Useful Information - 2021

01/07/2021 - Self-Employment Income Support Scheme (SEISS) Grant 5

Sorry this is going to be a long one as there are a lot of rules surrounding this grant...  

Below is the link to the appropriate page on HMRC's website

Work out your turnover so you can claim the fifth SEISS grant - GOV.UK (www.gov.uk)

How Can you Claim the 5th Self-employed Grant?

To claim the SEISS 5th Grant, you must declare that:

• you intend to continue to trade
• you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus from May 2021 to September 2021

You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.

HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.

The grant is taxable and will be paid out in a single instalment.

Who Can Claim the SEISS 5th Grant

To be eligible for the SEISS 5th grant you must be a self-employed individual or a member of a partnership.

When you must have traded

You must have traded in the tax years:

• 2019 to 2020 and submitted your tax return on or before 2 March 2021
• 2020 to 2021

You must either:

• be currently trading but are impacted by reduced demand due to coronavirus
• have been trading but are temporarily unable to do so due to coronavirus

Your tax returns

To work out your eligibility for the SEISS 5th grant, HMRC will first look at your 2019 to 2020 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.

If you’re not eligible based on your 2019 to 2020 tax return, HMRC will then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020.

Deciding if you can claim

You must declare that:

• you intend to continue to trade
• you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus from May 2021 to September 2021

How the SEISS 5th Grant is Different

The amount of the SEISS 5th grant will be determined by how much your turnover has been reduced in the year April 2020 to April 2021.

The portal to apply for the final self-employed income support scheme grant (SEISS 5) is due to open later this month, but this time traders need to do their homework first or they will fall at the first hurdle.

As was the case for the first four SEISS grants, accountants won’t be permitted to apply on behalf of clients, so a good deal of hand-holding will be required for some traders.

SEISS 5th Grant – Qualifying conditions

When applying for the first two SEISS grants the trader had to make a declaration that their business had been ‘adversely affected’ by the Covid restrictions, which is a term open to much interpretation.

To qualify for the third and fourth SEISS grants the trader also had to declare that their sales had reduced in the qualifying period due to the pandemic, compared to what would reasonably be expected for that period. However, the taxpayer was not asked to supply any figures to back up this assertion that sales were actually less than expected.

We were warned back in June that HMRC was tightening up the turnover test for the fifth SEISS grant and that taxpayers would have to prove their sales had reduced in order to qualify. HMRC has now released guidance on how to work out turnover for this test, but it is not logical and it may well confuse tax advisers and taxpayers alike.

There are four steps to achieve the two figures necessary for the application:

Step 1: 2020/21 turnover

Forget basis periods and accounting periods, what HMRC wants here is the turnover that fits almost exactly into the tax year 2020/21. This is the gross sales received in a 12-month period that started from 1 April 2020 to 5 April 2020 – essentially the sales recorded in that year.

Where the trader makes up their accounts for any period other than the tax year, this turnover figure won’t be the taxable turnover for the tax year 2020/21. However, the HMRC guidance seems deliberately designed to confuse, as it tells the taxpayer to refer to their 2020/21 self assessment tax return to find their turnover figure.

Mercifully the fifth bullet point under “where to find your turnover figure” advises the taxpayer to ask their accountant or tax adviser.

Step 2: Adjustments for grants

HMRC suggests that checking the business bank account for money received for customers is a good way to determine the turnover figure for the required 12-month period.

Where the taxpayer has treated ‘money in’ as turnover they must then deduct any amounts of Covid-related business support grants received from that figure. This includes SEISS and Eat Out to Help Out grants, and any local authority grants. Although these grants are all taxable, and must be included in the taxable profit reported on the trader’s tax return, they are not part of the turnover figure for this exercise.

Commenced or ceased trading

The guidance on turnover appears to have been written by someone who hasn’t read the other conditions for the SEISS grants; it says where the business has started or ceased in 2020/21 the trader should include all the turnover received in the year to April 2021, even if the trade covered less than 12 months. This is surprising as if the trader has ceased trading before 6 April 2021 and doesn’t intend to trade in 2021/22 they will not qualify for the SEISS 5 grant at all.

