Tax Diary June/July 2020

1 June 2020 – Due date for Corporation Tax due for the year ended 31 August 2019.

19 June 2020 – PAYE and NIC deductions due for month ended 5 June 2020. (If you pay your tax electronically the due date is 22 June 2020)

19 June 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2020.

19 June 2020 – CIS tax deducted for the month ended 5 June 2020 is payable by today.

1 July 2020 – Due date for Corporation Tax due for the year ended 30 September 2019.

6 July 2020 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2020 – Pay Class 1A NICs (by the 22 July 2020 if paid electronically).

19 July 2020 – PAYE and NIC deductions due for month ended 5 July 2020. (If you pay your tax electronically the due date is 22 July 2020)

19 July 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 July 2020.

19 July 2020 – CIS tax deducted for the month ended 5 July 2020 is payable by today

Self-employed grants claim process now open

Since 13 May 2020, it has been possible to use online processes, accessed via the gov.uk website, to:

  • Clarify if you are eligible to apply for the Self-Employed Income Support Scheme, and
  • Lodge your claim. Payment should usually be in your bank account within 6 days.

Are you eligible?

By entering your unique tax reference number and National Insurance number you will be advised if you are eligible to make a claim and when you should do this. The link to this facility is on page https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference

However, there have been comments in the press that HMRC has had problems with the complex calculations involved in making this decision. If you were expecting to receive a payment under this scheme and are advised that none is available, you should challenge the outcome with HMRC.

Register your claim

If a claim is eligible you will be directed to register your claim by using your personal Government Gateway ID and password.

You will also need:

  • UK bank details (only provide bank account details where a Bacs payment can be accepted) including:
  • bank account number
  • sort code
  • name on the account
  • your address linked to your bank account

Finally, you will be asked to confirm that your business has been adversely affected by coronavirus.

Note: claims for the first quarter to 31 May 2020 will close 13 July 2020

SEISS extended for final three-month period

It was announced 29 May that the SEISS would be extended for a further three-month period to 31 August 2020. Applications for this period will be opened late August 2020. The amount that can be claimed for June-August 2020 will be limited to 70% of eligible earnings capped at a maximum grant of £6,570.

Coronavirus Job Retention Scheme (CJRS)

On 12 May 2020, the Chancellor confirmed that this scheme will be extended until 31 October 2020. On the 29th May he confirmed the details of how the scheme would be changed to a flexible arrangement from 1 July 2020.

Until 1 September 2020, claims for time not worked will continue to be based on 80% of furloughed person’s salary up to the £2,500 maximum. For September this reduces to 70% capped at £2,187.50 and a further reduction in October to 60% capped at £1,875.

From 1 July 2020, employers can bring back furloughed staff part-time. Employers will be responsible for paying for this part-time work.

From 1 August 2020, employers will be required to pay for any employers' NIC and pension costs. From 1 September employers will be asked to contribute 10% of the CJRS wage costs for time not worked and from 1 October this contribution will increase to 20%.

The scheme will now close 31 October 2020.

Calculating holiday pay for workers without fixed hours

Government guidelines on this topic advise:

The amount of pay that a worker receives for the holiday they take depends on the number of hours they work and how they are paid for those hours. The principle is that pay received by a worker while they are on holiday should reflect what they would have earned if they had been at work and working.

A worker continues to accrue holiday entitlement while they are on sick leave, maternity leave, parental leave, adoption leave and other types of statutory leave. A worker may request holiday at the same time they are on sick leave.

The majority of the UK’s workforce are full-time workers on fixed hours and fixed pay. For these workers, typically on a fixed monthly salary, if they take a week’s holiday, they will receive the same pay at the end of the month as they normally receive.

The situation becomes more complicated when a worker does not work fixed or regular hours and so does not receive the same amount of pay each week, month or other pay period.

In these circumstances an employer should normally look back at a worker’s previous 52 paid weeks (known as the holiday pay reference period) to calculate what that worker should be paid for a week’s leave.

If a worker has not been in employment for long enough to build up 52 weeks’ worth of pay data, their employer should use the number of complete weeks of data they have. For example, if a worker has been with their employer for 26 complete weeks, that is what the employer should use.

