Briefing 10 – 17th July
As you will all no doubt know by now, Chancellor Rishi Sunak, announced ‘A Plan for Jobs’ last week. This announcement outlines how the Government plan to protect jobs and boost job creation. The Plan includes:
- Job Retention Bonus – HMRC will introduce a one-off payment of £1,000 to UK employers for each furloughed employee who remains continuously employed through to the end of January 2021. Employees must earn above the Lower Earnings Limit (£520 per month), on average, between the end of the Coronavirus Job Retention Scheme in October until the end of January 2021. This means that for the 3 months from November 2020 to January 2021, an employee must earn at least £1,560 in order for the employer to qualify for the £1,000 bonus payment. Payments will be made from February 2021. Further details about the Scheme will be announced by the end of July.
This is an incentive to retain employees that have already returned from furlough, or will return from furlough. It is already too late to furlough an employee who has not already been furloughed. Employers will need to take care if you have part-time staff returning from furlough (or who have already returned from furlough) to ensure that earnings meet the above mentioned average, in order for you as an employer to be eligible for the bonus.
Kickstart Scheme – this is a £2 billion fund to create high quality 6-month work placements aimed at those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment. Funding available for each job will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions. Applications are expected to open next month, with details of how you can claim yet to be released.
Our view is that this could have been less restrictive had it been open to all 16-24 year olds, not just those currently on Universal Credit, but in the right situation this is a generous funding.
- Traineeships – will provide an additional £111 million this year for traineeships in England, for work placements and training (so not permanent jobs, but a 6 week to 6 month unpaid placement) for 16-24 year olds. The Government will fund employers who provide trainees with work experience, at a rate of £1,000 per trainee. At the time of writing no detail on how to make the claim have been released.
- New Apprenticeships – the introduction of a new payment of £2,000 to employers in England for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over, from 1st August 2020 to 31st January 2021. These payments will be in addition to the existing £1,000 payment the Government already provides for new 16-18 year-old apprentices, and those aged under 25 with an Education, Health and Care Plan – where that applies. Claims can start to be made by employers in relation to these apprentices from 1 September 2020. Those claims must be made through the Apprenticeship Service.
As with the current Government support schemes for apprenticeship funding, the success of these new incentives for SME companies will be linked to the amount of ‘red tape’ involved, so we await the details before making a judgement on how widely used and accessible this scheme will be.
- Eat Out to Help Out discount – Diners can get 50% off meals and non-alcoholic drinks, up to £10 per person, at participating restaurants, bars and cafes when they eat in. Participating restaurants and establishments will be reimbursed for the discount they pass onto customers.
Businesses are now able to register for the Governments new “Eating out to help Scheme”
The main points to note are:
· The discount applies to eating in only – not to take away meals or food vans
· Alcoholic drinks are NOT included in the scheme
· Businesses who have registered are able to claim under the Scheme, on a weekly basis, commencing from 7 August.
· VAT will need to be paid on the FULL amount (so a mix of 5% and 20% if you supply both meals and alcoholic drinks) – you need to ensure that you have a system to differentiate between these supplies (i.e. set up new category on your till / EPOS system)
· Any monies received from the Government under the Scheme will be taxable.
· Businesses must maintain daily records of:
- the number of people who have used the Scheme
- the total value of transactions; and
- the total discounts given
· Only available Monday, Tuesday and Wednesday during August
· There is no limit to the number of times customers can use the offer during the period of the Scheme, however, customers cannot get a discount for any member of their party who is not eating or drinking.
Please note that we, as your agents, are unable to register your business for the Scheme or make any claims on your behalf. The Government wished to design a scheme that could be set up speedily. The registration and claims process has been designed to make this as easy as possible for business owners. You will need to set up your own Government gateway account to do so, per this link below:
Below are the examples that HMRC have provided in their guidance as to how the Scheme will work
Applying the £10 per person cap to a single bill
Where there is more than one diner on a single bill, the cap does not need to be calculated for each individual diner based on their specific orders. Instead, the discount that is applied to the overall bill should be capped at the number of diners multiplied by £10.