Similarly, the trader must have been in business before 6 April 2020 and submitted a tax return including self-employed profits for 2019/20 by 2 March 2021, in order to qualify for the SEISS grant.

It is possible that the trader could have several successive or concurrent trades, in which case the sales figures for all trades must be aggregated for the year to April 2021.

Partners

Partners who have no other business are told to use the partnership’s total turnover figure for the year to April 2020, with no adjustment for the proportion relating to the particular partner’s profit share.

Partners who also have another concurrent business, or who joined the partnership in 2020/21, must include only the proportion of the partnership turnover that relates to their profit share in their reference year (see step 3).

Step 3: Reference year

The reference year is used to determine the turnover figure used as the base comparison to the 2020/21 turnover (result of step 2).

For most taxpayers the reference year is the turnover reported on the 2019/20 tax return, but for new partners it will be turnover/ profit share for 2020/21. If 2019/20 was an unusually low year, the reference year turnover is that reported on the 2018/19 tax return.

Note the guidance has now switched to looking at turnover for an accounting period not the turnover received in the tax year. For a business that makes up accounts to 30 April, it will compare the sales booked in:

Reference year: 1 May 2018 to 30 April 2019; to

2020/21: 6 April 2020 to 5 April 2021

Step 4: Compare the figures

Only where the reference year turnover is higher than the 2020/21 turnover (result of Step 2) will the taxpayer qualify for the SEISS-5 grant.

If the 2020/21 turnover has reduced by 30% or more compared to the turnover in the reference period, the grant will be 80% of three months average profits capped at £7,500. In other cases where the reduction in turnover is less than 30%, the grant is 30% of three months average profits capped at £2,850.

Remember in all cases the comparison is of turnover not profits of the business.

When You Can Claim the SEISS 5th Grant

The online claims service for the SEISS 5th grant will be available from later this month (July 2021).

If you’re eligible based on your tax returns, HMRC will contact you in mid-July 2021 to give you a date that you can make your claim.

Claims must be made directly by self-employed individuals and cannot be processed by agents or accountants but we are here to help with all your figures.

13/04/2021 - Torbay Restart Grants

Torbay Council have now opened the application process for the Restart Grants announced in the budget.  If you want to apply you need to go to Restart grants - Torbay Council and select the appropriate link for your business type.

Non-essential retail premises
Non-essential retail premises will receive one-off grants of up to £6,000. Businesses occupying hereditaments (properties) with a rateable value of;

• exactly £15,000 or under on 1 April 2021 will receive a payment of £2,667.
• over £15,000 and less than £51,000 on 1 April 2021 will receive a payment of £4,000.
• exactly £51,000 or over on 1 April 2021 will receive a payment of £6,000.

Hospitality, accommodation, leisure, personal care and gym business premises
Hospitality, accommodation, leisure, personal care and gym business premises will receive one-off grants of up to £18,000. Businesses occupying hereditaments (properties) with a rateable value of;

• exactly £15,000 or under on 1 April 2021 will receive a payment of £8,000.
• over £15,000 and less than £51,000 on 1 April 2021 will receive a payment of £12,000.
• exactly £51,000 or over on 1 April 2021 will receive a payment of £18,000.

06/04/2021 - Self-employed income support scheme 4^th instalment

We are getting nearer to the 4^th instalment of the Self-employed income support scheme (SEISS) which will be available for claims from late April until 31^st May 2021.  This grant will be set at 80% of 3 months’ average trading profits, paid out in a single instalment, capped at £7,500.

The eligibility criteria for this grant are

• You must be a self-employed individual or a member of a partnership.
• You must have traded in 2019 / 2020 and submitted your tax return by 2^nd March 2021 and traded in 2020 / 2021
• You must either:
  • be currently trading but are impacted by reduced demand due to coronavirus
  • have been trading but are temporarily unable to do so due to coronavirus
• You must also declare that you intend to continue to trade and that you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus.

To work out your eligibility HMRC will first look at your 2019 / 2020 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.

If you’re not eligible based on your 2019 / 2020 Self Assessment tax return, HMRC will then look at the tax years 2016 / 2017, 2017 / 2018, 2018 / 2019 and 2019 / 2020.