If a worker takes leave before they have been in their job a complete week, then the employer has no data to use for the reference period. In this case the reference period is not used. Instead the employer should pay the worker an amount which fairly represents their pay for the length of time the worker is on leave. In working out what is fair, the employer should consider:

  • the worker’s pay for the job
  • the pay already received by the worker (if any)
  • what other workers doing a comparable role for the employer (or for other employers) are paid

Trade Credit Insurance update

Trade Credit Insurance provides cover to hundreds of thousands of business to business transactions, particularly in non-service sectors, such as manufacturing and construction. It covers suppliers selling goods against the company they are selling to, defaulting on payment and giving businesses the confidence to trade with one another.

Due to Coronavirus and businesses struggling to pay bills, they risk having credit insurance withdrawn, or premiums increasing to unaffordable levels.

To prevent this from happening, the government will temporarily guarantee business-to-business transactions currently supported by Trade Credit Insurance, ensuring the majority of insurance coverage will be maintained across the market. This will support supply chains and help businesses to trade with confidence as they can trust that they will be protected if a customer defaults on payment.

The guarantee will be delivered through a temporary reinsurance agreement with insurers currently operating in the market.

The government will work with businesses and the industry on the full details of the scheme to ensure firms are supported and risk is appropriately shared between the government and insurers.

Changes to Self-Employed and furlough schemes

The Chancellor, Rishi Sunak, announced the following changes to the Self-Employed Income Support (SEISS) and Coronavirus Job Retention Schemes (CJRS) at the close of business last week.

SEISS changes

In response to lobbying by interested business groups this scheme has been extended for a final three-month period (June – August 2020). The amount being offered is reduced, as compared with support provided for the first quarter (March – May 2020).

The eligibility criteria remains unchanged. In particular, claimants will still need to confirm that during the June to August period their businesses have been adversely affected by the coronavirus outbreak.

The amount that can be claimed is reduced to 70% of eligible earnings (previously 80%) and the maximum grant that can be claimed for the June – August quarter will be capped at £6,570 (previously £7,500).

As before, claimants will have to wait until the final month of the claim period, August 2020, to make a claim. Details on the claims process will be revealed 12 June 2020.

Please note, that self-employed persons claiming for the first claim period (March-May 2020) need to apply for their claim on or before 13 July 2020.

 

CJRS changes

The CJRS, more commonly described as the furlough scheme, is to close 31 October 2020.

From this date employers will reassume full financial responsibility for their employees.

Between July and October 2020, the support provided will reduce in two fundamental ways:

  • Employers can bring-back employees on a part-time basis and
  • Employers will need to make incremental contributions to the CJRS support costs.

Part-time working

If employees are invited back to work part-time from 1 July 2020, employers will need to meet the full costs of employing them for this part-time activity.

Furlough grants will still be available from government during the July – October 2020 period, but the amounts that employers can claim will gradually reduce as employers make increasing contributions.

A month by month summary of CJRS changes follows:

June 2020

No changes to government support this month but employers should note that the furlough scheme will close to new entrants on 30 June 2020. Effectively, the final date that employers can furlough staff for the first time will be 10 June 2020.

July 2020

From 1 July 2020, government will only provide support for hours not worked. The full cost of part-time working will have to be met by employers.

For time not worked, the scheme will provide 80% of furloughed costs up to £2,500 cap.

August 2020

From 1 August, employers will have to cover employers’ NIC and pension costs for furloughed workers. For many smaller businesses this will not dramatically increase costs as employers NIC is covered by the NIC Employment Allowance.

For time not worked, the scheme will continue to provide 80% of furloughed wages up to £2,500 cap.

September 2020

From 1 September, employers will, in addition to previous changes, have to start contributing towards the furlough scheme costs. For September 2020, this will amount to 10% of furloughed wage costs for time not worked.

For time not worked, government support will reduce to 70% of furloughed wages up to a revised £2,187.50 cap.

October 2020

From 1 October, employers will pay an increased contribution to the furlough scheme costs. For October 2020, this will amount to 20% of furloughed wage costs for time not worked.

For time not worked, government support will reduce to 60% of furloughed wages up to a revised £1,875 cap.

