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  • Let The Taxman Contribute To Your Christmas Party

    What are the limits?

    You can spend a maximum of £150 including VAT per staff member plus another £150 for a guest in total over a tax year. The main condition is that ALL members of staff at that location must be invited. A location is a bit more blurred this year, so keep your e-invite to show that all employees contractually employed at a certain site are invited.

    In addition to the £150 annual party limit, you may also send a gift to staff with a value up to £50 including VAT, such as a Turkey, wine or chocolates.

    What is the tax treatment and accounting required?

    The cost is fully tax deductible with no benefit in kind income tax or national insurance to worry about. Your staff will feel appreciated and you save 19% corporation tax. Ensure that the costs are called Staff entertainment or Christmas party in your Profit & Loss Account.

    The £150 includes all costs which this year may be a hamper sent to all attendees to link up on Zoom at the agreed time, possibly with the employer hosting a comedian, musician or quiz for attendees to enjoy.

    Divide the total cost of each function by the total number of people, including guests, to arrive at the cost per head.

    The VAT is fully recoverable when paying for staff entertaining. If you make a small charge to your staff’s guests and pay over a small amount of VAT, the VAT on the total cost for the guests is also fully recoverable.

    Similarly, small gifts up to £50 are fully tax deductible and VAT may be recoverable if only one small gift is made during a year. Perhaps these costs could be called Staff welfare to help keep them separate from your £150 calculations!

    NB Ensure you don’t go over the £150 or £50, otherwise the entire amount is taxable.

    I’m a director and don’t have any staff. Can I benefit from this favourable tax treatment?

    As you are the only director/employee you might think you can’t have a Christmas party – wrong! And it probably won’t need to be virtual if within the general Covid meeting up rules.

    You can avail yourself of the £150 per head exemption as a member of staff (the only one!) and also a guest. You can also have a gift with a value of up to £50, but you’re likely to be restricted to doing this up to an annual value of £300 so check what other company gifts you’ve taken so far. In this case, we would advise that VAT can’t be reclaimed.

    Now you can have a fabulous tax subsidised Christmas party !

  • Autumn Budget – Cheers From Your Town?

    Investment – Capital allowances of 100% or 130%

    If you invest in your business you’ll receive 100% tax relief on purchases up to £1m! This was due to be reduced, but today it has been extended to continue until April 2023. So invest in any machinery, van, computer, for your business and you get a full tax write off in that year, even if you borrow to buy it. 

    If you’re a company, however, you’re more likely to want to claim the super-deduction of 130% which saves even more tax and without a £1m cap so nothing changes for you today. Although it’s worth noting this is only avaialable for new assets and more restricted types of plant. 

    Company Research and Development Tax Relief – Restriction and Extension

    Good to know the UK spends quite a lot on R&D but I understand the OECD thinks it’s not all ‘proper’ R&D.

    One difference in comparison to other countries allowing spend outside the UK will, from April 2023, be restricted to UK spend only. By contrast, as widely requested, qualifying spend will from April 2023 be extended to include data and cloud costs which can form a large part of necessary R&D costs.

    Further details will be issued.

    Pension Scheme Withdrawal Age Increase – From 55 to 57 Years

    Confirming a previous announcement, however, many people will have made plans to take out at least their 25% tax free lump sum at age 55, perhaps to pay off their mortgage. If you don’t act before 6 April 2028, you’ll have to wait until you’re 57. 

    In the meantime do see if you can benefit from tax relief by making contributions into a scheme.

    Landlords, Sole Traders and Partnerships – Tax Year End

    Coming in from April 2023 and 2024, look out for this and whether you should change your year end to align with the tax year. Most of you will already use 31 March or 6 April, but if you don’t you may find you get a better result making the alignment before 2023.  

    Personal Capital Gains Tax – Sales of Residential Properties

    Where tax is due, UK residents now have 60 days after completion to report and pay the capital gains tax due. The online portal has had some problems so this gives HMRC and the taxpayer time to clear them soon after the transaction.

