Accounting and Taxation advice in Hexham, Northumberland

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Thoughts for the week ending 7th August

Hi folks,

There was a headline in the Times on Tuesday - “POETRY IS A CORONAVIRUS CASUALTY”. I personally think that sums up where we are with journalists at the moment. The article was something to do with what’s happening with exam syllabuses but it still seems a strange thing to head the Times front page. Well I’m sure if anything, as with most times of stress, coronavirus is probably good for poetry!

I listened to a webinar earlier this week with the financial director of Greggs. It’s quite interesting to hear his perspective on the pandemic and particularly interesting to see that even at this early point branches are back to 70% of the normal turnover – maybe this is a hopeful sign?

Don’t forget to ‘Eat Out to Help Out’ https://www.gov.uk/government/collections/eat-out-to-help-out-scheme – an amazing selection of businesses seem to be taking advantage of this. Let’s hope the government is as efficient at paying back these claims as it has been with furlough and the self-employment income support scheme.

There has been the first arrest for fraud in the government furlough scheme. I guess that’s probably good news for the taxpayers who are footing the bill. Let’s hope the largely compliant business community isn’t tainted by this.

And now onto the more technical stuff:

Flat rate VAT changes:

Following the reduction of VAT in hospitality and other industries, the following flat rates in that area have been adjusted temporarily:

  • Restaurants from 12.5% to 4.5%
  • Hotels from 10.5% to 0%
  • Pubs from 6.5% to 1%

So, I think there is no reason why you should not remain in the flat rate scheme if you are there at the moment.

Penalties on incorrectly claimed Coronavirus grants:

On 22 July 2020 the legislation so that HMRC can charge penalties on over-claimed coronavirus support payments or grants came into force.  You have 90 days from the date the claim was submitted to tell HMRC and correct the situation, after which penalties will be imposed.  For claims submitted before 22 July 2020 you have until 22 October.  This applies to all coronavirus support payments including SEISS (Self-Employment Income Support Scheme), CJRS/ Furlough (Coronavirus Job Retention Scheme) and SSP (Statutory Sick Pay) reclaims.  The penalties are 30-100% of the overclaimed amount for unprompted disclosures after the 90 days, and 50-100% for prompted disclosures.

Common examples of where businesses may have over-claimed include the following:

  • Claimed SEISS but the business has not been adversely affected by the Coronavirus, or trading had already ceased.
  • Employers NI claimed through furlough, but employment allowance also claimed.
  • SSP reclaimed on employees who were off work for non-coronavirus reasons or more than two weeks SSP has been claimed per employee.

 

If you need to arrange to repay an over payment of a coronavirus grant, the following links will help you:
 

      SEISS corrections: https://www.gov.uk/guidance/tell-hmrc-and-pay-the-self-employment-income-support-scheme-grant-back


      CJRS over-payments can be corrected on your next furlough claim.  If you are not going to make another claim the link below gives you a helpline number and webchat access: https://www.gov.uk/government/organisations/hm-revenue-customs/contact/get-help-with-the-coronavirus-job-retention-scheme


       SSP overpayments: https://www.gov.uk/government/organisations/hm-revenue-customs/contact/get-help-with-the-statutory-sick-pay-rebate-scheme

 

Furlough – where are we now:

From 1 August, employers have to contribute towards the costs of an employee on furlough as the employer national insurance (NI) and pension contributions cannot be reclaimed through the furlough scheme, and therefore incurred by the employer instead.  From 1 September, the furlough grant will only cover 70% of the employee’s usual wage, with the employer required to “top-up” the furlough payment to the 80%.

Job retention bonus:

This was part of the Chancellor’s “Plans for Jobs” announced on 8 July, and further details were released last week.  The job retention bonus will give employers £1,000 for every employee who they previously claimed furlough on behalf of, and who remains continuously employed with that employer to 31 January 2021.  The employee will have to earn on average £521 a month from 1 November 2020 to 31 January 2021 to be eligible, with at least some sort of payment each month.  All payments must be through the RTI system.  The payment of the bonus to employers will be made in February 2021.  It is confirmed that the bonus will include company directors and agency workers if the other criteria are met.  More guidance on what is included in the £520 earning threshold, and how employers can claim, will be published in September 2020.

Capital gains tax on residential property:  

There’s been so much going on recently that a major change in capital gains tax (CGT) reporting may have been overlooked by some people, although we did touch on this a few weeks ago in ‘Thoughts’.

Since 6 April 2020 any house sales by UK resident individuals, trustees and personal representatives who dispose of residential property in the UK need to file a CGT on UK property return and pay any notional CGT due on the disposal within 30 days of completion.  If there is no chargeable gain because of CGT relief, losses or the annual exemption, then there is no requirement to file the return.

Due to the Covid-19 pandemic, and to ease in the introduction of these new rules, any completions between 6 April and 30 June 2020 have until 31 July to file the return and pay the CGT without incurring penalties.  Completions from 1 July must file the return and pay the CGT within 30 days or incur a penalty and possibly interest.

If you are not sure if CGT is due on a residential property sale, please get in touch.  This may particularly be the case if you have not always occupied the house yourself or have over half a hectare (1.25 acres) with the property.

 

And finally:

for those of you who are curious - the Ribble Way was lovely (if a bit hot!)

Keep well,
Tricia

 

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