Example of applying the cap to a £60 bill
A group of four diners (2 adults and 2 children) spend £60, including £10 on alcoholic beverages. There is a 10% service charge bringing the pre-discount bill to £66.
|Bill before service charge and discount||60.00|
|Amount spent on alcohol||10.00|
|Amount that discount can be applied to||50.00 (Total minus Alcohol)|
|Discount to customers (50% of 50)||25.00|
|Bill after discount is applied||41.00 (Discounted Bill + Alcohol +Service charge)|
The total discount is £25, which is £6.25 per diner and is below the £10 per diner cap
Example of applying the cap to a £100 bill
A group of four diners (2 adults and 2 children) spend £100, including £10 on alcoholic beverages. There is a 10% service charge bringing the pre-discount bill to £110.
|Bill before service charge and discount||100.00|
|Amount spent on alcohol||10.00|
|Amount that discount can be applied to||90.00 (Total minus Alcohol)|
|Uncapped Discount to customers (50% of 90)||45.00|
|Capped Discount (£10 per diner)||40.00|
|Bill after discount is applied||70.00 (Discounted Bill + Alcohol +Service charge)|
The uncapped discount is £45, which is £11.25 per diner and is above the £10 per diner cap. The discount is therefore capped at £40.
- The rate of VAT applied on most tourism and hospitality-related activities will be cut from 20% to 5% – this will include temporary VAT cut for food and non-alcoholic drinks – From 15 July 2020 to 12 January 2021, the reduced (5%) rate of VAT will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK.
It will also include a temporary VAT cut for accommodation and attractions – From 15 July 2020 to 12 January 2021, the reduced (5%) rate of VAT will apply to supplies of accommodation and admission to attractions across the UK. A link to further guidance from the Government is below:
We believe that software suppliers have been in contact with their customers about reformatting VAT rates, but do call us if you have problems in this area.
We would ask businesses to note that the reduction in the VAT rate is not all encompassing, as previous reductions have been. For example, a restaurant or café business will need to have a system to record sales of alcoholic drinks (still VAT at 20%) separately from food and non-alcoholic drink sales (VAT at 5%). Please contact us for specific advice as to how this VAT cut will affect your business if you are uncertain.
· Temporary increase to the Nil Rate Band of Residential SDLT (Stamp Duty) – from £125,000 to £500,000 in England and Northern Ireland has been introduced and will run until 31 March 2021. Second homes continue to attract a 3% additional charge to SDLT on top of the published rates. The bandings from £925,000 remain unchanged.
You can use the table to work out the SDLT due:
|Property or lease premium or transfer value||SDLT Rate|
|Up to £500K||Zero|
|The next £425K (i.e.£500,001 to £925,000)||5%|
|The next £575K (i.e. £925,001 to £1.5 million)||10%|
|The remaining amount (the portion above £1.5 million)||12%|
- Green Homes Grant – this grant provides at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household. For those on the lowest incomes, the Scheme will fully fund energy efficiency measures of up to £10,000 per household.
Other policy announcements were made, and can be found on the Government’s website, but we have attempted to highlight ones that we felt most appropriate to you, our clients.
REMINDERS OF PREVIOUS TOPICS
Furloughed workers – Overtime and TUPE
From 1 July, you will:
- only be able to claim for employees who have previously been furloughed for at least 3 consecutive weeks any time between 1 March 2020 and 30 June
- be able to flexibly furlough employees – this means you can bring your employees back to work for any amount of time, and any work pattern
- still be able to claim the furlough grant for the hours your flexibly furloughed employees do not work, compared to the hours they would normally have worked in that period
These last two points are quite important, as the employer can ask the employee to come back on any work pattern for any amount of time, so this would include any “overtime” an employee could have worked on a day when they would normally only work for say, 5 hours.
The guidance stresses that claims are now made based on hours and not days or weeks, so it is very important that employers now keep a track of how many hours an employee works per week as against how many hours they should have worked.
In the early stages of this new regime we have found the calculation to be complex and time consuming. Please remember to bear with our team as they calculate your Payroll.
For clients with zero-hours contracts, if the pay varies, then the 80% limit will be based on the same month’s earnings from the previous year, or their average monthly pay during the 19/20 tax year, whichever is the highest.
On top of the above, employers also have to make sure that the furlough cap is not exceeded on any claim and claims can be made every seven days.
You can imagine the number of scenarios this brings up for each and every client. If you need help to understand this process and operate your Payroll system please contact us.
