NEWS & UPDATES IN THE ACCOUNTING WORLD
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BEWARE MINIUMBRELLA COMPANY FRAUD
8 June 2021
HMRC are urging businesses to look out for the use of miniumbrella companies (MUCs) to pay contractors supplying their labour via agencies and other intermediaries. Businesses need to be aware of the financial and reputational risks of such entities in their labour supply chain and carry out due diligence to minimise those risks. You may have heard a BBC File on 4 radio programme that highlighted the abuse of the £4,000 employment allowance by 48,000 companies set up to take advantage of the allowance to save employers national insurance. Such structures are also being used to avoid VAT and are currently being marketed as a means of side-stepping the “off payroll” working rules. To find out more, read our June newsletter.
On 29 October, the Chancellor of the Exchequer delivered the Autumn Budget. To find out more, read our newsletter.
DETAILS OF LATEST CJRS “FURLOUGH” GRANTS
17 May 2021
The fourth version of the CJRS “furlough” grant scheme started on 1 May 2021 and will run until 30 September with employees affected continuing to be supported such that they are entitled to be paid at least 80% of their “usual pay” subject to a limit of £2,500 a month for hours not worked. The government, via HMRC, will continue to provide support up to this 80% figure for the months of May and June. The government support then reduces to 70% for July and then 60% for August and September with the employer being required to make up the difference. The employer is also required to pay national insurance contributions and pension contributions on the full amount paid to the employee. To find out more, read our May newsletter.
NEW PERSONAL SERVICE COMPANY RULES START THIS MONTH
1 April 2021
The "off-payroll" working rules that apply to certain workers supplying their services to clients via their own personal service companies start from 6 April 2021. Under this new regime end user businesses will be required to determine whether that individual would have been treated as an employee or not if directly engaged. This will be a significant additional administrative burden on the large and medium-sized businesses to whom the new rules apply. This is a complex area based on different decisions by the courts and HMRC suggest that end user organisations use the CEST (Check Employment Status for Tax) online tool on their website to help with the determination. To find out more, read our April newsletter.
CHANCELLOR “LEVELS UP” WITH US ON TAX
11 March 2021
In the Chancellor’s second real Budget on 3 March 2021 he announced that he had to level with people about the state of the UK economy. Prior to Budget day there were fewer leaks than normal about possible tax changes. There were however announcements prior to Budget day of grants for High Street businesses and the hospitality sector and the widely predicted extension of the furlough scheme. Rishi Sunak has chosen a fine line between raising taxes to start paying down the massive Government borrowings but at the same time stimulate economic recovery and save jobs. To find out more, read our March newsletter.
BUDGET DAY IS 3 MARCH
8 February 2021
There has been a lot of speculation on what will be in Rishi Sunak’s second Budget in early March and whether there is any tax planning that you should consider before then. The government will have to start paying down the massive £2 trillion of borrowings at some stage. Increasing tax rates would send the wrong message when the government is trying to stimulate economic recovery. What the Chancellor is more likely to do is abolish or restrict some of the generous tax reliefs that we have got used to taking advantage of. That would have the effect of raising tax revenue without increasing headline rates. To find out more, read our February newsletter.
CLAIM YOUR “FURLOUGH” GRANT
1 December 2020
We now have further details of the operation of the extension of CJRS “furlough” that will apply from 1 November 2020 through to the end of March 2021. The government support will initially be at the rate of 80% of an employee’s reference pay for hours they are furloughed, subject to a maximum of £2,500 a month. Claims must be made by the 14th of the following month although they can be made up to 14 days in advance. Another key difference from the previous versions of CJRS is that there is no requirement that the employee was on the payroll at 19 March 2020 or has been previously furloughed. They do however need to be on the payroll and subject to an RTI submission prior to midnight on 30 October 2020. To find out more, read our December newsletter.
WHEN WILL BUDGET DAY BE NOW?
1 November 2019
It was announced on 14 October that Sajid Javed’s first budget would be on 6 November but with a general election in December when will it be now? The current political uncertainty makes it difficult to give clear tax advice as a number of key proposals in the draft Finance Bill scheduled to take effect from April 2020 might not now take place, due to the December general election. To find out more, read our November newsletter.
