Monthly Archives: April 2021

HMRC contacts self-employed individuals who could be eligible for fourth SEISS grant

HM Revenue & Customs (HMRC) is now contacting self-employed individuals who could be eligible for the fourth round of the Government’s Self-Employment Income Support Scheme (SEISS).

The fourth round of the scheme covers the period from 1 February 2021 to 30 April 2021 and is worth 80 per cent of three months’ average trading profits, paid in a single instalment capped at £7,500.

HMRC is contacting self-employed individuals whose 2019-20 Self-Assessment tax returns show trading profits of no more than £50,000 and which are equal to or greater than income from other sources.

Where someone is not eligible based on their 2019-20 Self-Assessment tax return, HMRC will then assess their eligibility based on their average trading profits for 2016-17, 2017-18, 2018-19 and 2019-20.

However, not all self-employed individuals who meet these trading profit requirements and are contacted by HMRC will be eligible for the fourth grant. They must also have traded in both the 2019-20 and 2020-21 tax years, be currently trading but impacted by reduced demand or unable to trade because of the pandemic, declare their intention to continue trading and ‘reasonably believe’ there will be a ‘significant reduction’ in trading profits between 1 February and 30 April 2021.

Self-employed individuals applying for the fourth round of grants will need to keep evidence of the impact of Coronavirus on their business activity. They must also decide if they consider a reduction in trading profits to be ‘significant’, a decision HMRC says it cannot make because “individual and wider business circumstances will need to be considered when deciding whether the reduction is significant”. Previous grants from the SEISS do not need to be taken into account in this decision.

The application portal for the fourth grant will open in ‘late April 2021’.

A fifth grant will cover the period from May 2021 to September 2021. Unlike the first four rounds of the scheme, it will be paid at two different rates, depending on the reduction in trading profits a self-employed individual has seen. Those whose turnover has fallen by 30 per cent or more in the year to April 2021 will once again be eligible (subject to other conditions) for a grant worth 80 per cent of three months’ average trading profits capped at £7,500. Meanwhile, those whose turnover has fallen by less than 30 per cent during this period will be eligible (again subject to other conditions) for a grant worth 30 per cent of average trading profits, capped at £2,850.

Applications for the fifth round will open in late July.

Furlough scheme guidance updated

HM Revenue & Customs (HMRC) has published a series of updates to its guidance on the Coronavirus Job Retention Scheme (CJRS), more commonly known as the ‘furlough scheme’.

The updates cover the changes to the scheme as it is extended from 1 May 2021 to 30 September 2021.

The guidance confirms that new employees who have not previously been eligible for furlough can be furloughed for the first time from 1 May 2021 onwards as long as they were included in a Full Payment Submission to HMRC by 2 March 2021.

As with the existing scheme, furloughed employees will continue to receive 80 per cent of their usual wages capped at £2,500 a month, or equivalent weekly or daily figures, for usual hours not worked under the extended scheme.

CJRS grants will continue to cover the full 80 per cent paid to employees in May and June, while employers must continue to cover the costs of the associated Employer National Insurance and workplace pension contributions. However, employers will also need to make a 10 per cent contribution in July and a 20 per cent contribution in August and September to the amount paid to employees.

The calculation of usual wages is based on the last pay period before the employee became eligible for furlough. Those dates vary, depending on whether the employee was reported to HMRC on or before 19 March 2020, 30 October 2020 or 2 March 2021. Any pay rises since an employee’s reference date are not taken into account for any time they are furloughed.

The new guidance also clarifies and changes several technical points relating to the calculation of furlough pay in various circumstances that employers will need to be aware of.

Full guidance for the CJRS is available here.

New claims needed to continue receiving working from home tax relief

Employees who are continuing to work from home as a result of the Coronavirus pandemic and whose expenses have not been reimbursed by their employers should make new claims to continue receiving working from home tax relief.

