In this month’s Enews we report on a number of areas including updates on the Brexit Withdrawal Agreement and the UK and Scottish Budgets. With developments on off-payroll working, overdraft fees, HMRC’s report of bizarre excuses and a new statutory entitlement to leave and pay there are lots of areas to update you on.
- Brexit – transition period
- Scottish Budget
- Budget Day 11 March
- A decade of bizarre excuses and expense claims
- Off-payroll working
- Tax relief on professional fees and subscriptions
- Changes to overdraft fees
- New right to paid parental bereavement leave
Brexit – transition period
The leaders of the UK and European Union signed the Withdrawal Agreement, and the UK left the EU on 31 January 2020. However the UK is now in the transition or implementation period during which time it is ‘business as usual’ as the UK is covered by EU rules until the end of the year. By 2021 the UK aims to have agreed a deal on future arrangements with the EU and the rest of the world.
HMRC has contacted businesses in the UK who may import and export between the UK and the EU to explain what they can do to prepare for changes to customs arrangements after the UK has left the EU.
No change during the implementation period
Between 1 February and 31 December 2020, there will be an implementation period. HMRC has confirmed that there will be no changes to the terms of trade with the EU or the rest of the world during this time.
From 1 January 2021, the way businesses trade with the EU will change and HMRC is reminding businesses that they should prepare for life outside the EU, including ensuring they are ready for customs arrangements.
HMRC is advising businesses to:
- make sure they have a UK Economic Operator Registration and Identification (EORI) number
- prepare to make customs declarations.
HMRC has posted letters to 220,000 VAT registered businesses advising them on the current position.
We will advise you on the progress of negotiations and what these will mean for your business.
Internet link: GOV.UK HMRC letters
Minister for Public Finance and Digital Economy, Kate Forbes, delivered the 2020/21 Scottish Draft Budget on Thursday 6 February 2020, setting out the Scottish Government’s financial and tax plans.
The current Scottish income tax rates and bands for 2019/20 and the proposed rates and bands for 2020/21 on non-savings and non-dividend income are as follows:
|Scottish Bands 2019/20||Scottish Bands
|Band name||Scottish Rates|
|£12,501* – £14,549||£12,501* – £14,585||Starter||19%|
|£14,550 – £24,944||£14,586 – £25,158||Scottish Basic||20%|
|£24,945 – £43,430||£25,159 – £43,430||Intermediate||21%|
|£43,431 – £150,000**||£43,431 – £150,000**||Higher||41%|
|Above £150,000**||Above £150,000**||Top||46%|
* assuming the individual is entitled to a full UK personal allowance
* Assumes individuals are in receipt of the Standard UK Personal Allowance.
** the personal allowance will be reduced if an individual’s adjusted net income is above £100,000. The allowance is reduced by £1 for every £2 of income over £100,000.
In the 2018 Autumn Budget, the UK Government announced that the UK-wide personal allowance would be frozen at its current level of £12,500 in 2020/21. The UK higher rate tax point for 2020/21 is also expected to be frozen at the 2019/20 amount of £50,000 (for those entitled to the full UK personal allowance) and the tax rates for non-savings and non-dividend income are expected to be maintained at 20%, 40% and 45% respectively. The additional rate of 45% is payable on income over £150,000.
Land and Buildings Transaction Tax change to non-residential rates and bands
The Government announced the introduction of a new 2% band for non-residential leases which will come into effect for contracts entered into on or after 7 February 2020. The rates and bands for non-residential LBTT transactions are as follows:
Net present value of rent payable
|Up to £150,000||0%||Up to £150,000||0%|
|£150,001 to £250,000||1%||£150,001 to £2 million||1%|
|Over £250,000||5%||Over £2 million||2%|
Internet link:GOV.SCOT Budget
Budget Day 11 March
Chancellor Sajid Javid has announced that he will deliver the 2020 Budget on Wednesday 11 March 2020.
The 2020 Budget will be the first to be delivered after the UK’s departure from the EU on 31 January 2020.
It is also Mr Javid’s first Budget as Chancellor, following the cancellation of last November’s planned Budget due to the General Election.
Mr Javid said:
‘People across the country have told us that they want change. We’ve listened and will now deliver.
‘With this Budget we will unleash Britain’s potential – uniting our great country, opening a new chapter for our economy and ushering in a decade of renewal.’
In the Budget announcement, the government said that it will prioritise the environment, and build on recent announcements to boost spending on public services and tackle the cost of living.
We will update you on Budget announcements.
Internet link: GOV.UK news
A decade of bizarre excuses and expense claims
Vengeful witches and pet hamsters feature in HMRC’s list of imaginative excuses and expense claims, which has been published in the run up to the self assessment deadline.
