Enews January 2021
In this month’s Enews we consider the latest lockdown grant package, the extension of the Job Retention Scheme and guidance on the VAT deferral. We also update you on action to disrupt tax avoidance scheme promoters, the approaching self assessment deadline and a warning against potential capital gains tax rises. With guidance on making festive charitable donations and the Self-Employed Income Support Scheme there is a lot to update you on.
- Chancellor announces £4.6 billion lockdown grant package
- Extension of the Job Retention Scheme
- VAT Deferral
- HMRC and Advertising Standard Authority launch new action to disrupt promoters of tax avoidance schemes
- Self assessment deadline approaching
- Institute of Directors warns Capital Gains Tax (CGT) rise would adversely affect entrepreneurs
- Individuals urged to remain vigilant when making festive charitable donations
- Check if you can claim a grant through the Self-Employment Income Support Scheme
Chancellor announces £4.6 billion lockdown grant package
Chancellor Rishi Sunak has announced a new £4.6 billion package of grants to support businesses through the latest national lockdown.
UK businesses in the retail, hospitality and leisure sectors are to be given one-off grants worth up to £9,000.
The payments are expected to support 600,000 business properties across the UK. A further £594 million will be made available to councils and devolved nations to support businesses not covered by the new grants.
The Chancellor said:
‘The new strain of the virus presents us all with a huge challenge, and whilst the vaccine is being rolled out, we have needed to tighten restrictions further.’
‘Throughout the pandemic we’ve taken swift action to protect lives and livelihoods and… we’re announcing a further cash injection to support businesses and jobs until the spring.’
‘This will help businesses to get through the months ahead – and crucially it will help sustain jobs so workers can be ready to return when they are able to reopen.’
Internet link: GOV.UK news
Extension of the Job Retention Scheme
Chancellor Rishi Sunak has extended the Coronavirus Job Retention Scheme (CJRS) until the end of April 2021.
Businesses adversely affected by the coronavirus (COVID-19) can make use of the CJRS until the end of April, with the government continuing to pay 80% of employees’ salaries for hours not worked. Employers will only be required to pay wages, national insurance contributions (NICs) and pensions for hours worked, and NICs and pensions for hours not worked.
Additionally, Mr Sunak stated that he is extending COVID-19 business loan schemes until the end of March 2021. Businesses will be given until the end of March to access the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS). These schemes had been due to close at the end of January.
The Chancellor also confirmed that the 2021 Budget will be delivered on 3 March 2021 and will outline the next phase of the government’s plan to combat COVID-19 and protect jobs.
The Chancellor said:
‘Our package of support for businesses and workers continues to be one of the most generous and effective in the world – helping our economy recover and protecting livelihoods across the country.
‘We know the premium businesses place on certainty, so it is right that we enable them to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support.’
Internet link: GOV.UK news
HMRC has issued some guidance to taxpayers that deferred their VAT payments between 20 March and 30 June 2020 and still have payments to make.
HMRC is advising taxpayers who deferred their VAT payments to:
- pay the deferred VAT in full on or before 31 March 2021
- or opt in to the VAT deferral new payment scheme when it launches in 2021
- or to contact HMRC if they need more help to pay.
Taxpayers can pay their deferred VAT in full by 31 March 2021. There is no need to contact HMRC. However, if taxpayers want to use the new payment scheme they will need to opt in. The new online opt in process will be available in early 2021. Taxpayers will need to opt in themselves as this cannot be carried out by tax agents.
Where taxpayers opt in to the VAT deferral new payment scheme instead of paying the full amount by the end of March 2021, they can make up to 11 smaller monthly instalments which are interest free. All instalments of the outstanding amount must be paid by the end of March 2022.
In order for taxpayers to use the scheme they must:
- still have deferred VAT to pay
- be up to date with their VAT returns
- opt in before the end of March 2021
- pay the first instalment before the end of March 2021
- be able to pay the deferred VAT by Direct Debit.
Taxpayers must prepare to opt in by:
- creating their own Government Gateway account if they do not already have one
- submitting any outstanding VAT returns from the last four years. You will not be able to join the scheme if you have not done so
- correcting errors on their VAT returns as soon as possible. Corrections received after 31 December 2020 may not show in their deferred VAT balance
- ensuring they know how much they owe, including the amount they originally deferred and how much they may have already paid.
Internet link: GOV.UK guidance
HMRC and Advertising Standard Authority launch new action to disrupt promoters of tax avoidance schemes
HMRC and the Advertising Standards Authority (ASA) have launched a new joint enforcement notice to cut out misleading marketing by promoters of tax avoidance schemes.
The joint enforcement notice aims to disrupt the activity of promoters and protect individuals from being presented with misleading adverts which may tempt them into tax avoidance.