In our last briefing we gave you details of the sliding scale of Government contributions to the Furlough scheme, but, for reference they are:
- in June and July, the Government will pay 80% of wages up to a cap of £2,500 as well as Employer National Insurance (ER NICs) and Pension contributions for the hours the employee does not work – Employers will have to pay employees only for any hours they work
- in August, the Government will continue to pay 80% of wages up to a cap of £2,500 but Employers will have to pay the ER NICs and Pension contributions – for the average claim, this represents 5% of the gross employment costs that would have incurred if the employee had not been furloughed
- in September, the Government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – Employers will pay ER NICs, Pension contributions and the 10% of wages to make up 80% of the total up to a cap of £2,500
- in October, the Government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – Employers will pay ER NICs, Pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
- the cap on the Furlough grant will be proportional to the hours not worked.
Second Self Employed Income Support Scheme (SEISS)
A further payment is due to the self-employed still affected by Covid-19.
HMRC will work out your eligibility the same way as the first grant. If you make a claim for the second grant you will have to confirm your business has been adversely affected on or after 14 July 2020.
This grant will be a taxable grant worth 70% (it was 80% last time) of your average monthly trading profits, paid out in a single instalment covering a further 3 months’ worth of profits, and capped at £6,570 in total.
The same tax years will be used as a basis to calculate the second grant as the first one. So, 16/17, 17/18 and 18/19. Please note that 19/20 will not be included even if you have completed and submitted your Tax Return.
If you are eligible for the second and final grant, and your business has been adversely affected on or after 14 July 2020, you will be able to make a claim from 17 August 2020 and the Scheme will close on 19 October 2020. You can claim for the second grant even if you did not make a claim for the first grant.
If you receive the grant, you can continue to work, start a new trade or take on other employment, including voluntary work, or duties as an armed forces reservist. The grant will be subject to Income Tax and National Insurance, collected through your 20/21 Tax return.
Your business could be adversely affected by coronavirus if, for example:
you are unable to work because you:
- are shielding
- are self-isolating
- are on sick leave because of coronavirus
- have caring responsibilities because of coronavirus
- you have had to scale down or temporarily stop trading because:
- your supply chain has been interrupted
- you have fewer or no customers or clients
- your staff are unable to come in to work
Please speak to us if you are unsure as to whether your business has been adversely affected, and we can discuss the details specific to your business and provide advice.
Do you think you may have been paid too much under the Scheme? (Guidance updated 1 July 2020)
As previously advised, you must tell HMRC if you think your grant has been overpaid as if you do not you may be charged a Penalty. An overpayment enquiry could be managed better if you record examples of how Covid 19 has impacted your business. So collect your evidence now.
The Finance Bill 2020 includes details of the powers HMRC will have to deal with incorrect claims.
Also, advice from the Government for new parents, added 26 June 20 states that:
· Self-employed parents whose trading profits dipped in 2018/19 because they took time out to have children will be able to claim the SEISS.
· Parents, including adoptive ones, who took time out of trading to care for their children within the first 12 months of birth of the child or within 12 months of adoption placement, will now be able to use either their 2017-18 or both their 2016-17 and 2017-18 self-assessment returns as the basis for their eligibility for the SEISS.
· They will also need to meet the other standard eligibility criteria for support under the SEISS.
Further details of the change for self-employed parents will be set out by the start of July in published guidance.
A link to check if you can claim is here:
Company Filing Dates Extensions
From 27 June 2020 to 5 April 2021 private limited companies and LLPs have automatically been granted an extension of 3 months in which to file their Accounts (so 12 months from their year-end -not 9 months).
In addition to extending the filing deadline for Accounts, companies will automatically get more time to file their Annual Confirmation Statement. The current 14 day deadline (from the end of the review period) will be extended to 42 days.
Full details can be found here:
One point to note is that Corporation Tax payment dates have not been changed, so although you now have 12 months to submit Accounts, the 9 months Tax payment date means that, in reality, Accounts will still have to be produced within the same 9 month period as has been the case
Our view is that the extension should be seen as a “fall back” position rather than the norm, particularly as your Corporation Tax payment deadline is still 9 months and 1 day after the financial year end.
Clearly events Covid 19 related have taken this topic off the news headlines, but on Monday of this week (13 July) the UK Government has launched a new public information campaign called “The UK’s new start: let’s get going” to give everyone the facts that they will need to be ready for 1 January 2021. A checker tool at gov.uk/transition will quickly identify the specific steps any business or individual needs to take to be ready, and will allow companies to sign up for bespoke updates. Taking these steps will equip businesses for when we exit the transition period.
If you would like further help or to discuss any area of this briefing contact us on 01202 880384 or firstname.lastname@example.org
Chartered Accountants & Business Advisors