Unwinding the furlough scheme

From 1 November 2020, employers will be faced with two choices: to bring all furloughed workers back to full-time working or consider redundancies.

This outcome should be considered as soon as possible and if possible by considering quite detailed planning and forecasting considerations. We can help. Please contact us if you are presently claiming under the CJRS and are undecided how to unwind the support from the furlough scheme when it ceases on 31 October.

Waiving salaries or dividends

HMRC advice for people choosing to give up their income to support their business or donate to charity during the coronavirus (COVID-19) pandemic has been published.

Business owners who have decided to give-up their rights to receive dividends, salary or bonuses from their companies need to follow HMRC’s guidelines to be effective.

To be effective tax-wise, the pay-back or waiving of remuneration needs to be done before they are paid and by following HMRC’s instructions. HMRC’s advice says:

During the COVID-19 pandemic, many people are choosing to give up part of their income to support their business or employers or donate to charity.

HMRC is keen to support people who choose to waive – or give up – part of their income, particularly when it comes to understanding any tax implications.

Employers, directors and employees have several options to support a business or employer, including:

  • waiving their salary or bonuses before they are paid
  • waiving the right to any dividends
  • giving salary or dividends back to their employer after they have been paid
  • Payroll Giving
  • Gift Aid

Waiving salary or bonuses before they are paid

A ‘waiver of remuneration’ happens when an employee gives up rights to remuneration and gets nothing in return. If an employee and employer agree to a reduction in the employee’s remuneration before they are paid, for example to support company cashflow during the pandemic, then no Income Tax or National Insurance contributions (NICs) will be due on the amount given up.

This is provided the agreement is not part of any wider arrangement to divert the amount to a particular recipient or a cause. For example, if it were waived on condition that the sum would be donated to a particular charity, this would still be liable to tax.

 

Waiving dividends

Directors or other shareholders, including employees, are able to waive their right to be paid a dividend.

For this to be effective, a Deed of Waiver must be formally executed, dated and signed by shareholders and witnessed and returned to the company.

The waiver must be in place before the right to receive a dividend arises. For final dividends, this is before they are formally declared and approved by the shareholders. For interim dividends, the waiver must be in place before the dividends are paid.

 

Giving salary or bonuses back to your business or employer after they have been paid

It is possible to give back salary or bonuses to a business or employer after they have been paid. However, it is not possible to claim back the Income Tax and NICs that would already have been deducted from the salary or bonuses on payment.

Bonuses must be waived before the date they are due to be paid. If they are waived on or after the due date then tax will still be payable on them, even if the bonus is not paid over.

Donating to charity

Payroll Giving is a way of giving money to charity without paying tax on it. It must be paid through PAYE from someone’s wages or pension. If you are an employee, you should select a registered charity to donate to, and let your employer’s payroll department know.

 

Employers should contact a Payroll Giving agency to set up a scheme. The donation will be taken from employees’ pay before Income Tax but after National Insurance. Any registered charity in the UK or the EU recognised by HMRC for tax purposes can receive donations through Payroll Giving.

Gift Aid

Donating through Gift Aid means charities and community amateur sports clubs can claim an extra 25p for every £1 donated.

This means that if you donate to an eligible charity, the charity can claim back from HMRC the basic rate tax you would have paid on the amount. This is a way of giving to charity tax efficiently even after you have been paid.

 

Coronavirus – Business update 27 May 2020

This week, the formal process to claim back certain Statutory Sick Pay (SSP) payments is launched. From 26 May 2020, employers can register their claim using a new online process.

Making a claim

To use the online service, you will need the Government Gateway user ID you received when you registered for PAYE Online. If you did not register online you will need to enrol for the PAYE Online service.

If you use an agent who is authorised to do PAYE online for you, they will be able to claim on your behalf.

If you are unable to claim online an alternative way to claim will be available.

To make a claim you will need:

  • your employer PAYE scheme reference number
  • contact name and phone number of someone we can contact if we have queries
  • UK bank or building society details (only provide bank account details where a Bacs payment can be accepted)
  • the total amount of coronavirus SSP you have paid to your employees for the claim period – this should not exceed the weekly rate that is set
  • the number of employees you are claiming for
  • the start date and end date of the claim period

You can claim for multiple pay periods and employees at the same time. The start date of your claim is the start date of the earliest pay period you are claiming for. The end date of your claim is the end date of the most recent pay period you are claiming.