    Underpaid or Failure To Repay Child Benefit, Gift Aid, Pension Charges 

    As a result of losing a tax case, which they’re appealing, it’s been made clear today that HMRC can go back at least 4 years and recover any overpaid child benefit, gift aid relief or underpaid pension charges.

    The figures can be very large when paid back in one lump sum with costs, so ensure you understand the rules and pay the correct amount on time.

    Let us know if you need to know more about these or any other changes announced today. 

  • Health & Social Care Reform or Sticking Plaster?

    To set the scene,

    From April 2022, the following NICs will increase by 1.25% for one year only:

    • Employee NIC (over £9,568)
    • Employer NIC (over £8,840)
    • Benefit in Kind Class 1A (all levels)
    • Payroll Settlement Agreements Class 1B (all levels)
    • Class 4 NIC for sole trader and partners (over £9,568)
    • Employees of umbrellas companies (over £8,840, 2.5% over £9,568)
    • Limited companies within IR35 (over £8,840, 2.5% over £9,568)

    And the following income tax will increase by 1.25%:

    • Dividend tax (over £2,000)

    From April 2023, the NIC % will revert to current levels and the amounts above will be renamed a ‘Health and Social Care Levy’ showing up as such on payslips and start to apply to employed pensioners.

    It’s a common trick to call a new tax, a ‘levy’, but it’s a tax.

    What will you get for it? From October 2023, lifetime care home fees will be capped at £86k presumably hoping that the family home doesn’t need to be sold to pay for this level of fees.

    Employers may not pay the new tax:

    • If employers NIC is less than £4k
    • An employee is an apprentice
    • An employee is a veteran
    • The employer is in a freeport

    Apart from looking at these exceptions, how might you respond?

    Shareholder-directors – use your normal dividend tax threshold in full before April 2022

    If you tend to keep your dividends in the basic rate band paying 7.5% dividend tax on total income up to £50,270, ensure you use this band in full before 5 April 2022, before the increase to 8.75% from 6 April 2022. 

    Ditto for higher rate band dividends from £50,270 up to,say, £100k to pay as many dividends at the current 32.5% rather than the increased 33.75%. 

    You’ll need enough after-tax profits to pay the dividends, as usual, and check the effect of your other taxable income such as property rents.

    Sole traders and partners –  ensure you use accruals accounting, rather than cash accounting

    Unrepresented taxpayers tend to report cash income (and costs), not allowing for unpaid invoices or work-in-progress.

    You may wish to revisit this, to ensure as much net profit as possible is taxed at 9% NIC rather than the increased 10.25% on profits between £9,568 and £50,270 or 3.25% in the higher rate band on profits above £50,270.

    All businesses – revisit other ways to take money out of your company/business from April 2022

    The new tax increases the value of tax efficient alternatives, such as replacing existing dividends with a new electric car or employer pension contributions. Sole traders and partners will benefit from investing in plant and equipment including a new electric car or van for use by the business.

    Increase prices?

    Prepare or update your business plan, checking your margins, to see how you might recoup this additional cost to you and your business.

    Sell up or retire? 

    This may be another reason, after the pressures of the pandemic, to sell up or retire from your business, possibly paying 10% capital gains tax on its value.

    Interesting that this announcment, well before the budget on 27 October, leaves the Chancellor clear space to focus on his other tax and spending plans. What will we see then? 

    Further details as always can be obtained from your On The Spot Accountant. 

  • 2023 Corporation Tax Increase – 7 Ways To Keep It Low

    What action can you take to help you pay less of this increase? Here are some ideas for your consideration:

    1. Director salary

    A tax deductible expense against profits, ensure this is optimised. Perhaps it’s time to have a paid spouse director? This makes paying a higher salary to both of you, tax efficient. For example as a sole director-employee you’re probably taking £736pcm. With a second director, this could be increased to £1,047pcm to save corporation tax but also to remain efficient for income tax and national insurance. 