This is because claims made in the 2020-21 tax year, which ended on 5 April 2021, will not be carried over automatically to the current 2021-22 tax year.

The relief is intended to cover tax-deductible additional costs incurred by people working from home as a result of the pandemic, such as heating and metered water.

People can choose either to claim relief at a flat rate of £6 a week, which translates to weekly savings of £1.20 or £2.40 for basic and higher rate taxpayers respectively, without needing to submit evidence or they can claim for the actual costs incurred if these are above £6 a week.

Self-Assessment taxpayers can claim the relief on their Self-Assessment tax returns for 2021-22, while people who do not complete a Self-Assessment tax return can claim via gov.uk here.

Parents missing out on tax-free childcare bonus of up to £500

Parents are being encouraged to check whether they are missing out on a tax-free childcare bonus of £500.

Families using tax-free childcare accounts to pay for their childcare costs could receive a Government top-up worth up to £500 every three months, but thousands are missing out on the payout, HM Revenue & Customs (HMRC) has warned.

Tax-free childcare allows parents or carers who have children aged up to 11, or 17 if their child is disabled, to pay their childcare provider through the scheme, and receive a 20 per cent Government top-up on any money deposited. The top-up is paid directly into the child’s account and is ready to use almost instantly.

Parents and carers can get up to £500 every three months (up to £2,000 a year) for each child to help with the costs of childcare. This goes up to £1,000 every three months if a child is disabled (up to £4,000 a year).

Currently, almost 248,000 families across the UK saved money using tax-free childcare in December 2020, an increase of almost 43,000 families from December 2019, who have received a share of more than £25 million in Government top-up payments.

Families can use the money to pay a wide range of childcare providers, including childminder fees, after school clubs or sports activities, where the provider has signed up for tax-free childcare.

Families could also save money now to earn the Government top-up and use the money to pay for childcare, summer camps and play schemes during school holidays.

An HMRC statement said: “As children return to their schools, after-school clubs and nurseries, help is available towards the cost of childcare.

“Families using tax-free childcare to pay their childcare provider are already benefiting from the 20 per cent Government top-up on deposits. To find out more search ‘tax-free childcare’ on GOV.UK.”

Tax-free childcare is also available to families with pre-school aged children attending nurseries, childminders or other childcare providers.

The tax-free savings on childcare costs can provide financial support to families affected by the pandemic. If parents and carers’ working patterns have changed because of COVID-19 or they have received either furlough payments or the Self-Employment Income Support Scheme grant, they may still be eligible to receive tax-free childcare.

Each eligible child requires a tax-free childcare account. If families have more than one eligible child, they will need to register an account for each child.

The 20 per cent Government top-up is then applied to deposits made for each child, not each household.

Account-holders must confirm their details are up to date every three months to continue receiving the top-up.

Link: Tax-free childcare bonus of up to £500 not being claimed

Applications for SME Brexit Support Fund underway

A new scheme that supports small and medium-sized businesses with a grant of up to £2,000 has opened.

The scheme provides grants to help tackle the new admin requirements for imports and exports to and from EU countries, as well as elsewhere in the world, or the movement of goods between GB and Northern Ireland.

The grant can be used for training on how to complete customs declarations, how to manage customs processes and use customs software and systems or specific import and export related aspects including VAT, excise and rules of origin.

It can also be used to help businesses access professional advice, including support from their accountant, so that they can meet the customs, excise, import VAT or safety and security declaration requirements.

Firms can apply for a grant if the business has been established in the UK for at least 12 months or holds Authorised Economic Operator status and has always met its tax or customs obligations. To be eligible, the company must have no more than 550 staff and an annual turnover under £100 million.

The fund applies if the business:

  • Exports goods between GB and the EU, or moves goods between GB and Northern Ireland;
  • Intends to complete import or export declarations internally for its own goods; or
  • Requires more capability to cope with imports or exports despite using the services of someone else to complete the declaration documents.