25/03/2021 - New temporary tax reliefs on qualifying capital asset investments from 1 April 2021

From 1^st April 2021 HMRC will temporarily introduce increased reliefs for expenditure on plant and machinery.

• For expenditure incurred from 1 April 2021 until the end of March 2023, companies can claim 130% capital allowances on qualifying plant and machinery investments.
• Under the super-deduction, for every pound a company invests, their taxes are cut by up to 25p.
• This change makes the UK’s capital allowance regime more internationally competitive, lifting the net present value of our plant and machinery allowances from 30^th in the OECD to 1^st.

There are a lot of conditions surrounding the use of the capital investment allowances so check if your purchases would qualify before making them.

The new Capital Allowances offer

As a result of measures announced at this year’s Budget, businesses will now benefit from four significant capital allowance measures:

• The super-deduction – which offers 130% first-year relief on qualifying main rate plant and machinery investments until 31^st March 2023 for companies.
• The 50% first-year allowance (FYA) for special rate (including long life) assets until 31^st March 2023 for companies.
• Annual Investment Allowance (AIA) providing 100% relief for plant and machinery investments up to its highest ever £1 million threshold, until 31^st December 2021.
• Within Freeport tax sites, companies can access new Enhanced Capital Allowances (ECA+) and companies, individuals and partnerships can benefit from an increased level of Structures & Buildings Allowance (SBA+) for investments until 30^th September 2026.

What are capital allowances?

• Capital allowances let taxpayers write off the cost of certain capital assets against taxable income. They take the place of accounting depreciation, which is not normally tax-deductible. Businesses deduct capital allowances when computing their taxable profits.
• In translating its accounting profits into taxable profits, a business is usually required to ‘add back’ any depreciation, but can instead deduct capital allowances. For example, a corporation tax paying company with accounting profits of £1,000, depreciation expense of £200 and total capital allowance claims of £300 would make the following adjustment:
• Add £200 (depreciation expense) to £1,000 (accounting profits) = £1,200
• Deduct £300 (capital allowances) from £1,200 = £900 (taxable profits)
• Apply the appropriate tax rate, e.g. corporation tax at 19%: £900 x 19% = £171 tax due
• The two main types of capital allowances are:
• Writing Down Allowances (WDAs) for plant & machinery - covering most capital equipment used in a trade; and
• Structures and Buildings Allowances (SBA) - covering the construction and renovation of non-residential structures and buildings.
• The 130% super-deduction and 50% first-year allowance are generous brand new capital allowances for investments in plant and machinery assets. Both will allow investing companies to lower their corporation tax bills.

11/03/2021 - Scam HMRC calls, texts and emails

Having received a very robotic call apparently from HMRC this morning telling me that ‘HMRC is filing a lawsuit against me, and to press 1 to speak to a caseworker to make a payment’, I thought it worth flagging that there are a huge number of scam calls, texts and emails going around at the moment.  This has got worse recently with scams relating to Coronavirus grants as well as the normal HMRC scams.

HMRC provide some useful information on their website Dealing with HMRC: Phishing and scams - detailed information - GOV.UK (www.gov.uk) and I’m sure most of us will recognise some of the examples they provide.

04/03/2021 - The Coronavirus Job Retention Scheme (CJRS) has been extended until the end of September 2021

The Government will continue to pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month, up to the end of June 2021. For periods in July, CJRS grants will cover 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50. In August and September, this will then reduce to 60% of employees’ usual wages up to a cap of £1,875. Employers will need to continue to pay their furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month. They also need to pay the associated Employer National Insurance contributions and pension contributions on subsidised furlough pay from their own funds.

Some good news for people employed since 30^th October 2020, when claiming for periods from 1 May 2021 onwards, eligible employees must have been employed on 2 March 2021 and had a Real Time Information (RTI) submission to HMRC notifying a payment of earnings for that employee by their employer between 20 March 2020 and 2 March 2021.

04/03/2021 - Business Rates in England

How your rates are calculated

Business rates are payable on most non-domestic properties, including buildings part-used for non-domestic activity.

