This easement is for late filing penalties only. It does not affect any other tax obligations. A return received in February will be treated in the same way as a return filed in February in a ‘normal’ year where there is a reasonable excuse – the penalty will not be charged but the return is treated as late for the purposes of enquiry windows, etc.

Self Assessment tax payments

Tax still needs to be paid by 31 January. Interest will be charged from 1 February on any outstanding liabilities. If any tax remains outstanding on 3 March, taxpayers will be charged a late payment penalty of 5% of the amount still due. It is therefore important for taxpayers to estimate their tax liability due 31 January 2021 even if work is still to be done on completing the 2020 Tax Return and pay this amount over before 3 March 2021 deadline to avoid the late filing 5% surcharge of tax due.

Taxpayers that do not pay in full by 31 January will be able to use HMRC’s Time to Pay service on the Government website to set up an affordable plan where they can pay overtime usually 12 months in instalments. Interest will still be charged but if they set up the payment plan before 3 March, they won’t be charged a late payment penalty as long as they keep to the terms of the payment plan.

Also, the easement for late filing penalties will be applied to an SA700 tax return relating to tax due from a Non-UK resident company e.g. owning UK property and a SA970 tax return (trustees of registered pension schemes) filed in February. These returns can only be filed on paper.

It should be noted that for SA800 (Partnership Tax Return) and SA900 (Trust and Estate Tax Return) HMRC will apply the easement if taxpayers file online by the end of February. Their paper deadline was 31 October 2020 so if customers file on paper in February they will not get the easement.

Those taxpayers affected by HMRC Exclusions, who had until 31 January to file on paper, will avoid a late filing penalty provided they file their return by 28 February.

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It is recommended by HMRC that any such payment arrangements are set up before the self assessment tax payment is due. HMRC will then agree a Time to Pay arrangement (TTP) on a case by case basis.

Self Assessment payment affordability

HMRC look at what a taxpayer can afford to pay and then use that to work out how much time they need to pay. They establish the ability to pay using an ‘income and expenditure’ assessment similar to a financial institution carrying a check on the ability of an applicant to repay a loan.

Many taxpayers including businesses self employed and workers under PAYE are faced with self assessment tax liabilities on 31 January 2021 which is based on their reported taxable income in the year ended 5 April 2020 together with, in some cases, a deferred second payment on account tax due on 31 July 2020 – which the Government has deferred to this month due to the pandemic Covid 19 effect on the taxpayer’s cash flow.

In October 2020, HMRC increased the threshold for Time to Pay arrangements from £10,000 to £30,000 for self assessment customers.

Taxpayers can apply for the payment plan via GOV.UK. However, they must meet the following requirements:

• Tax affairs up to date
• No other tax debts due e.g. VAT
• No other HMRC payment plans set up
• The debt needs to be between £32 and £30,000
• The payment plan needs to be set up no later than 60 days after the due date of a debt.

Visit GOV.UK to find out more about Payments on Account

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It is recognised that pubs where their business is mainly in serving alcohol rather than providing food (wet-led) have had to make huge sacrifices over the festive season and therefore will be eligible for a one-off £1000 grant to help make ends meet.

The payment will be a one-off for December and will be paid in addition to the existing £3000 monthly cash grants for businesses. This will cover those in Tier 2 and Tier 3 forced to reduce their operations because of of the latest regional measures put in place to combat transmission of the virus. Local authorities are responsible for processing and paying the grants.

Wet-led pubs in Tiers 2 and 3

In Tier 3 pubs can only offer takeaways. In Tier 2 pubs can remain open under the previous Tier 2 rules, except that they must provide a “substantial meal” where serving alcoholic drinks. The hospitality curfew has also been extended from 10pm till 11pm – that is last orders taken at 10 pm and customers allowed to stay until 11 pm to finish their food and drinks.

There seems to be some confusion surrounding what a “substantial meal” means. The government has described it as “a full breakfast, main lunchtime or evening meal”, but various government ministers have indicated that things like Scotch Eggs and Pasties could be considered a normal meal if accompanied by, say a salad or chips, and are served at the table, which is mandatory under the current rules anyway.

There is also a rather confusing “no loitering” requirement, which appears to require people to finish their meals and leave. It seems unlikely that someone who has not finished their drink when they have finished eating would feel obliged to leave, and will another drink not be served at or towards the end of a meal? – What if a bottle of wine is ordered under these circumstances?

Yet further confusion exists in the Press, where at least one newspaper has described wet-led pubs as being pubs that served no food at all. I doubt if many, if any, of these still exist, although Ireland claims to still have some – they call them “wet pubs”. Again, one newspaper regards wet pubs and wet-led pubs being one and the same thing.

There you go – anyway many in the trade seem to find the whole thing inadequate, if not derisory.

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This week the Council agreed the Local Restrictions Support Grants. Further information and the application window is now available on the Council’s website.