    1. Home office rent

    If you’ve not revisited this recently, perhaps the costs have increased? Or your business use of your home office increased? Ensure you have a licence agreement and record the rental income in your income tax return, with a deduction for the costs, such as utilities, council tax, insurance, against the rent.

    You can set the net rent for income tax purposes to be £NIL, but it might be better to have a profit in your self assessment income tax return, to save more corporation tax, depending on the details of your other income from the company and elsewhere. 

    1. Company pension contributions and relevant life policies

    In general, you can benefit from up to £40k pension contributions per tax year. Therefore, if no other pension contributions are made by you or on your behalf, your company might be able to pay the full £40k into your personal pension saving up to £10,600 of corporation tax.

    A death in service policy where neither the premiums paid by the company or the benefits paid out are taxed on you or your beneficiaries.

    Of course, take IFA advice before going ahead.

    1. Electric vehicles

    New electric vehicles are receiving some of the most generous tax benefits for the next few years. Your company saves corporation tax on the purchase price even if you don’t pay out all the cash up front eg hire purchase. Plus there are minimal income tax and national insurance costs. You therefore get the personal use and enjoyment of a car for a large net tax saving. For petrol, diesel or hybrid cars, there are often large net costs!

    If your electric vehicle costs £50k, the potential corporation tax saving if you’re aiming to reduce your £100k profits to £50k, is £13,250 in the year of purchase.

    1. Investment in plant & equipment

    Perhaps it’s time to make that expansion and invest in new plant & equipment needed to do that. Of course, you have the 130% super-deduction before 2023, but going forward after that you can invest up to £200k every year in new eligible assets and receive 100% corporation tax relief. The maximum you can save annually at the 26.5% maximum marginal rate is therefore £53k.

    1. Trivial benefits and annual parties

    As long as each benefit costs less than £50 incl VAT, you can provide a voucher or buy a gift for yourself and your employees which aren’t taxable on them but saves corporation tax at the same time. Director-shareholders are limited to a maximum of £300 per tax year, but your employees aren’t, as long as the gifts are made on an ad-hoc basis.

    One of our old favourites, the annual party can be a Summer party as well as a Christmas party. Everyone has to be invited and it’s £150 incl VAT per person plus £150 incl VAT for a guest.

    With two shareholder-directors and two employees, each receiving £300 trivial benefits and attending an annual party with a guest, over £600 of corporation tax might be saved each year.

    1. Healthier options – cycle to work scheme, private health checks, eye tests

    To offset the annual party and driving around in your new car, you might visit these healthier tax deductible items, where you don’t suffer any income tax or national insurance.

    A cycle to work scheme has to be offered to everyone and the bike used more than 50% of the time for commuting or business journeys. The bike is lent to you and you then buy it from the company at a second hand value a few years later.

    Annual private health checks, as opposed to private health insurance, and eye tests where you use a screen for work, also save corporation tax without any tax charge on you or your employees.

    If any of these appeal to you, please discuss with your On The Spot Accountant. 

  • 2021 Tax Year End Planning – Top Tips

    Easter Monday is not only the end of a long bank holiday, it’s also the end of the tax year. Make sure you plan accordingly, so you can improve your nest egg before Easter 🐤 Please see our top tips below:

    1. Income Tax Thresholds – £50k and £100k

    These are crucially important to understand, to ensure you don’t pay more tax than you need to. Even if you benefit from a 0% tax rate on certain allowances, say the £2k dividend allowance, the £2k still counts towards these £50k and £100k thresholds.

    As a company business owner, you can choose the salary and dividends you take out of your company; profits and cash permitting! You are in control and you don’t need to cross these thresholds unless you do so with knowledge of the consequences.

    Between £50k and £60k, your child benefit starts to get taken away for you or your partner. If your child benefit is an annual £1,820 and your income is £60k, you have to repay (or not claim) £1,820. This amounts to a further tax of 18.2% on top of your dividend tax of 32.5%, just over 50% in total. This is expensive!