Records you must keep

You must keep records of SSP that you have paid and want to claim back from HMRC. You must keep the following records for 3 years after the date you receive the payment for your claim:

  • the dates the employee was off sick
  • which of those dates were qualifying days
  • the reason they said they were off work – if they had symptoms, someone they lived with had symptoms or they were shielding
  • the employee’s National Insurance number

You can choose how you keep records of your employees’ sickness absence. HMRC may need to see these records if there is a dispute over payment of SSP.

Cash boost for new business start-ups

Innovative businesses and start-ups are set to benefit from a £40 million government investment to drive forward new technological advances. It was announced 20 May 2020, that government is doubling investment in the Fast Start Competition with an additional £20 million.

The competition aims to fast-track the development of innovations borne out of the coronavirus crisis while supporting the UK’s next generation of cutting-edge start-ups.

Among the successful projects to receive the funding to date, is a virtual-reality surgical training simulator and an online farmers’ market platform.

Innovate UK has received a record number of applications – over 8,600 to the Fast Start Competition and will now be able to distribute investment to over 800 projects.

Projects receiving funding include:

  • I3d Robotics which is building a virtual-reality training/teaching platform to enable medical students to upskill remotely and perform simulation surgeries.
  • Volunteero Ltd has developed a social media app to connect local communities and allow volunteers to target support to the most vulnerable members in their neighbourhoods.
  • Elchies Estates Limited is setting up new virtual farmers’ markets to replace traditional markets which have had to close as a result of COVID-19, providing a platform for local businesses and farmers to sell produce.

 

The Fast Start Competition was launched in April in response to the outbreak and is being managed by Innovate UK.

 

 

Social distancing at work

The following guidelines have been released to cover social distancing concerns if working in offices or call centres. The objective being to maintain 2m social distancing whenever possible.

The published guidelines are:

You must maintain social distancing in the workplace wherever possible. Where the social distancing guidelines cannot be followed in full in relation to a particular activity, businesses should consider whether that activity needs to continue for the business to operate, and, if so, take all the mitigating actions possible to reduce the risk of transmission between their staff.

 

Mitigating actions include:

  • further increasing the frequency of hand washing and surface cleaning
  • keeping the activity time involved as short as possible
  • using screens or barriers to separate people from each other
  • using back-to-back or side-to-side working (rather than face-to-face) whenever possible
  • reducing the number of people each person has contact with by using ‘fixed teams or partnering’ (so each person works with only a few others)

Social distancing applies to all parts of a business, not just the place where people spend most of their time, but also entrances and exits, break rooms, canteens and similar settings. These are often the most challenging areas to maintain social distancing.

 

Coming to work and leaving work

Objective: To maintain social distancing wherever possible, on arrival and departure and to ensure handwashing upon arrival.

Moving around buildings and worksites

Objective: To maintain social distancing wherever possible while people travel through the workplace.

Workplaces and workstations

Objective: To maintain social distancing between individuals when they are at their workstations.

For people who work in one place, workstations should allow them to maintain social distancing wherever possible.

Workstations should be assigned to an individual and not shared. If they need to be shared they should be shared by the smallest possible number of people.

If it is not possible to keep workstations 2m apart then businesses should consider whether that activity needs to continue for the business to operate and if so take all mitigating actions possible to reduce the risk of transmission.

Meetings

Objective: To reduce transmission due to face-to-face meetings and maintain social distancing in meetings.

Common areas

Objective: To maintain social distancing while using common areas.

Accidents, security and other incidents

Objective: To prioritise safety during incidents. In an emergency, for example, an accident or fire, people do not have to stay 2m apart if it would be unsafe.

People involved in the provision of assistance to others should pay particular attention to sanitation measures immediately afterwards including washing hands.

Full details are available on the gov.uk website

The suggested actions that need to be taken to comply with the above objectives are listed here: https://www.gov.uk/guidance/working-safely-during-coronavirus-covid-19/offices-and-contact-centres