This month we consider the latest Self Assessment figures, those named and shamed for failing to pay the minimum wage, and Scottish Budget announcements.
With guidance on bonuses for businesses taking on trainees, calls for changes ahead of the Budget and the Supreme Court ruling on business interruption claims there is a lot to update you on.
- 10.7 million taxpayers submitted their 2019/20 Self Assessment tax returns
- Rogue employers named and shamed for failing to pay employees the minimum wage
- Scottish Budget Income Tax
- Scottish Land and Buildings Transaction Tax
- Bonus of £1,000 to help businesses take on trainees
- LITRG calls for a rise in the High Income Child Benefit Charge threshold
- Government urged by CBI to act on COVID business support ahead of Budget
- Supreme Court backs small firms on business interruption claims
10.7 million taxpayers submitted their 2019/20 Self Assessment tax returns
HMRC has revealed that more than 10.7 million taxpayers submitted their 2019/20 Self Assessment tax returns by the 31 January deadline.
The remaining 1.8 million whose tax return is now late will not be charged a late filing penalty provided they submit their return online by 28 February.
Taxpayers who did not pay their Self Assessment tax bill by 31 January are now incurring interest on the outstanding balance and should pay their bill as soon as possible.
Taxpayers should pay any outstanding balance, or arrange a payment plan, before 3 March 2021 to avoid a 5% late payment penalty.
Those who are not yet able to file their tax return should pay an estimated amount as soon as possible, which will minimise any interest and late payment penalty.
Karl Khan, HMRC’s Interim Director General for Customer Services, said:
‘Thank you to the 10.7 million customers who have sent in their tax returns.
‘We won’t send anyone a late filing penalty if they complete their tax return by 28 February.
‘We know that many individuals and small businesses are finding it harder to pay this year, due to the pandemic. Anyone who can’t afford to pay their tax bill in full can set up a payment plan, once they’ve filed their return, to spread their tax bill into monthly instalments.’
There are several ways that taxpayers can pay their Self Assessment tax bill or an estimated amount. They can pay online, via their bank, or by post.
Anyone who cannot pay their bill in full can apply to spread the cost. Taxpayers can set up a payment plan, in up to 12 monthly instalments, online via https://www.gov.uk/pay-self-assessment-tax-bill/pay-in-instalments provided they meet the following requirements:
Taxpayers need to have no:
- outstanding tax returns
- other tax debts
- other HMRC payment plans set up.
The debt needs to be between £32 and £30,000.
The payment plan needs to be set up no later than 60 days after the due date for payment. Taxpayers should set up the payment plan as soon as possible, and certainly before 3 March to avoid a 5% late payment penalty.
Those who do not meet these requirements, or who need more than 12 months to pay their bill, can apply for a payment plan by speaking to one of HMRC’s debt advisers.
Interest accrues on all outstanding balances, including those in payment plans.
Self Assessment taxpayers who are required to make Payments on Account, and know their 2020/21 tax bill is going to be lower than in 2019/20, for example due to loss of earnings because of COVID-19, can reduce their Payments on Account. More information is available at https://www.gov.uk/understand-self-assessment-bill/payments-on-account.
Internet link: GOV.UK press release
Rogue employers named and shamed for failing to pay employees the minimum wage
HMRC has published the names of 139 named companies that failed to pay minimum wages amounting to £6.7 million to over 95,000 workers.
HMRC has named 139 companies, including major household names, that have underpaid their employees and have been fined. The offending companies failed to pay £6.7 million to their workers, in a breach of employment law.
This is the first time the government has named and shamed companies for failing to pay National Minimum Wage since 2018, following reforms to the process to ensure only the worst offenders are targeted.
Business Minister Paul Scully said:
‘Paying the minimum wage is not optional, it is the law. It is never acceptable for any employer to short-change their workers, but it is especially disappointing to see huge household names who absolutely should know better on this list.
‘This should serve as a wake-up call to named employers and a reminder to everyone of the importance of paying workers what they are legally entitled to.
‘Make no mistake, those who fail to follow minimum wage rules will be caught out and made to pay up.’