    Similarly, if you need to take more than £60k and are close to the £100k threshold, you may want to stay under the £100k threshold where you start to lose your tax free personal allowance. For every £1 of dividend taken between £100k and £125k, the effective dividend tax due is 48.75%, rather than 32.5%. For high earning employees the effective income tax rate is 60%!

    2. The Importance of Pension Contributions and Charitable Gift Aid Donations

    The introduction of the £50k and £100k thresholds has shown how important pension contributions and gift aid donations are to your financial health. Admittedly, you are parting with money so it does cost you, but perhaps not as much as you thought.

    If you’re thinking of paying pension contributions or gift aid donations, pay them at the optimal time to maximise your tax reliefs. Remember they need to be paid on or before 5 April 2021 to save income tax.

    As a company owner, your pension contributions will probably be made as company contributions and to save corporation tax these must be paid before your accounting year end. If your company year end is 31 March 2021, pay them on or before 31 March 2021.

    As a high earning employee, say, on a salary of £110k, paying £8k into a pension scheme saves you £6k of income tax! This is 60% of £10k being the £8k you paid, grossed up by 20%, or £2k, paid direct by the government into your pension pot. The net effect on your income tax return is £4k to allow for this £2k paid in the background.

    As a sole trader or partner, if you have a good year, you’re not able to defer income as easily into another tax year so pensions and gift aid donations may be even more important. Similar considerations apply as above.

    Take IFA advice before deciding if, when and where to invest.

    3. Planning To Expand?

    As a sole trader or partner, if you have some larger costs to incur or equipment to buy, you might want to incur these costs before 5 April 2021 so you can claim tax relief in this tax year.

    If you’ve just started up so you’re making losses and paid tax elsewhere in this tax year or any of the previous three tax years, you should be able to claim an income tax refund. Therefore, if you have some costs to incur or equipment to buy, incur them before 5 April 2021 to increase your tax loss and therefore your tax refund.

    The meaning of ‘incur’ isn’t necessarily paying out cash before 5 April 2021, so check the rules if your cashflow is tight.

    Similarly, as a company owner with a 31 March 2021 accounting year end, bringing forward significant costs will save you corporation tax. However, for plant & equipment, you may save more tax by making the investment in your next accounting period from 1 April 2021 to benefit from the recently announced super-deduction of 130%.

    4. Planning To Invest?

    If you’re planning to support unrelated growing limited companies by investing in shares, remember to consider whether S/EIS income tax reliefs are available to you. Each £10k invested might save you £3k or £5k of income tax. Investing on or before 5 April 2021 should bring forward your tax saved by a year.

    5. Marriage Allowance, Trivial Benefits, Annual Parties

    Ensure you’ve not missed out on these during the tax year. They can add up! For example, marriage allowance can save up to £250. Perhaps even treat your employees to a virtual Easter party, assuming the £150 per person wasn’t used up at Christmas!

    As ever, remember to take appropriate professional advice before taking or refraining from any action so that your tax and business situation may be assessed in full.

  • Budget 2021 – Help To ReGroup & Grow

    Help To ReGroup

    Corporation Tax and Self Employed Losses – Carried Back 3 Years

    A bit like after the financial crisis, the usual 1 year loss carry back is extended to 3 years, meaning that tax paid on previous profitable years, will generate much needed cashflow through a tax refund.

    This applies from 1 April 2020 to 31 March 2022 which helpfully covers the worst of Covid’s effects. Get your 2021 tax returns in early to receive your tax refund as soon as possible.

    SEISS 4.0 & 5.0, Furlough Extension, VAT Rate Cut Extension, Business Rates

    SEISS 4.0 covers February, March, April and will now include those who’ve traded in both 2019/20 and 2020/21 and submitted 2019/20 before today. Claims can’t be made for a while – late April. 

    SEISS 5.0 will look at your turnover reduction in the year April 2020 to April 2021 with a similar £7,500 cap if your turnover reduced by 30% or more, but a much smaller cap of £2,850 if your turnover reduced by less than 30%.