The enforcement notice requires promoters to be clear about the potential consequences of tax avoidance in any online adverts.
Immediate sanctions include having their paid advertising removed from search engines and follow-up compliance action, which can include referral to Trading Standards. The enforcement notice has been published as HMRC launches its ‘Tax avoidance: don’t get caught out’ awareness campaign warning and educating contractors about how to identify if they are being offered a tax avoidance scheme, and the pitfalls of using these schemes.
Jesse Norman MP, the Financial Secretary to the Treasury, said:
‘The government has made clear its determination to clamp down on the promoters of tax avoidance schemes.’
‘Today HMRC and the ASA are taking an important further step in this direction by action against misleading advertisements by promoters.’
‘As always, we would encourage people to pay close attention to HMRC’s warnings not to enter tax avoidance schemes. If it looks too good to be true, it almost certainly is.’
Internet link: GOV.UK news
Self-assessment deadline approaching
The deadline for submitting your 2019/20 self-assessment return is 31 January 2021. The deadline applies to taxpayers who need to complete a tax return and make direct payments to HMRC in respect of their income tax, Classes 2 and 4 National Insurance Contributions (NIC), capital gains tax and High Income Child Benefit Charge liabilities.
There is a penalty of £100 if a taxpayer’s return is not submitted on time, even if there is no tax due or the return shows that they are due a tax refund.
The balance of any outstanding income tax, Classes 2 and 4 NIC, capital gains tax and High Income Child Benefit Charge for the year ended 5th April 2020 is also due for payment by 31 January 2021. Where the payment is made late interest will be charged.
The first payment on account for 2020/21 in respect of income tax and any Class 4 NIC or High Income Child Benefit Charge is also due for payment by 31st January 2021.
HMRC revealed that more than 2,700 taxpayers filed their return on Christmas Day. If you would like help with your return or agreeing your tax liability, please contact us.
Institute of Directors warns Capital Gains Tax (CGT) rise would adversely affect entrepreneurs
The Institute of Directors (IoD) has warned the government that a rise in CGT would affect Britain’s entrepreneurial spirit.
The business group believes CGT could be targeted by the Treasury and increased in order to help put public finances back on a stable footing following the coronavirus (COVID-19) pandemic.
Tej Parikh, Chief Economist at the IoD, said:
‘But any reform would have to be done with extreme care to prevent a knock-on effect. Positive entrepreneurialism will be more important than ever in the months ahead.’
‘All told, ramping up CGT will pour cold water over Britain’s entrepreneurialism just when we need it most. It’s not an answer to the costs of COVID-19, but rather paves the way for a stunted recovery.’
Additionally, increasing CGT ‘would only add to the impression held by some that wealth creation is falling down the list of priorities’, the IoD said. It has urged the government to consider the UK’s international standing as a destination for business, arguing that the UK has ‘long held a strong reputation as a place to start, run and grow a company’.
Internet link: IoD news
Individuals urged to remain vigilant when making festive charitable donations
Action Fraud has warned the public to remain vigilant when making festive charitable donations as the number of scams rises.
Figures published by Action Fraud showed that £350,000 in charitable donations ended up with criminals over the festive period in 2019. It warned that fraudsters often set up fake charities or impersonate well known charitable organisations in order to deceive victims.
Action Fraud has advised individuals to look for the registered charity number on charity websites; check if a charity is registered with the Fundraising Regulator, never click on links or attachments in emails and never respond to unsolicited messages or phone calls.
Pauline Smith, Head of Action Fraud, said:
‘Charities do incredibly important work, helping those in need, especially at this time of year. Unfortunately, criminals will try to abuse the generosity and goodwill of others and this can have a huge financial impact on charities and the good causes they support.’
‘We would encourage people not to be put off donating to charities, but instead to be vigilant.’
Internet link Action Fraud news
Check if you can claim a grant through the Self-Employment Income Support Scheme
HMRC is advising the self-employed that the Self-Employment Income Support Scheme (SEISS) has been extended. Taxpayers who were not eligible for the first and second grant will not be eligible for the third.
To make a claim for the third grant the taxpayer’s business must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021, which they reasonably believe will have a significant reduction in their profits.
The third taxable grant is worth 80% of a taxpayer’s average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total.
The online service to claim the third grant is open. Taxpayers should make their claim from the date HMRC give taxpayers either by email, letter or within the service. Eligible taxpayers must claim the third grant on or before 29 January 2021.
The grant does not need to be repaid, but will be subject to Income Tax and self-employed National Insurance and must be reported on the taxpayer’s 2020 to 2021 Self Assessment tax return. Taxpayers must keep evidence to support their claim.
Internet link: GOV.UK guidance