors who work through their own intermediary
  • An employment agency which supplies contractors who work through their own intermediary
  • A public authority – there are additional changes from April 2021
  • A contractor who provides services through your own limited company or other intermediary.

You can check if you are caught by this by completing a CEST which is available now.

Check Employment Status for Tax (CEST) tool CEST is available for organisations and contractors to help decide the right employment status for tax for contracts running now, and beyond 6 April 2021.

https://www.gov.uk/guidance/ check-employment-status-for-tax

Supporting guidance: ESM11000

Webinars will be available on this topic from HMRC in November 2020 onwards.

 

Student and Postgraduate Loans thresholds and rates from 6 April 2021

The thresholds for Plan 1 and Plan 2 Student Loans are increasing from April 2021.

The thresholds for the current tax year 2020-2021 are:

  • Plan 1 – £19,390
  • Plan 2 – £26,575.

The Department for Education has confirmed that from 6 April 2021 the thresholds will increase to: • Plan 1 – £19,895

  • Plan 2 – £27,295.

Student Loan deductions will continue to be calculated at 9% on earnings above the Plan 1 or  Plan 2.

The Postgraduate Loan threshold will remain at £21,000.

Earnings above £21,000 will continue to be calculated at 6%.

 

Small Business Leadership Programme

This is a new Government support package to improve small business leadership and problem solving skills and to help with small business management & productivity.

There are two 2 training programmes available which are both free.

There are 6,000 places available on the Peer Networks programme (with a possible further 4,000 – subject to demand) and 2,000 places available on the Small Business Leadership Programme.

Interested small business leaders who run small businesses are encouraged to sign up now to secure a free place.

 

HMRC and additional income

HMRC has launched new interactive guidance on GOV.UK to let users check if they need to tell HMRC about extra income they receive that could be in addition to their main PAYE income.

For many this will mean filling in a Self Assessment tax return.

HMRC are cracking down on people earning money from

  • selling things, for example at car boot sales or auctions, or online
  • doing casual jobs such as gardening, food delivery or babysitting
  • charging other people for using your equipment or tools
  • renting out property or part of your home, including for holidays (for example, through an agency such as Airbnb or online).

 

HMRC opening hours

Currently the phone lines are only open between 8am-4pm.
The best time to ring HMRC is between 8am and 9am.
HMRC are planning to extend the opening hours to 8am – 6pm by the 1st November 2020.