    The furlough extension to the end of September tapered down to 70% for July and 60% for August & September is something for small limited company directors, as well as larger businesses, the main aim to help ensure employees stay in the jobs market.

    The 5% VAT rate extension to the end of September and 12.5% to 31 March 2022 will be valuable to eligible businesses and is another reason to become voluntarily VAT registered! With the current compulsory threshold remaining at £85k, you may need to be registered sooner than you think.

    Continuing with £NIL business rates for April, May, June is a much welcome cashflow saving until all property-based businesses can fully open.

    Help To Grow

    Management Training & Digital, Other Grants, Recovery Loan Scheme

    New management training and digital schemes for businesses with over 5 employees are aimed at improving productivity, an elusive goal for many governments, will be 90% funded by the government. New restart grants were also announced for non-essential retail, hospitality, leisure, personal care and gyms. Plus, picking up from the end of BBLs and CBILs, a new Recovery Loan Scheme will be available with 80% government backing.

    With so many different existing grants around available to all sorts of businesses, it must be worth most  checking whether there might be something available to them. Check the State Aid rules, though. 

    Investment – Super-Deduction – Companies 

    Increasing the tax deduction when purchasing plant & equipment from 100% to 130% from 1 April 2021 to 31 March 2023. At a corporation tax rate of 19%, £1,000 of investment, currently saves £190 of corporation tax, with the 130% super deduction, it saves £247, an increase of £57. Don’t forget to bring in 130% proceeds if you sell that equipment one day!

    If the plant is purchased through hire purchase there will be some further requirements, unlike under the current 100% deduction.

    Corporation Tax Rate Increase – 19% to 25%

    Happily, this is delayed until 1 April 2023 and with a taper from £50k to £250k profits, the effective rate on those profits will be between 19% to 25% for many small businesses. Apart from helping out the country’s finances, higher corporation tax rates arguably encourage investment. The more you invest, the more you save…  Interesting the start date is at the same time as the super deduction mentioned above comes to an end which mathematically seems to come to a similar answer: £1,000 @6% = £60

    It’ll be interesting to see whether fewer sole traders/partnerships will incorporate or at least delay doing so, although the freezing of tax free personal allowances and the higher rate tax bands through to April 2026 might encourage more incorporations. Each case will be different. In any event, ambitious businesses can easily incorporate later.

    Enterprise Management Incentive – EMI and Research & Development – Consultations

    Are these working? Should they be extended? etc etc. Let’s hope these come to quick conclusions so businesses can benefit from any improvements. The maximum repayable credit of £20k plus 3x PAYE bill won’t be disturbed.

    UK Infrastructure Bank, Grants

    There doesn’t seem to be any minimum sized business, so small green or local growth projects might be eligible. 

    What Didn’t We See? 

    Interesting the things that weren’t mentioned:

    • Business rates fundamental reform
    • Long term care funding ideas, perhaps through the national insurance system
    • Capital gains tax changes, but there have been several in recent years!
    • Pension tax relief, ditto! Although freezing the lifetime allowance will affect some.

    The focus has been on growth as the way to pay our way out of the enormous debt, with some important taxpayer help from corporation tax and freezing tax allowances. 

  • Coronavirus Dates To Remember – Just like yesterday’s Valentine date, make sure you don’t miss them!

    BBLs – Loan – apply by 31 March 2021

    Borrow between £2k and up to 25% of turnover up to £50k, very easily with no fees or security and pay annual interest of only 2.5% after 12m, with no repayments due for the first 12m.

    These remain the best loans a small business will ever receive and must be worth considering. We’re seeing the cash give small businesses valuable breathing space so they can focus on re-grouping and re-launching, as restrictions permit.

    Pay As You Grow improvements announced by the British Business Bank on 6 February, appearing to apply to existing BBLs borrowers, allow repayments to be delayed by a further 6m and after making only one repayment the option to pause repayments for up to 6m.