A business must also either:

  • Complete (or intend to complete) import or export declarations internally for its own goods; or
  • Use someone else to complete import or export declarations but requires additional capability internally to effectively import or export (such as advice on rules of origin or advice on dealing with a supply chain).

A spokesman for the Federation of Small Businesses, said: “The vast majority of UK small firms that do business overseas trade with the EU. Not only are they trying to stay afloat as lockdowns gradually ease, they now have new, unfamiliar paperwork and costs to navigate when they buy from, or sell to, Europe.

“We encourage all eligible small businesses to take a look and apply for this new source of help.”

Applications will close on 30 June 2021 or earlier if all funding is allocated before this date. To apply for funding, please click here.

Link: £20 million SME Brexit Support Fund opens for applications

Thousands of cases of COVID-related fraud and cyber-crime are being investigated

A special police task force, tackling fraud in England, Wales and Northern Ireland, says it is investigating 6,000 cases of cybercrime, worth a staggering total of £34.5 million since March last year.

The Action Fraud team is investigating many cases, but said that of those reporting a cyber-attack to volunteer-run Cyber Helpline, only a quarter also reported the incident to the police.

However, the pandemic appears to have coincided with a fall in one type of cyber-crime. Reported cases of computer software service fraud – in which criminals call offering fake tech support to fool victims into sharing their payment card details and other credentials – dropped by 15.5 per cent.

Meanwhile, the National Cyber Security Centre is tackling about 30 “significant attacks” a month against the country’s pandemic response infrastructure.

These involve attempts to breach the NHS, vaccine producers and vaccine supply chains, among other organisations.

In the capital, City of London Police, which coordinates efforts to combat fraud, said more than 150 related arrests were made since the pandemic began.

In addition, more than 2,000 websites, phone numbers and email addresses linked to the crimes have been recorded and there was a total of 416,000 reports of fraud and cyber-crime.

The activity peaked between April and May 2020, and January this year – both times when lockdowns were in force.

Many of the scams involved conning people out of their money and financial details by focusing on internet shopping.

Related fraud was 42 per cent higher over the pandemic than the preceding year, as criminals took advantage of the fact many physical stores had been forced to close.

Charities are also common targets as one in three suffered a cyber-attack during the first 10 months of the pandemic, according to a survey by Ecclesiastical Insurance.

Another popular type of cyber-fraud involved romance scams, in which people looking for relationships via the net often get fooled into sending money to prospective partners, who prey on their emotions.

Businesses and individuals are being warned to take caution in light of this surge in scams.

Link: £34.5m stolen in pandemic scams

Majority of SME owners have loaned personal money to their business during the pandemic

A new study has found that nearly six in 10 (59 per cent) small business owners loaned personal money to their business during the pandemic to help it survive.

Research undertaken by one of Europe’s largest small business lenders, iwoca, showed that many owners had taken drastic steps during the pandemic to support their business.

Despite this, many owners are still worried about the viability of their business with more than a third (38 per cent) concerned about closing this year.

A similar survey conducted among UK accountants during the same period, representing more than 23,000 small businesses, has indicated what the most important issues are for their clients currently.

The first priority highlighted by the survey was the need to make sure businesses were well funded to deal with future disruption.

Ensuring invoices were paid was the second-biggest priority according to the study, with 48 per cent of respondents highlighting this issue.

Taking lessons from the last year, around a third of the firms surveyed said that diversifying product offerings would be key for businesses in the coming year, while 26 per cent believe that transitioning to online sales and services would be key.

When SME owners were asked the same question, 60 per cent said they will focus on ensuring they are well-funded but four in 10 small business owners still expect to need to use their own money to finance their business during the next 12 months.

Link: Majority of small businesses used personal money to stay afloat last year

Coronavirus insolvency measures extended until the end of June

To help businesses with the ongoing impact of the pandemic the Government has decided to extend measures in the Corporate Insolvency and Governance Act (the Act) to protect struggling companies.