Internet link: GOV.UK news
Scottish Budget Income Tax
Finance Secretary Kate Forbes delivered the 2021/22 Scottish Draft Budget on Thursday 28 January 2021, setting out the Scottish Government’s financial and tax plans.
The Government has devolved powers to set the rates and bands of income tax (other than those for savings and dividend income) which apply to Scottish resident taxpayers.
The Scottish Budget announced the following income tax rates and bands for 2021/22. These will be considered by the Scottish Parliament, and an agreed Scottish Rate Resolution will set the final Scottish income tax rates and bands for 2021/22.
The current rates and bands for 2020/21 and the proposed rates and bands for 2021/22 on non-savings and non-dividend income are as follows:
|Band name||Scottish Rates|
|£12,501* – £14,585||£12,570* – £14,667||Starter||19%|
|£14,586 – £25,158||£14,668 – £25,296||Scottish Basic||20%|
|£25,159 – £43,430||£25,297 – £43,662||Intermediate||21%|
|£43,431 – £150,000**||£43,663 – £150,000**||Higher||41%|
|Above £150,000**||Above £150,000**||Top||46%|
* 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 UK Spending Review in November 2020, the UK Government announced that the UK wide Personal Allowance and the UK higher rate threshold would be uprated by CPI inflation of 0.5% for the tax year 2021/22 (to £12,570 and £50,270 respectively). All other policy decisions about UK rates and bands will be announced at the UK Budget on 3 March 2021.
The Personal Allowance is £12,500 for 2020/21. Across the rest of the UK the basic rate of income tax is 20%. In 2020/21 the band of income taxable at this rate is £37,500 so the threshold at which the 40% band applies is £50,000 for those entitled to the full personal allowance. UK taxpayers pay 45% tax on their income over £150,000.
Internet link: GOV.SCOT publications
Scottish Land and Buildings Transaction Tax
As part of the Scottish Budget, Finance Secretary Kate Forbes also announced changes to Land and Buildings Transaction Tax (LBTT) which apply from 1 April 2021.
The Scottish Government’s stated policy priority for residential LBTT remains to help first-time buyers and to assist people as they progress through the property market. The current rates and bands which apply until 31 March 2021 are as follows:
|£0 – £250,000||0%|
|£250,001 – £325,000||5%|
|£325,001 – £750,000||10%|
|£750,001 and over||12%|
For transactions with an effective date on or after 1 April 2021 the rate bands will return to:
|£0 – £145,000||0%|
|£145,001 – £250,000||2%|
|£250,001 – £325,000||5%|
|£325,001 – £750,000||10%|
|£750,001 and over||12%|
The rates apply to the portion of the total value which falls within each band.
First-time buyer relief
The relief for first-time buyers of properties up to £175,000 will resume its effect by increasing the residential zero tax threshold for first-time buyers from £145,000 to £175,000. First-time buyers purchasing a property above £175,000 also benefit from the relief on the portion of the price below the threshold. According to the Government, those buying a property for more than £175,000 will receive relief on the portion of the price below the threshold and benefit from savings of up to £600.
Higher rates for additional residential properties
Higher rates of LBTT are charged on purchases of additional residential properties, such as buy to let properties and second homes. Although these are the main targets of the higher rates, some other purchasers may have to pay the higher rates.
The Additional Dwelling Supplement (ADS) potentially applies if, at the end of the day of the purchase transaction, the individual owns two or more residential properties. Care is needed if an individual already owns, or partly owns, a property and transacts to purchase another property without having disposed of the first property. An 18-month rule helps to remove some transactions from the additional rates (or allows a refund). The ADS is charged at 4%.
Internet link: GOV.SCOT publications
Bonus of £1,000 to help businesses take on trainees
The government has announced that employers can now apply for a £1,000 bonus, a cash boost, to help them take on new trainees.
The new scheme will support young people to gain the skills and experience they need from the start, helping them to get a job, an apprenticeship, or to pursue further study.
The cash boost, which is available until 31 July 2021, will help businesses with the cost of providing a high-quality work placement for a trainee. This includes providing facilities, uniforms or helping with travel costs.
Businesses offering new traineeship opportunities will receive the £1,000 bonus for every trainee they take on, up to a maximum of ten trainees.
Employers can claim the cash incentive for all work placements that have been completed since 1 September.