    This is in addition to the existing choices to extend the loan term from 6 to 10 years and/or pay interest-only up to three times during the loan term.

    CBILs – Loan – apply by 31 March 2021

    Designed for small businesses requiring finance for up to £5m, with no personal guarantees required for loans under £250k and even over £250k your home cannot be taken as security. No fees or interest due for the first 12m. These loans may also be extended to a term of up to 10 years.

    Local Authority Grants – current

    There are six schemes currently available:

    • Closed Businesses Lockdown Payment – from 5 January 2021
    • Local Restrictions Support Grant (Closed businesses) – businesses affected by Tier restrictions from 2 December
    • Local Restrictions Support Grant (Open businesses) – hospitality, accommodation and leisure businesses
    • Local Restrictions Support Grant (Closed businesses) – businesses affected by November and from 5 January national restrictions
    • Local Restrictions Support Grant (Sector) – nightclubs, adult entertainment venues and similar
    • Additional Restrictions Grant – discretionary

    For example, a small local authority discretionary Additional Restrictions Grant may be available to a home based business which has been severely impacted throughout, such as an events business.

    Business Rates Holiday (retail, hospitality & leisure) – to 31 March 2021

    Might this be extended in the Budget? We’ll let you know on 3 March…

    Full or Flexible Furlough – to 30 April 2021 – claim within 2 weeks of each month

    The government continues to pay 80% of furloughed non-working hours, the employer paying only employer NIC and pension contributions. Remember to claim within the specified 2 week date of the month end for each claim. 

    SEISS 4.0 – to 30 April 2021 – claim details due by 3 March 2021

    Details of the fourth self employed grant covering February, March and April are due to be announced by Budget day. 

    VAT Deferral – to 31 March 2021 or up to a further 12m – apply from 23 February

    VAT due between 20 March and 30 June 2020 is due by 31 March 2021 unless you apply to join the new interest-free instalment deferral scheme between 23 February to 21 June 2021.

    VAT Rate Reduction (hospitality & tourism) – 20% to 5% – to 31 March 2021

    This increases gross profit margins helping small businesses deal with other aspects of the virus such as bringing in safety measures or adapting their business model. Another one to look out for on Budget Day.

    Income Tax Returns – extension to 28 February 2021

    Apparently there are still quite a few to be submitted! If 28 February is missed, the usual £100 penalty is due, even if no tax is due, escalating after that for continuing delays.

    Income Tax Deferral – apply before 2 March 2021.

    If you’ve missed the 31 January payment deadline make sure you pay or enter an online deferral agreement before 2 March 2021 [EDIT: NOW AMENDED TO BY 1 APRIL 2021], to avoid a 5% surcharge. If you owe more than £30k in total, you’ll need to contact HMRC to agree a bespoke payment plan – known as Time To Pay.

    Other Taxes -Time To Pay – case by case – as early as possible

    This has always existed for taxpayers in difficulty. Approach HMRC as early as possible to agree a realistic payment plan. 

    Businesses have done well to keep going and many have improved their entire business model for the long term. Make sure you get the help for your long term success while you can.  

  • Let The Taxman Contribute To Your Virtual Christmas Party

    What are the limits?

    You can spend a maximum of £150 including VAT per staff member plus another £150 for a guest in total over a tax year. The main condition is that ALL members of staff at that location must be invited. A location is a bit more blurred this year, so keep your e-invite to show that all employees contractually employed at a certain site are invited.

    In addition to the £150 annual party limit, you may also send a gift to staff with a value up to £50 including VAT, such as a Turkey, wine or chocolates.

    What is the tax treatment and accounting required?

    The cost is fully tax deductible with no benefit in kind income tax or national insurance to worry about. Your staff will feel appreciated and you save 19% corporation tax. Ensure that the costs are called Staff entertainment or Christmas party in your Profit & Loss Account.

    The £150 includes all costs which this year may be a hamper sent to all attendees to link up on Zoom at the agreed time, possibly with the employer hosting a comedian, musician or quiz for attendees to enjoy.