The extension to the measures introduced in the Act, includes an extension of the suspension of liability for wrongful trading from 30 April 2021 to 30 June 2021, as well as respite for those facing winding up petitions during the same period.

Struggling businesses and their owners will welcome the extension to the removal of the threat of personal liability arising from wrongful trading, as it may give those facing the prospect of insolvency time to turn their fortunes around without a personal penalty if the company fails.

Businesses will also still be able to take advantage of the COVID-19 moratorium until the end of June, which provides a company with breathing space from creditor enforcement to enable it to enact a rescue plan.

A company may enter into a moratorium if it has been subject to an insolvency procedure in the previous 12 months.

The moratorium also covers waiving the requirement that a company subject to a winding up petition must obtain a court order and allows certain companies carrying on regulated financial activities, who would usually be ineligible, to seek the same support.

The extension to the Act also means that termination clauses continue to be prohibited. This will prevent suppliers from ceasing their supply or asking for additional payments, while a company is going through a rescue process. Small suppliers remain exempted from the obligation to supply until 30 June 2021.

In response to the extension, R3, the Insolvency and restructuring trade body, is calling on directors of COVID-hit businesses to make the most of the time granted by the Government’s extension to restructure and rebuild.

It says that business owners should use this additional time to put plans in place for when the Government support ends with the help of a professional adviser, such as their accountant, to consider the options open to them to address their financial issues.

Link: Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2021

Inheritance tax reporting to be simplified

Rules coming into effect from 1 January 2022 will mean that nine in 10 estates that are not subject to Inheritance Tax (IHT) will no longer need to complete IHT forms as part of the probate process.

Meanwhile, a temporary measure that is currently in place so that IHT returns can be submitted without a physical signature will become a permanent change.

John Bunker, Chair of the Chartered Institute of Taxation’s Private Client (UK) Technical Committee, said: “We welcome that, as part of the implementation of the OTS recommendations ‘to improve the customer journey’ for IHT many families in the aftermath of bereavement will be spared the additional stress of supplying unnecessary detail to HMRC.

“The change will mean that only around 15 per cent of estates will need to complete some form of IHT return.

“The challenge for HM Revenue & Customs (HMRC) will be to design a process that meets that aim and is fit for purpose in only nine months.”

At the same time, HMRC has issued guidance for the first time on what it considers to constitute a spouse or civil partner for the purpose of IHT.

This expressly states that cohabiting partners, not in a marriage or civil partnership, are not recognised in the IHT rules.

However, perhaps surprisingly, people in polygamous marriages recognised in the UK – including those entered into such arrangements overseas in jurisdictions where they are permitted – are recognised for the purposes of IHT.

Link: Inheritance tax reporting requirements simplified

Link: Inheritance tax: HMRC update spouse & civil partner guidance – everything you need to know

Coronavirus Restart Grant

Businesses in the non-essential retail, hospitality, leisure, personal care and accommodation sectors can now access one-off cash grants of up to £18,000 from their local council.

The Restart Grant scheme opened nationally on 1 April 2021 and is now being rolled out by local authorities across England.

Eligible businesses will be paid:

  • a one-off grant of up to £6,000 in the non-essential retail sector
  • a one-off grant of up to £18,000 in the hospitality, accommodation, leisure, personal care and gym sectors.

Your business may be eligible if you are:

  • Based in England
  • Pay business rates
  • In the non-essential retail, hospitality, accommodation, leisure, personal care or gym sectors
  • Trading on 1 April 2021 (this includes businesses currently closed due to restrictions).

However, you may not be eligible if your business:

  • Is in administration, insolvent or has been struck off the Companies House register; or
  • Has exceeded the permitted subsidy allowance

It is down to each local councils’ discretion, as to whether a business meets the eligibility criteria for this grant scheme.

To apply you will need to find your relevant local authority by clicking here.

If you need assistance with claiming this grant or you are unsure of your eligibility, please speak to our team