I’ve taken the liberty of preparing these ‘Thoughts’ rather earlier than intended due to the flurry of recent changes both from a regulatory point of view and from a government financial assistance view point. I have no doubt we will receive quite a lot of changes before the end of the month and so I propose that the next one of these ‘Thoughts’ will be with you on Friday 6th of November – after any half term lock down if that actually becomes more than a concept.
I have to confess to feeling rather overwhelmed by different rules in different places and somewhat upset in that my daughter’s mother-in-law can go and see her and her baby – they live in Derbyshire which is just on medium risk that obviously is no further from the fleshpots of Manchester than we are from the fleshpots of Newcastle whereas, because we are considered to be one economic area in Northumberland, we are caught by the high assessment made in some more populated areas of the county. I say bring back district councils such as they have in Cumbria and this wouldn’t be a problem. Looking at the latest figures the numbers for Newcastle and for Northumberland are both lower for last week, so maybe we’ll get out of this high category sometime soon.
Recent figures from economic researchers are showing that GDP has slipped but not as much as feared. Moderately good news I guess.
Apparently we are 22nd in the OECD (Organisation for Economic Co-operation and Development) advanced nations table regarding tax competitiveness and it’s considered that tax changes that might be on the cards could drop that to 30th. I do have a book called 100 tax havens in which, firmly with their tongue in their cheek, the authors have included both the US and the UK. If we go ahead with these changes no doubt the UK won’t be there in the future.
According to a recent review of small businesses, Accountants are key workers as regards economic recovery…!
Errors on Covid grant claims
If you have overclaimed a grant you must inform HMRC by the later of 90 days from when you received the grant, or the 20 October 2020. This means for any grants received before 22 July 2020 you must report your overclaim by 20 October 2020. If you report the error after 20 October 2020 then you may be given a late notification penalty. If the error is found by HMRC, rather than notification from you, then the error will be treated as deliberate and concealed and a penalty of up to 100% of the value of the grant may be raised.
Potential areas where the Self-Employment Income Support Scheme (SEISS) grant may have been claimed in error are as follows:
- You have not traded in the 2019/20 tax year
- You do not intend to trade in the 2020/21 tax year
- You have not been adversely affected by Coronavirus
You can report an error on a SEISS claim by using the HMRC link below:
The key areas where the Coronavirus Job Retention Scheme (CJRS) grant may have been claimed in error are as follows:
- Employees working for periods when they were on furlough
- Claiming the employment support allowance in addition to claiming a furlough grant for the employer’s national insurance (NI), when there is not adequate employer’s NI charged to cover both during the tax year
- Calculation errors
- Furlough grants not used to pay employees i.e. the employee remains unpaid
Details on how to make a correction to CJRS can be found on the following link:
Coronavirus Job Retention Scheme (CJRS) – employment support allowance (ESA)
As noted above, you can’t claim furlough on the employer NI and ESA on the same amounts. If you have claimed furlough on the employer’s NI, and then subsequently claimed ESA for later non-furloughed months, your payroll software is likely to allocate the ESA from April onwards - and tell HMRC that too! This is fine as long as you adjust your payments of employer’s NI accordingly. You should also call HMRC (0300 200 3200) so that they can manually adjust the ESA so it is not all shown as claimed on their system.
Self-employment Income Support Scheme (SEISS)
A quick reminder that any claims for the 2nd SEISS grant must be made by Monday 19 October. If you are eligible and have been adversely affected by the Coronavirus pandemic on or since 14 July 2020 you can make a claim by clicking on the link below, scrolling down, and clicking on the green “Start now” button.
A 3rd and 4th SEISS grant will cover the period November 2020 to April 2021. As reported in my last ‘Thoughts’, the 3rd grant will be only 20% of average monthly trading profits with the amount for the 4th grant not yet announced. More details of how to claim the 3rd grant have not yet been made available by HMRC, but of course I will update you in future ‘Thoughts’.
Job retention bonus
Eligibility for the job retention bonus starts in November. A £1,000 bonus will be paid per employee, agent worker or office holder (directors) that has previously been on furlough and meets the eligibility criteria. The bonus is not paid to the employee.
For the bonus to be eligible the employee must have been continuously employed from when they were furloughed until 31 January 2021, and not be serving a contractual or statutory notice period for you on 31 January 2021. In addition the employee must have received at least £1,560 (gross) in total from November to January, with at least one payment of taxable earnings (of any amount) in each relevant tax month. This means paying the employee £520 on average in each tax month. Payrolled benefits appear to be included in the definition of taxable pay.
Claims will be made through HMRC online claims service from 15 February until 31 March 2021, and further details will be available nearer the time.
It is vital that from 6 November 2020 to 5 February 2021, the tax months covered by the scheme, that you submit a full payment submission (FPS) accurately and on time. Late submission may mean that you do not qualify for the job retention bonus. HMRC will also move to a “check first, pay later” model, meaning that checks will be made on the claim prior to the payment of the bonus being made.
The bonus is taxable income for self-employed and corporation tax purposes. However, where it is paid to an employer of domestic staff (e.g. nanny, cleaner) then the bonus is not classed as taxable income for the year.
Employee allowance for working from home
Employees can claim a tax-free allowance for working from home, even if they have not been paid the allowance by their employer. There is a fixed £6 per week (£4 per week up to 6 April 2020) tax-free allowance available if you are working from home which helps the employee to cover the additional costs of working from home such as electricity, heating, etc. This allowance can be paid by the employer, but where it has not been the employee can now claim the allowance directly from HMRC. It can be shown as a deduction from their earnings in their tax return or via the Government gateway to claim tax relief in-year for 2020/21 through their tax code.
To find out how you can claim, please follow the following link to HMRC’s new online claims checker. It will ask a series of questions and then let you know if you can claim. If you need to claim via a Government gateway account it will take you to the log-in page where you can also set-up a gateway account if you have not done so previously.
The Institute of Chartered Accountants in England and Wales (ICAEW) believes that this is a relaxation of the current rules just during the Coronavirus pandemic, and in future tax years the allowance will only be available where it is paid by the employer.
Recent comments on how the Chancellor should pay for all this help are coming from leading economists. The consensus is that Rishi should learn from history that high levels of corporation tax and high levels of income tax will just stall any recovery. Will he take their advice I wonder? Let’s see if he heeds that lesson.
Bye for now and stay safe.