HMRC has compiled a list of the weirdest unsuccessful excuses from the last decade.
The list includes one taxpayer who claimed their mother-in law was a witch who had cursed them, hamsters and dogs that had eaten the post and a taxpayer who was up a mountain without internet access.
HMRC also reported questionable expense claims including pet food for a Shih Tzu ‘guard dog’ and 250 days of claims for a £4.50 sausage and chips meal.
Commenting on the list, Angela MacDonald, HMRC Director General of Customer Services, said:
‘Each year, we try to make it as easy and simple as possible for our customers to complete their tax returns and the majority make the effort to do their’s right and on time.
‘We always offer help to those who have a genuine excuse for not submitting their return on time. It is unfair to the majority of honest taxpayers when others make bogus claims.’
Internet link: GOV.UK news
HMRC has now published draft secondary legislation for the off-payroll working rules that are due to come into force in April this year.
In 2017, HMRC introduced new off-payroll rules to the public sector, which saw some contractors’ net income cut significantly. HMRC also shifted the responsibility for compliance from individual contractors to public bodies or recruitment agencies.
From 6 April 2020, the new tax rules will use the 2017 changes as a starting point for the extension to medium and large organisations in the private sector. These reforms will shift the responsibility for assessing employment status to the medium and large organisations engaging the individual worker via and intermediary.
The new draft legislation is open for consultation until 19 February 2020.
Jesse Norman, the Financial Secretary to the Treasury, said:
‘We recognise that concerns have been raised about the forthcoming reforms to the off-payroll working rules. The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.’
Internet link: GOV.UK consultations
Tax relief on professional fees and subscriptions
Employees are allowed to claim tax relief on their annual professional fees or subscriptions to some HMRC approved professional organisations. The costs are tax deductible generally where the individual must have membership to do their job or it is helpful for their work. Where the fees are paid by the individual’s employer this will not generally result in a benefit in kind charge.
HMRC has updated the list of approved bodies which also includes not only details of the professional bodies that are approved but details of qualifying annual subscriptions for journals.
Internet link: GOV.UK professional subscriptions
Changes to overdraft fees
The Financial Conduct Authority (FCA) has confirmed it will introduce new rules in April this year that it says will make the costs of overdrafts clearer and easier to compare.
The rules will mean banks can only charge for overdraft users a simple annual interest rate – without additional fees and charges.
According to the FCA, seven out of ten overdraft users will be better off or see no change in cost.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said:
‘Our changes expose the true cost of an overdraft. We have eliminated high prices for unarranged overdrafts.
‘This will result in a fairer distribution of charges, helping vulnerable consumers, who were disproportionately hit by high unarranged overdraft charges, and many people who use their overdraft from time-to-time.’
However, many banks have responded by hiking the interest rates they charge on overdrafts and several of the largest providers are set to introduce rates of up to 40%.
The FCA has sent a letter to the providers asking them to explain what influenced their decision and to ask how the banks will deal with any customers who could be worse off following the changes.
It said some firms could reduce or waive interest for customers who are in financial difficulty because of their overdraft.
New right to paid parental bereavement leave
The government has confirmed that parents who suffer the loss of a child will be entitled to two weeks’ statutory leave.
Under the new entitlement working parents who lose a child under the age of 18 will get two weeks’ statutory leave and where they meet the necessary conditions a legal right to two weeks’ paid bereavement leave.
Business Secretary Andrea Leadsom, stated:
‘The Parental Bereavement Leave and Pay Regulations, which will be known as Jack’s Law in memory of Jack Herd whose mother Lucy campaigned tirelessly on the issue, will implement a statutory right to a minimum of 2 weeks’ leave for all employed parents if they lose a child under the age of 18, or suffer a stillbirth from 24 weeks of pregnancy, irrespective of how long they have worked for their employer.
This is the most generous offer on parental bereavement pay and leave in the world, set to take effect from April.’
Under the new rules, parents will be able to take the leave as either a single block of two weeks, or as two separate blocks of one week each taken at different times across the first year after their child’s death.
The right to Parental Bereavement Leave (PBL) will apply to all employed parents who lose a child under the age of 18, or suffer a stillbirth (from 24 weeks of pregnancy), irrespective of how long they have been with their employer.
Parents with at least 26 weeks’ continuous service with their employer and weekly average earnings over the lower earnings limit (£118 per week for 2019/20) will also be entitled to Statutory Parental Bereavement Pay (SPBP), paid at the statutory rate of £148.68 per week (for 2019/20), or 90% of average weekly earnings where this is lower.
The government has confirmed SPBP will be administered by employers in the same way as existing family-related statutory payments such as Statutory Paternity Pay.
Internet link: GOV.UK news