In summary there are three Local Restrictions Support Grants:-

• Closed – this is for those businesses who are required to close under the current national lockdown
• Sector – for those businesses that have been required to be closed since March 2020
• Open – for those businesses in the hospitality, accommodation and leisure sectors where they are significantly impacted by Tier 2 and Tier 3 restrictions on households mixing indoors

Where Camden hold enough information, they have already processed payments for the closed and sector grants.

Where they believe your organisation may be entitled to one or more of these grants but they do not hold enough information to pay you or confirm your eligibility, they are asking you to urgently go online and complete the application form available on the Council’s website.

Other prosed support grants

Camden are also developing their proposals for the Additional Restrictions Grant, the 4th government scheme and hope to be able to announce the details of this grant very soon. They will also be working with the Business Innovation Districts to host a series of application advice sessions over zoom in the coming weeks.

Tony Stitt Associates would be pleased to help business obtain such support grants from Camden, together with London Boroughs of Brent and Westminster.

The post Support Grants in Camden appeared first on Finance and Tax.

Self employment income support eligibility

To be eligible for the third and fourth grants, taxpayers must:-

• have been previously eligible for the first and second SEISS grants (although they do not need to have claimed the previous grants)
• declare themselves to be either currently trading, but impacted by reduced demand due to coronavirus, or to have been trading but temporarily unable to do so due to coronavirus
• declare that they intend to continue to trade and that they ‘reasonably believe’ there will be a significant reduction in their trading profits
• The requirements to be “actively trading” and to be “impacted by reduced demand” are new and HMRC is expected to publish further guidance to clarify the meaning of these terms

The third grant will be calculated as 80% of the average of three months of trading profits, up to a maximum of £7,500. The level of the fourth SEISS grant is to be kept under review and will be set in due course. Average trading profits is based on taxable profits reported under self-assessment for the tax years 2016/17, 2017/18 and 2018/19 with some exceptions. This will not change for the third and fourth grants.

The online claims portal for taxpayers (which cannot be used by their agents) will open in phases during the week beginning 30 November for applications for the third grant. Further details on the application process will be provided by HMRC in due course.

HMRC does all the calculations needed for the claims, using the information in the above submitted tax returns. The taxpayer does not have to provide any figures. Grants will be paid within six working days of the claim being submitted.

It should be noted that grants are subject to income tax and self-employment national insurance contributions in the 2020/21 tax year to 5 April 2021. HMRC will provide a specific section in the 2020/21 self-assessment tax return for the reporting of SEISS grants. It is also possible that the fourth grant will be taxable in 2021/22, that has yet to be decided.

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It is however important to note the short deadline in respect of claims for October where a mixture of Tier 2 and Tier 3 restrictions were in place for many businesses.

Employers and their employees do not need to have benefited from the scheme before to claim for periods from 1 November 2020.

Coronavirus Job Retention Scheme claims

Employers need to take the following action:-

• Submit any claims for periods up to 31 October on or before 30 November. They will not be accepted after this date. Claims are subject to eligibility and the rules in force at the time
• Submit any claims for November, no later than 14 December. You can claim before, during or after you process your payroll as long as your claim is submitted by the deadline
• Keep any records that support the amount of CJRS grant you claim, in case HMRC needs to check them. You can view, print or download copies of your previously submitted claims by logging onto your CJRS service on GOV.UK

There are now monthly deadlines for claims. Claims for periods starting on or after 1 November must be submitted within 14 calendar days after the month they relate to, unless this falls on a weekend in which case the deadline is the next weekday. The deadline to make claims for employees furloughed in November is Monday 14 December.

HMRC in an attempt to discourage fraudulent claims will publish the names, an indication of the value of claims and Company Registration Numbers of employers who make CJRS claims for periods from December onwards. They write to you again with details of when this information will be published.

For claim periods from December, employees will also be able to check if their employer has made a CJRS claim on their behalf through their online Personal Tax Account. To sign in or set up a Personal Tax Account go to gov.uk/personal-tax-account.

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The Job Support Scheme (JSS) will open on 1 November and run for six months, until 30 April 2021. The first claims can be made on 8 December for pay periods ending in November. The government will review the terms of JSS in January 2021.

Job Support Scheme variations

There are two variations to JSS: JSS Open and JSS Closed. These follow government announcement of increased generosity to support businesses in Tier 2 and Tier 3 lockdowns set by one of the four governments of the UK.

JSS Open

JSS Open will provide support to businesses that are open where employees are working shorter hours due to reduced demand. Employees will need to work at least 20% of their usual hours.

Employers will continue to pay employees for the hours they work, and the UK government will pay a contribution of 61.67% of the usual pay for hours not worked, up to a maximum of £1,541.75 per month.

Employers will pay 5% of the usual pay for hours not worked, up to a maximum of £125 per month, and can top this up further if they choose. This means employees should receive at least two thirds of their usual pay for hours not worked.