Gillian Keegan, Minister for Apprenticeships and Skills, said:
‘We’re pulling out all the stops to help young people get the skills and confidence they need to progress. This cash boost will help employers of all sizes provide more traineeship opportunities to invest in their workforce so they can rebuild and grow, giving young people a vital route to start their apprenticeship journey, get their first job or go on to further study.
‘I strongly encourage as many employers as possible to apply now and take advantage of this fantastic offer so more young people can gain the skills they need to progress in their careers as we build back better from the pandemic.’
Internet link: GOV.UK news
LITRG calls for a rise in the High Income Child Benefit Charge threshold
The Low Incomes Tax Reform Group (LITRG) has urged the government to raise the High Income Child Benefit Charge (HICBC) threshold to avoid it affecting basic-rate taxpayers for the first time in April 2021.
The LITRG stated that this goes against the original policy intent, and is ‘likely to cause the government additional difficulties in raising awareness about the charge among those who do not consider themselves on a high income’.
Tom Henderson, Technical Officer at the LITRG, said:
‘When the HICBC was announced in 2010, the government’s policy intent was that it would only affect higher-rate taxpayers from January 2013. For the 2012/13 tax year, the higher-rate threshold – the point at which an individual is liable to the higher rate of tax – was £42,475. Since then, the higher-rate threshold has risen broadly in line with inflation but the £50,000 threshold for the HICBC has remained static.
‘The government has so far resisted calls to up-rate the £50,000 threshold, but this is no longer tenable now the higher-rate threshold will overtake it from 6 April 2021.’
In its Budget submission, the LITRG calls for the point at which child benefit is fully clawed back to increase from £60,000 to £75,000.
The government will present the 2021 Budget on Wednesday 3 March.
Internet link: LITRG news
Government urged by CBI to act on COVID business support ahead of Budget
The Confederation of British Industry (CBI) has urged the government to provide more financial assistance to businesses affected by the coronavirus (COVID-19) pandemic ahead of the Budget on 3 March 2021.
The business group has outlined support measures required to help protect UK businesses through the spring. It has called for:
- an extension of the Coronavirus Job Retention Scheme (CJRS) beyond April to the end of June
- a lengthening of repayment periods for existing VAT deferrals until June 2021; and
- an extension of the business rates holiday for at least another three months.
The CBI has also called for an announcement of details of the successor of the Coronavirus Business Interruption Loan Scheme (CBILS).
Tony Danker, Director General of the CBI, said:
‘The Budget comes at a crucial time for the UK. The Government’s support from the very start of this crisis has protected many jobs and livelihoods, and progress on the vaccine rollout brings real cause for optimism.
‘But almost a year of disrupted demand and extensive restrictions to company operations is taking its toll. Staff morale has taken a hit. And business resilience has hit a sobering new low.
‘The Government must once again stand shoulder-to-shoulder with businesses to underwrite support for the duration, helping viable enterprises to last the course.
‘Many tough decisions for business owners on jobs, or even whether to carry on, will be made in the next few weeks. If the Government plans to continue its support then I urge them to take action before the Budget which is still more than six weeks away.
‘The Government has done so much to support UK business through this crisis, we don’t want to let slip all the hard work from 2020 with hope on the horizon.
‘The rule of thumb must be that business support remains in parallel to restrictions and that those measures do not come to a sudden stop, but tail off over time. Just as the lifting of restrictions will be gradual, so must changes to the Government’s sterling support to businesses.’
Internet link: CBI article
Supreme Court backs small firms on business interruption claims
The UK’s Supreme Court has found in favour of small firms receiving payments from COVID-19 business interruption insurance policies.
The test case was brought against insurers by the Financial Conduct Authority (FCA). The ruling means that thousands of small businesses are now set to receive insurance payouts covering losses from the first national lockdown.
Commenting on the ruling, Flora Hamilton, Financial Services Director at the Confederation of British Industry (CBI), said:
‘At such an uncertain time, this court case provides much-needed clarity to companies across the UK, and relief for smaller firms struggling with cashflow.
‘This is significant news for insurers, and regulators will need to work closely with the industry as policies, products and processes are updated to reflect this ruling.’