Accounting and Taxation advice in Hexham, Northumberland

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Thoughts for the Month of September 2020

Hi folks

I hope you’ve enjoyed the quite pleasant first month of Autumn. I wonder, how many of you chose to do the Great North Run in its Covid friendly form? We had a staff member who did and managed to raise £1,068.10 plus additional gift aid of £267.03 which makes a total of £1,335.13 for The MS Trust, our charity this year. A magnificent effort and done despite the fact that her run was not lauded by thousands, and accompanied by lots of glitz as it would normally be, but just by the few friends who accompanied her on her chosen route.


Listening again to the Prime Minister on the 22nd, particularly in the context of all of the students going off to university for the first time, and bearing in mind those people at the other end of life whose lives have been massively restricted again, I do begin to wonder whether this has been dealt with in the right way. Perhaps if we could all attend to the quite catchy: HANDS FACE SPACE - actually that should be a general health mantra not just one for COVID-19 – then life might get back to normal sooner?

There is to be a further announcement later which may turn everything on its head again however Boris is not expected to announce any new lockdown measures, but rather give an update on the UK’s general coronavirus situation, so hopefully what I’m saying below won’t be obsolete by the time you read it!

It is difficult to work out what you can and can’t do in these ever changing times but I think these regularly updated links are a great help:
National:
https://www.gov.uk/government/publications/coronavirus-outbreak-faqs-what-you-can-and-cant-do/coronavirus-outbreak-faqs-what-you-can-and-cant-do


Local: (We have recently found that some versions of the Microsoft Edge browser find fault with the certificate for this next link but Chrome or Firefox browsers usually access it without any problems)
https://www.northumberland.gov.uk/coronavirus/Latest-information-and-advice-on-Coronavirus.aspx


I’m with the pundits in thinking that it would be damaging to continue the furlough scheme longer. I think if there is going to be Government help for specific sectors it needs to be help to get them working, not help to keep them not. With that in mind Rishi’s amendment to the furlough scheme with the job support scheme seems to me to be a very good idea. We need to be preserving jobs that are real rather than putting off the business of returning to work or not – time will tell how it works.
I am quite relieved that next month we will not have a budget. Life is quite complicated enough without major tax changes at the moment and I have to say from this side of the desk it does feel like we virtually had a budget every weekend and then every month since March!

With the added restrictions announcement from Northumberland County Council on 28th September and the national change of tone and further restrictions for everyone from the 22nd, I think the coronavirus is beginning to grind us all down and we need to find ways of keeping ourselves cheerful. I personally think Dr Stephens’ 10 rules of happiness again many times better than belonging to a WhatsApp group:

•           Watch less television
•           Take more exercise
•           Plant something
•           Talk to your partner
•           Smile/laugh
•           Phone a friend
•           Do something for someone else
•           Spoil yourself
•           Count your blessings
•           Seize the day


On to technical particulars:

The Autumn Budget has been shelved, but a November Autumn statement and financial forecast will be issued instead.

Self-assessment Time to Pay scheme

The 2nd payment on account due by 31 July 2020 was already allowed to be deferred by HMRC to 31 January 2021.  This means that you may have your 2019/20 2nd payment on account, balancing payment for 2019/20 and first payment on account for 2020/21 to pay by 31 January 2021.  Tax-payers now have an additional 12 months to make these payments, by 31 January 2022, but you do need to apply for it, and interest will be charged.

If your total liability is under £30,000 you can use HMRC’s Time to Pay facility. The page reached by using the following link https://www.gov.uk/difficulties-paying-hmrc contains a further link called “set up a Time to Pay Arrangement online” which will allow you to do this.  
The online facility gives automatic and immediate approval to an additional 12 months to pay.  You will need your online HMRC log-in.  

If you owe more than £30k at 31 January 2021, or cannot use the online facility, then you need to call HMRC on 0300 200 3822, and set-up the Time to Pay that way.

Self-Employment Income Support Scheme (SEISS)

If you are self-employed (sole trader or a member of a partnership) you have until 16 October 2020 to apply for the 2nd of two grants that have been available.  If you are eligible you can claim 70% of your average profits (calculated over a three year period) for three months of trading, up to a maximum of £6,570.  We have contacted all clients that are eligible and told them of the grant they can expect to get.  In addition to the historical financial eligibility criteria, you also need to have been adversely affected by Coronavirus between 14 July and 16 October.  

On 24 September an extension was announced to the scheme to provide two further grants covering the three months November 2020 to January 2021, and February to April 2021.  If you have been adversely affected you will be able to claim 20% of your average profits for the three months November to January 2021 up to a maximum of £1,875.  Details of the level of grant for February to April 2021 have not yet been released.  Details on how to claim the 3rd grant starting in November are not yet available.