Employers will need to cover all employer National Insurance and pension contributions including auto-enrolment workplace pensions.

JSS Closed

JSS Closed will provide support to businesses whose premises are legally required to close under coronavirus restrictions. It will include premises restricted to delivery or collection-only services, providing food and/or drinks outdoors.

The UK government will fund two thirds of employees’ usual wages for time not worked, up to a maximum of £2,083.33 per month. Employers will not be required to contribute, but they can top up the government’s contribution if they choose to.

Employers will still need to cover all employer National Insurance and pension contributions.

The post Job Support Scheme update appeared first on Finance and Tax.

This allowance is effective from 6 April 2020.

Such employees can use their personal self-assessment tax return to claim a deduction or go to their personal tax account and apply to have their tax code under Pay As you Earn (PAYE) adjusted by HMRC. The allowance is to cover tax-deductible additional costs that employees who are required to work from home have incurred, such as heating and lighting the room(s) where they carry out their work, and business telephone calls using a landline.

HMRC Employment Income Manual outlines the following guidance:-

It is a condition for relief under Income Tax (Earnings and Pensions) Act 2003 section 336 known as ITEPA that the expenses must be incurred “wholly and exclusively” “in the performance of” the employee’s duties so that relief can only be allowed for (a) the additional unit costs of gas and electricity consumed while a room is being used for work; (b) the metered cost of water used “in the performance of the duties” (if any); and (c) the unit costs of business telephone calls (including “dial up” internet access).

Working from home and Covid-19

The ability to claim a deduction for this allowance from earnings where this amount has not been paid or reimbursed by the employer is a useful relaxation from the normal rules during Covid-19. It is understood that after Covid-19 the rules will revert back to normal under which the allowance is only tax-free were paid by the employer.

If an employee wants to claim a higher deduction for use of home as an office, they will need to keep records of all expenses such as light and heat, water and telephone bills to support their calculation on an apportionment between private and business use.

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This is because such workers may inadvertently become resident in Scotland for tax purposes where income tax rates are considerably higher than in the rest of the UK for medium or high earners. For example, someone earning £50,000 per annum, who is Scottish tax resident will actually pay approximately £1,500 more in income taxes, than someone who is resident in the rest of the UK.

Scotland tax status rules

If you live in Scotland for 183 days or more in the tax year (i.e. between 6 April 2020 – 5 April 2021), you will be Scottish tax resident for the whole year and be liable to Scottish taxes on all of your income for the year.

It is also possible where someone has homes both in Scotland and anywhere else in the UK could become Scottish tax resident even if they spend less than 183 days in Scotland. This is because of the ties tests being: (a) family ties; (b) social links; (c) personal property. These, in Scotland, are held to be more substantive than the ongoing ties retained in the rest of the UK.

Workers in this position should consider contacting HMRC about having their PAYE tax code changed to collect Scottish income tax from their pay.

However, lower earners who relocate to Scotland may benefit from slightly lower tax rates than those based in other home nations.

On 4 March 2020 the Scottish Parliament set the following income tax rates and bands for 2020 to 2021:-

Over £12,500 – £14,585 Starter Rate 19%
Over £14,585 – £25,158 Scottish Basic Rate 20%
Over £25,158 – £43,430 Intermediate Rate 21%
Over £43,430 – £150,000 Higher Rate 41%
Over £150,000 Top Rate 46%

The first band assumes individuals are in receipt of the Standard UK Personal Allowance.

Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.

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Tier 2 Lockdown Business Grants

Set out below is an outline of some of the measures ahead of more detail coming to hand:-

Cash Grants

Hospitality, leisure and accommodation businesses operating under Tier 2 restrictions will be able to apply to receive cash grants from local authorities as part of expanded financial support to help businesses weather the difficult winter months ahead even if they are not legally closed.

These grants will be worth up to £2,100 a month while Tier 2 restrictions are in place in
recognition of limits regarding the number of people who can meet indoors (rule of six) and the
10pm curfew. Such grants will be available retrospectively back to August for areas which have
already been under similar rules.

Job Support Scheme (JSS)

The Scheme which has been altered will come into effect on November 1 and will run until April
2021 is simplified and more generous with staff only needing to work one day a week to be eligible
and the contribution employers are to make is being significantly reduced to pay 5% of unworked
hours with the government contributing the balance.

Self-Employment Income Support Scheme (SEIS)

The grants are being doubled from 20% to 40% meaning the maximum grant will increase from £1,875 to £3,750, over three months. The second grant will cover a three-month period from the start of February until the end of April 2021.

Tier 2 Lockdown in South East England

Joining many other places in England, from midnight on Friday 16 October the whole of London (all 32 Boroughs), parts of Essex and Surrey moved from Tier 1 to Tier 2 Covid-19 restrictions.

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