GOVERNMENT U-TURN ON PENSION TAX FOR DOCTORS AND OTHERS?
1 September 2019
Hospital doctors and GPs have been lobbying the government to amend the pension tax rules as the current system of restricting tax relief on penion contributions means many doctors paying almost all of the extra slary back in tax if they take on additional responsibilities or work addition shifts. To find out more, read our September newsletter.
NO DEAL BREXIT - WHAT ABOUT VAT?
1 February 2019
The Government and HMRC have updated their collection of high-level guides called “partnership packs”, intended to help businesses involved in importing and exporting prepare for changes to customs procedures after 29 March 2019 in the event of a “no deal” scenario.
If the UK exits the EU without a deal, UK businesses will have to apply customs, excise and VAT procedures to goods traded with the EU, in broadly the same way that already applies for goods traded outside of the EU. To find out more, read our February newsletter.
CHRISTMAS IS THE TIME FOR GIVING
20 December 2018
Those thinking about making gifts at Christmas should take advantage of the various inheritance tax (IHT) exemptions and reliefs available to them. Note that certain gifts can also have capital gains tax (CGT) implications. To find out more, read our December newsletter.
ANNUAL INVESTMENT ALLOWANCE INCREASED TO £1 M
5 November 2018
The Annual Investment Allowance (AIA) which provides businesses with a 100% write off against profits when they acquire plant and machinery has been temporarily increased from £200,000 to £1 million for two years from 1 January 2019. This will again mean that the timing of expenditure will be critical. It may be advantageous to delay expenditure until after 1 January 2019 to get full benefit in certain circumstances.
However, the current enhanced capital allowance for energy efficient plant will be abolished from April 2020. A further change is that the writing down allowance for special rate pool equipment, broadly long-life assets and fixtures in buildings, is being reduced from 8% to 6% from April 2019.
2018: THE AUTUMN BUDGET
29 October 2018
IT CONSULTANT WINS IR35 PERSONAL SERVICE COMPANY CASE
2 October 2018
The government have been consulting on extending the personal service company rules that currently apply to public sector workers to those in the private sector, but in the meantime tax tribunal decisions are still being decided against HMRC.
In a recent case involving an IT consultant working on various projects to implement the new Universal Credit system the First Tier Tax Tribunal decided that the consultant would not have been an employee if directly engaged. A key factor was that the level of control over the consultant fell far below the sufficient degree required to demonstrate a contract of service.
TAX EFFICIENT CHILDCARE SCHEMES
2 October 2018
Earlier this year the government announced that no new childcare voucher schemes could be set up after 5 October 2018. This was a six month extension from the previous 5 April 2018 end date. If those employers offering such schemes at 5 October are prepared to keep administering their scheme then they will continue to be available but will eventually be phased out.
The current scheme allows employers to provide vouchers to employees to pay for care of their children up age 16. Vouchers to the value of £55 a week can be provided tax free to basic rate taxpayers with differing tax free amounts for higher rate and additional rate taxpayers.
The replacement scheme is the government's "tax free" childcare account which started this year for children up to age 12. Under this scheme the government tops up the savings in the childcare account by 25% up to £2,000 per child per year (£4,000 for a disabled child).
Thus, savings of £8,000 would be topped up by the government to £10,000 and the £10,000 could then be used to pay Ofsted registered childcare providers such as nursery fees, childminders, after school clubs and summer camps. Unlike childcare vouchers, the new childcare accounts will be available to both employees and the self-employed.
For those already in childcare voucher schemes it may be beneficial to switch to the new childcare account and we can help you calculate whether or not that would be beneficial.
DON’T FORGET THERE MAY BE TAX TO PAY ON YOUR DIVIDENDS IN JANUARY
30 September 2018
The rules for taxing dividends changed radically from 6 April 2016 with the removal of the 10% notional tax credit and the introduction of new rates of tax on dividends. For many taxpayers that meant more tax to pay on those dividends on 31 January 2018. The same will also apply on 31 January 2019.
If you are a higher rate taxpayer and received £30,000 of dividends in 2017/18 £25,000 of those dividends would be taxed at 32.5% meaning £8,125 due on 31 January 2019.