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Tax Talk

September 2020

After confirming last week that there will not be a Budget in November, the Chancellor later addressed the House of Commons to deliver a Winter Statement. Rishi Sunak spoke about the impact of the £190 billion of government support to date:  

  • Paying the wages of 9.6 million employees
  • Supporting the livelihoods of 2.6 million self-employed workers
  • Helping 84,000 cafes and restaurants offer 50% discount on meals
  • Stimulating a 15.6% increase in house sales in August through a temporary cut to Stamp Duty Land Tax
  • Growing the economy by 6% in June and July driven by government interventions

The Chancellor acknowledged the recovery is fragile and that the increased social-distancing restrictions to protect people’s health require action to preserve economic wellbeing. A new Job Support Scheme has been announced alongside extensions to other support measures for self-employed workers and the hospitality industry which are summarised in this Insight. Whilst strangely, the raft of further government support came with no price tag attached, the Chancellor reiterated the intention to continue doing what is necessary in these unprecedented times.

Self-assessment

  • The government is giving Self-Assessment taxpayers with liabilities due by 31st January 2021 more time to pay.
  • Income taxpayers with a Self-Assessment liability of up to £30,000 who need extra help, can also now extend their outstanding tax bill over 12 months from January. This means liabilities due in July 2020 and January 2021 will not need to be paid in full until January 2022.
  • Anyone with a liability of over £30,000 or who is otherwise unable to pay their tax bill on time can contact HMRC to organise a Time to Pay Arrangement through their helpline or online.  
  • If you are looking to negotiate a Time to Pay Arrangement with HMRC, or are concerned about your current arrangement, then please speak with your Relationship Manager or contact the Tax team directly and we will be able to help you through the application process.

VAT

  • To continue supporting over 150,000 businesses and protect 2.4 million jobs, the government has extended the 15% VAT cut (to 5%) for the tourism hospitality sectors to the end of March next year. This will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, cafes and similar premises, provision of accommodation and admission to attractions across the UK.
  • Businesses who deferred their VAT will no longer have to pay a lump sum at the end of March next year. They will have the option of splitting it into smaller, interest free payments over the course of 11 months. This will benefit up to half a million businesses. Businesses will need to opt in but are all eligible.
  • The process will be in place in early 2021 and do not hesitate to contact the Tax team if you have any questions on this or any other VAT matters.

Job Support Scheme (JSS)

  • From 1st November, for the next six months (to April 2021), the JSS will protect viable jobs in businesses who are facing lower demand over the winter months due to COVID-19.
  • The aim is to give businesses who face depressed winter demand the option of keeping employees in a job on shorter hours rather than making them redundant.
  • Anyone who as of yesterday (24th September 2020) is employed is eligible.
  • All small and medium sized businesses with a UK bank account and a UK PAYE scheme are eligible to apply whereas larger businesses must demonstrate adverse impacts of COVID-19 (i.e. fall in revenue) and the government expects they will not be making capital distributions (i.e. dividend payments).  
  • Businesses are eligible even if they have not previously used the furlough scheme.
  • Employers retaining furloughed staff on shorter hours can claim both the JSS and the Jobs Retention Bonus – aiming to increase the incentive to bring back previously-furloughed employees.
  • To be eligible and for a job to be classed as viable, employees must work a minimum of 33% of their hours and be paid for that work, as normal, by their employer. For the remaining hours not worked, the government and employer pay a third of the wages each.
  • The government’s contribution is capped at £697.92 per month.

Self-Employment Income Support Scheme (SEISS)

  • SEISS has been extended until the 30th April 2021 for viable traders who are facing reduced demand over the winter months.
  • Viable traders will be those who meet the following criteria and can declare:
     • They are currently eligible for the SEISS even if they have not made a claim to date;
     • They are currently actively trading and intend to continue to trade; and
     • Their businesses income has been negatively impacted due to COVID-19 in the qualifying period.
  • The extension will be in the form of two taxable grants:
     • The first will cover a three-month period from the start of November until the end of January covering 20% of average monthly trading profits via a government grant (capped at £1,875).
     • The second grant will cover a three-month period from the start of February until the end of April. The government will review the level of the second grant and set this out in due course.

Loan schemes

  • Lenders can now offer Coronavirus Business Interruption Loan Scheme borrowers more time to make their repayments, where needed.
  • More than 1 million businesses which have borrowed under the Bounce Back Loan Scheme will be offered the choice of more time and greater flexibility for their repayments. This will include the option to repay their loan over a period of up to 10 years – pay as you grow.
  • The application deadline for all coronavirus loan schemes (including the Future Fund) has been extended to 30 November ensuring even more businesses can benefit from government backed support.

If you would like more detailed guidance on any of the issues raised in this update or to discuss your personal circumstances, please do not hesitate to get in touch with your Relationship Manager,  or a member of the Tax team: Chris Harden or Byron Heard. We will be delighted to help.