• A property’s rateable value (RV) is based on a Valuation Office Agency (VOA) valuation using open market rental values as of 1 April 2015, which is then multiplied by a centrally set ‘multiplier’.
• The multiplier you need to use may vary based on your company size and location and will indicate the tax liability you will pay in each pound of the estimated rateable value.
• Business rates liabilities for the following tax year will be issued annually by letter via local authorities in February-March.
• You can look up your rateable value, which can be multiplied by the multiplier to calculate liabilities for the applicable financial year.

*Note 1: A higher multiplier rate is applied to properties within the City of London – 52.0p standard rate and 50.7p for small businesses

Reliefs and exemptions

There are several reliefs and exemptions available for qualifying use-classes, industries and rateable value thresholds. In England your local authority will apply reliefs for:

• Exempted buildings
• Empty buildings - for 3 months after the property becomes vacant in England. Notify your local authority when a property becomes vacant.
• Transitional relief - phased billing if your liability changes by more than a certain amount at revaluation.

You can find a full list of exemptions, types of relief for England here

10/02/2021 - New Bounce Back Loan payment options

Bounce Back Loan borrowers will now have the option to tailor payments according to their individual circumstances with the option to delay all repayments for a further six months.

The options available will be:

• extend the length of the loan from six years to 10 at the same fixed interest rate of 2.5%;
• make interest-only payments for six months, with the option to use this up to three times throughout the loan; and
• pause repayments entirely for up to six months. This option is available once during the term of the Bounce Back Loan.

27/01/2021 - Statutory Sick Pay due to Coronavirus

Don't forget that if you have had to pay statutory sick pay (SSP) whilst an employee was off work due to COVID-19 then you may be able to reclaim the cost under the Coronavirus (COVID-19) Statutory Sick Pay Rebate Scheme.

Some of the reasons given where SSP may be reclaimed are where the employees:

• were self-isolating on or after 13th March 2020 because they or someone they live with had symptoms of coronavirus;
• have been shielding at any time since 16th April 2020;
• started self-isolating on or after 28th May 2020 because they were notified by the NHS or public health authorities that they’ve come into contact with someone with coronavirus;
• were self-isolating on or after 6th July 2020 because someone in their support bubble (or extended household in Scotland or Wales) but not their own household had symptoms or tested positive for coronavirus;
• have tested positive for coronavirus since 5th August 2020;
• were self-isolating on or after 26th August because they had been advised to do so by a doctor or healthcare professional before going into hospital for surgery

25/01/2021 - Self assessment penalties delayed until 28th February

HMRC chief executive Jim Harra has announced that self assessment taxpayers will not receive a penalty for tax returns submitted late if they file by 28th February 2021.

HMRC has increased support for taxpayers who may need help with their tax liabilities. Once they have completed their 2019-20 tax return, they can set up an online payment plan to spread Self Assessment bills of up to £30,000 over up to 12 monthly instalments. They can apply for self-serve Time to Pay via gov.uk. Interest will be applied to any outstanding balance from 1st February 2021.

It is worth highlighting that HRMC have NOT announced an extension but have purely said that there will be no late filing penalties if submitted before the end of February. They have also said that interest on any tax liability will be calculated from 1st February 2021 when it is due.

07/01/2021 - 'Wet-led Pub' grant

For those wet-led pubs that were forced to close over the Christmas period and that haven't already claimed the extra £1000 grant don't forget to get your applications in to your local council as soon as possible. The deadline for applications is 31st January 2021.

Like most of the recent grants these will be paid through the local authorities.

05/01/2021 - Chancellor announces £4.6bn in new lockdown support

• One-off top up grants for retail, hospitality and leisure worth up to £9000 per property;

  • £4,000 for businesses with a rateable value of £15,000 or under

  • £6,000 for businesses with a rateable value between £15,000 and £51,000

  • £9,000 for businesses with a rateable value of over £51,000
    We believe that these grants will be paid through the local authorities as has previously been the case.

• £594m discretionary fund to support other businesses impacted by latest lockdown in addition to £1.1bn support already in place giving up to £3000 per business per month and an extension to the Furlough scheme.