A useful summary is on the Institute of Chartered Accountants in England and Wales (ICAEW) website as follows:
https://www.icaew.com/coronavirus/self-employment-income-support-scheme
Full details are on the HMRC website as follows:
https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

The Coronavirus Job Retention Scheme (CJRS) - until 31 October 2020

This scheme, also known as furlough, will change again from 1 October.  Employers will only be able to claim up to 60% of the employee’s usual wage, up to a cap of £1,875. The remaining 20%, so that the employee receives 80% of their usual wage, will have to be paid by the employer along with the employer’s pension and national insurance contributions.  The scheme ends at the end of October, and final claims must be submitted by 30 November 2020.  The Job Support Scheme (see section below) will replace CJRS.

The flexible furlough system was introduced from 1 July 2020 where employees could return to work on reduced hours and a CJRS grant would be available to pay the employee the difference between their reduced hours and their usual hours up to the furlough %, which at the time was 80%.  The usual hours calculation caused a great deal of confusion, and HMRC have revised their usual hours calculation for employees returning to work during a month from 14 September.  In summary, the usual hours are calculated up to the last day of furlough, instead of to the end of the claim period, and similarly the hours worked are only counted to the last day of furlough.  Employers do not need to amend claims made prior to 14 September, but any claims from 14 September should reflect the revised calculation.  Full details of the calculation and guidance are in the link below:
https://www.gov.uk/guidance/calculate-how-much-you-can-claim-using-the-coronavirus-job-retention-scheme#work-out-80-of-your-employees-usual-wage


From November 2020 the CJRS bonus of £1,000 will be available if previously furloughed employees continue to be paid an average of at least £520 a month across November 2020, December 2020 and January 2021.  The bonus will then be payable in February 2021.  I’ll give you more information of the bonus scheme nearer the time.

Job Support Scheme – from 1 November 2020

This replaces the CJRS from 1 November 2020 and will run for 6 months.  The employee must work at least 33% of their usual hours, and the employer pays for all time that the employee actually works.  For the hours not worked, the Job Support Scheme will pay one third of the employee’s usual wages up to £697.92 per month, and the employer one third (no cap).  The employer will also have to meet all national insurance and pension contributions. So, the employee will receive up to two thirds of their wage for the hours not worked and be paid in full for the hours they do work – which means they receive at least 77% of their usual wage unless the government contribution has been capped.

Some other key points of the new scheme:
- Small and medium sized businesses are eligible, along with large businesses who have met a financial assessment test
- An employee doesn’t have to have been on furlough previously to qualify for the scheme – this is a new scheme
- Employees must have been registered on the PAYE payroll on or before 23 September 2020, and a submission made to HMRC
- Grants will be paid monthly from December 2020 onwards
- You can claim the CJRS retention bonus and also use the Job Support Scheme

Further details and a factsheet can be found as follows: https://www.gov.uk/government/publications/job-support-scheme

VAT deferral new payment scheme

Businesses who deferred VAT due between 20 March and 30 June 2020 were due to pay the VAT by the 31 March 2021.  The Chancellor’s announcement last week means that businesses can now choose to make smaller payments up to 31 March 2022 interest free. You need to opt-in to the scheme, and more details on how you do this will be released in due course.

Extension to the reduced rate of VAT

The temporary reduced rate of VAT of 5% for tourist attractions and goods and services supplied by the hospitality sector has been extended to 31 March 2021.  The reduction came into effect from 15 July 2020 and was due to end 12 January 2021.

Coronavirus support loans

All Government state-backed loan schemes will be extended until 30 November 2020, and a new loan programme will start in January 2021. The bounce-back loan scheme repayment period will be extended from 6 years to 10 years, with options available to pause payments for up to 6 months (once only) or pay interest only payments for up to 6 months (can use up to 3 times). The Government will also allow lenders to extend repayment terms on the Coronavirus Business Interruption Loan Scheme to 10 years – although I fear this may require even more hoop jumping, as if the actual loan itself isn’t difficult enough to get as it is.

Meanwhile, HMRC continue to investigate CJRS fraud and the Police are making arrests for suspicion of fraud by false representation and money laundering.  Remember, if you made a claim for a CJRS or SEISS grant before 26 June, you have until 20 October to inform HMRC of any over payments or errors without penalty. If you made the claim after 26 June you have until 90 days after the date of your claim to inform HMRC of any errors.

So, lots happening again and various deadlines and changes to remind you about in the coming months.
 
The Chancellor has set out his economic plan for the Winter: https://www.gov.uk/government/news/chancellor-outlines-winter-economy-plan
and here is his transcript: https://www.gov.uk/government/speeches/chancellor-of-the-exchequer-rishi-sunak-on-the-winter-economy-plan
 
Some new COVID-19 support schemes have been announced: https://content.govdelivery.com/accounts/UKHMRCED/bulletins/2a24a8b
 
Let’s hope the rule of six really does do what the Government thinks it will and the threats of a cancelled Christmas can be consigned to the dustbin of scaremongering once we get there.
 
Keep well everyone.
 
Until next month
 
Tricia

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