    Divide the total cost of each function by the total number of people, including guests, to arrive at the cost per head.

    The VAT is fully recoverable when paying for staff entertaining. If you make a small charge to your staff’s guests and pay over a small amount of VAT, the VAT on the total cost for the guests is also fully recoverable.

    Similarly, small gifts up to £50 are fully tax deductible and VAT may be recoverable if only one small gift is made during a year. Perhaps these costs could be called Staff welfare to help keep them separate from your £150 calculations!

    NB Ensure you don’t go over the £150 or £50, otherwise the entire amount is taxable.

    I’m a director and don’t have any staff. Can I benefit from this favourable tax treatment?

    As you are the only director/employee you might think you can’t have a Christmas party – wrong! And it probably won’t need to be virtual if within the general Covid meeting up rules.

    You can avail yourself of the £150 per head exemption as a member of staff (the only one!) and also a guest. You can also have a gift with a value of up to £50, but you’re likely to be restricted to doing this up to an annual value of £300 so check what other company gifts you’ve taken so far. In this case, we would advise that VAT can’t be reclaimed.

    Now you can have a fabulous tax subsidised virtual Christmas party !

  • Coronavirus – Remember, remember the 5th November

    There will be new funding for:

    CJRS – Coronavirus Job Retention Scheme – August version applying to November [EDIT: EXTENDED TO END OF MARCH 2021]

    Employees agree to receive 80% of their reference pay, which the government pays up to £2,500 per month. Their employer pays employer national insurance and pension contributions, and may top up the basic pay beyond 80%. Training, voluntary work or work for another employer may be carried out during a furlough period.

    If there is some work to do, employees may be on flexible furlough, paid in full for the hours worked, with the government payment only applying for non-worked hours.

    Importantly, an RTI submission must have been made by close of 30th October, again emphasising government preference to use up to date information and to help prevent fraud.

    To date, the reference pay has usually been as it was on or before March 2020, with no pay rises expected. As new employees and employers may use this November scheme, the reference pay will need to change perhaps to the amount paid on or before October. We’ll be checking the details when they come out.

    For shareholder-directors on a tax year 2019/20 reference salary of £719 now finding there is no work for them beyond statutory duties, they should be able to claim at least £575.20 for November while paying themselves the 2020/21 recommended £732 monthly salary. Again, we need to see the details in due course.

    Business Grants – Premises based businesses

    Further business grants will be paid for businesses required to close with properties with a rateable value of: 

    • £15k or under, receiving £1,334 per month.
    • Between £15k-£51k, receiving £2,000 per month.
    • £51k or over, receiving £3,000 per month. 

    The reference to a monthly figure clearly suggests this lockdown may last longer than the hoped-for one month!

    Often used to pay rent and utilities, these are essential for businesses who can’t trade at all.

    If you can offer phone or online retails sales for your product or takeaway options for your food, this will help you survive. Together with 5% VAT still applying for takeaways, perhaps you can keep putting those fires out!

    There are also numerous grants for all sorts of businesses, nothing to do with Coronavirus, which may be worth a bit of research.

    SEISS – Already extended

    There was no mention of the self employed grant which was previously extended with a maximum payable for November-December-January of a total £3,750. [EDIT: INCREASED TO £7,500 OR 80% OF PROFITS IF LOWER] With many businesses not being eligible at all so far, such as those with historical profits over £50k, presumably those exclusions need to be revisited as time goes on, as well as the amount, in the light of this lockdown. 

    BBLs – Business Bounce Back Loan – to 30th November [EDIT: 31ST JANUARY]

    Remember, remember not only the 5th November, but the 30th. If you’ve not yet taken out a BBLs loan for up to £50k, you may need to revisit this to help see you through. If so, your application needs to be in by 30th. [EDIT: 31ST JANUARY]

    Businesses should revisit their particular business model, fixed and variable costs and how government, or other, assistance can help them put these fires out!

  • WEP WEP WEP? Winter Economic Plan? Or…

    To add to the self employed (SEISS) and employee (CJRS) grant schemes already introduced, the employee Job Support Scheme (JSS) will start from 1 November, to pick up from the end of the CJRS the previous day, and run for the following six months. In addition, your business will receive the previously announced £1k Job Retention Bonus in February for those staff.

    The SEISS will similarly be extended to cover a further six months to end of April 2021, also at lower amounts, for the self employed.

    There are extensions to VAT and income tax payment due dates and improvements to the BBLs and CBILs terms to help yuor business’ cashflow further.

    Job Support Scheme (JSS)

    As long as employees work at least a third of their ‘usual’ hours, the government and employer will each pay one third of their ‘usual’ pay for their unworked hours, with the government contribution capped at £697.92.

    Meaning that the government will pay up to 1/3 of 67%, being 22% of pay (up to the cap) and the employer pays 55%, being 22% plus the 33% for the hours worked.

    You may be keen to know where the specific £697.92 came from. It seems to derive from a maximum annual reference salary of about £38k, not far off the £37,500 used for the CJRS.

    There isn’t anything to suggest that directors will be treated differently, although we’ll have to wait for further details to know for sure, but clearly on the usual low director salary the JSS has limited value.

    Self Employed (SEISS)

    The current version SEISS 2.0, opened in August 2020, pays a 3 month lump sum of up to £6,570 being 70% of £3,125 of your average profits.

    Today SEISS 3.0 and 4.0 were announced covering November-December-January and February-March-April, respectively. The SEISS 3.0 grant will be for 3 months of 20% of average profits up to a maximum of £1,875.

    This is much lower than before, being just under 30% of SEISS 2.0. Interestingly, this is about 90% of the JSS. Perhaps this is some in-built clawback of previously lower national insurance payments? The SEISS 4.0 grant hasn’t yet been announced.

    SEISS 3.0 and 4.0 are NOT dependent on claiming SEISS 2.0 or SEISS 1.0 (but you do need to be currently eligible).

    Presumably if you were adversely affected, say in August, but business has since picked up, you can’t claim SEISS 3.0 or 4.0. But how to measure ‘reduced demand’ isn’t yet clear. Perhaps a turnover comparison will be required for SEISS 3.0 and 4.0?

    Reduced 5% VAT

    Proving to be valuable to the hospitality and tourism sector, this reduced VAT will now continue beyond mid January to the end of March 2021. Remember this applies to sales of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to attractions. Do check the details if making a claim to recover VAT for subsistence when travelling for business.

    You don’t need to pass this reduced VAT onto your customers, as it may be needed to help keep your staff in their jobs.

    VAT Deferral

    If you deferred your VAT and were expecting to pay it in full by next March 2021, you may now spread that payment over 11 instalments during the 2021/22 financial year to end of March 2022.

    If you want to do this, look out for details on the ‘New Payment Scheme’ which you’ll need to opt into in early 2021.

    Income Tax 31 July 2020 Deferral

    Expected to be due by 31 January 2021, these deferrals already made can enter a plan to pay over a further 12 months, with the final payment due by 31 January 2022. This is only available if your income tax is under £30k.

    If you want to do this, look out for details on the ‘Self-service Time to Pay’ facility.

    Bounce Back Loans – Pay As You Grow

    Borrowers will be offered a delay from 6 years to up to 10 years to repay their loan. You can move to interest-only payments for up to 6 months for up to 3 times and pause repayments entirely for up to 6 months but only once during the term.

    Similarly a loan under CBILs can be extended from 6 years to up to 10 years.

    If you’ve not yet applied for one of these loans, you now have two months until 30 November to do so. Not an easy thing to do for many SMEs, so perhaps these extensions will be persuasive and save some businesses from permanently closing.

    At least, there is no Budget this autumn leaving businesses the time and space to focus on surviving the virus and hopefully thriving in the long run. 

    Please ask your usual On The Spot contact for further assistance.