Moore Accountancy Update

LOOKING FORWARD TO 2021

2020 has been a tough old year, hasn't it?

But with an end in sight with these vaccines, hopefully there will by some sense of normality by Q2. Who knows what "normal" will look like, but we can hope it will enable individuals and businesses to bounce back and the economy to remain stable rather than fall into a recession.

Our December newsletter usually has a picture of everyone in the office with their Christmas jumpers on, but we have a virtual zoom picture instead to entertain you :)

We will be closed for the Christmas period from lunchtime on Wednesday 23rd December, reopening on Monday 4th January.
Emails will not be responded to during this time of closure; and any deadlines for December payroll and VAT returns will be sent out imminently so that plenty of notice is given.

Finally, we would like to wish you a very "Merry Christmas" and look forward to working with you in 2021.

If you have missed any of our previous newsletters, then our website has a backlog of them here.

SELF EMPLOYED INCOME SUPPORT SCHEME (SEISS) GRANT NOW OPEN

The rules on who is eligible to claim are different to those for the previous SEISS grants.

However, a Self Assessment tax return for the tax year 2018-19 showing self-employment income (unless one of the existing exceptions applies) will still need to have been submitted in order to claim.
The third grant will be based on 80% of three months’ average trading profits, paid out in a single taxable instalment capped at £7,500, and will cover the period from 1/11/20 - 29/1/21.

As previously, the third grant will also be subject to Income Tax and self-employed National Insurance and must be reported on 2020-21 SATRs, due by 31/01/22.

To make a claim for the third grant, claimants must – as previously:
•    be self-employed or a member of a partnership – they cannot claim the grant if they trade through a limited company or a trust
•    have traded in both the tax years 2018 to 2019 and 2019 to 2020.

For this third SEISS grant claimants must also now:
•    either be currently trading but are impacted by reduced business activity, capacity or demand, or have been previously trading but are temporarily unable to do so due to coronavirus
•    declare that they intend to continue to trade, or restart trading, and that they reasonably believe that the impact on their business will cause a significant reduction in their trading profits
•    only claim if the reduction in profits is caused by reduced business activity, capacity or demand, or inability to trade due to coronavirus – reduction in profits due to increased costs (such as having to buy masks) does not make a business eligible for the third SEISS grant.
When deciding whether the reduction is significant, claimants will need to consider their wider business circumstances.
Their business must have been impacted on or after 1/11/20. Claimants must keep evidence that shows how their business has been impacted by coronavirus, resulting in reduced activity, capacity or demand, or a temporary inability to trade.

More information and examples are available here - https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#howmuch

HOW ABOUT A VIRTUAL CHRISTMAS PARTY?

HMRC are not the Grinch after all. They have recently announced that employers may arrange a “virtual” Christmas party this year and there will be no taxable benefit for employees provided that all staff are invited and the cost per head does not exceed the normal £150 limit.

Maybe keep it to a modest affair and let’s have a big bash when the Coronavirus pandemic is over as we are allowed more than one event a year within the £150 limit.

PLUS CHRISTMAS GIFTS OF UP TO £50 TO EMPLOYEES

If we produce your year end Limited Company accounts, you no doubt have us asking about "Trivial Benefits".
Remember that certain gifts to staff at Christmas are tax free if structured correctly. Employers are allowed to provide their directors and employees with certain "trivial" benefits in kind tax free.

This exemption applies to small gifts to staff at Christmas, on their birthday, or other occasions and includes gifts of food, wine, or store vouchers.

There are of course a number of conditions that need to be satisfied to qualify for the exemption.

Conditions for the exemption to apply

the cost of providing the benefit does not exceed £50
the benefit is not cash or a cash voucher
the employee is not entitled to the benefit as part of any contractual obligation such as a salary sacrifice scheme
the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)

We recommend vouchers for John Lewis or Amazon as an easy gift, as employees can purchase a range of products to suit their needs.

MAKE A CLAIM IF YOU ARE WORKING FROM HOME

With more of us working from home there is good news from HMRC that employees can now make a claim for tax relief to cover some of their costs while they are working from home.

The previous rule for employees was that there had to be a home working arrangement with their employer under which they were required to work from home on a regular basis to be paid £6 a week tax free (£4 a week up to 5 April 2020). This rule has now been relaxed as a result of COVID-19 so that such arrangements are not currently required and employees can also claim tax relief directly from HMRC where their employer does not make the payments.

£312 a year tax free is equivalent to £538 gross for a higher rate taxpayer. The payments are tax deductible for the employer and not liable to national insurance contributions.

Where the employer does not make the payments to the employee there is a new claims portal on the HMRC website so that the employee who is working from home can claim to deduct £312 from their employment income. That would generate a £124.80 tax refund for a higher rate taxpayer or £62.40 if basic rate.

There is a similar tax break for the self employed which provides a deduction from profits of up to £26 a month.

GIFTS TO CHARITY

Where possible taxpayers should “Gift Aid” any payments to charity to provide additional benefit to the charity. Higher rate taxpayers obtain additional tax relief on the grossed up amount donated.

For example, where an individual makes a £20 cash donation to charity the charity is able to reclaim a further £5 from HMRC making a gross gift of £25. Where the individual is a 40% higher rate taxpayer he or she is able to claim a further £5 tax relief under self-assessment, reducing the net cost of their donation to £15.

Note that the donor is required to make a declaration that they are a UK taxpayer and those that have not suffered sufficient UK tax to support the Gift Aid amount will taxed on the shortfall.

Remember that Gift Aid does not just apply to gifts of cash. Many charity shops will now sell donated items on your behalf and are able to treat the sale proceeds as Gift Aided donations. It is also possible to gift quoted securities and land and buildings to charity and claim Gift Aid on the market value of those assets.

KEY DATES

19/12/20 - PAYE & NIC deductions for month ended 05/12/20 (November payroll)

23/12/20 - Last date for signed/approved SATRs to be received by Moore Accountancy in order to request that HMRC collect outstanding tax via the 2020/21 PAYE code

31/12/20 - Corporation tax due for year to 31/03/20

19/01/21 - PAYE & NIC deductions for month ended 05/01/21 (December payroll)

31/01/21 - Corporation tax due for year to 30/04/20

31/12/20 - Deadline for filing 2019/20 self-assessment tax return online and paying your outstanding tax for 2019/20 and first payment on account of 2020/21 tax.
Note that if this liability is no more than £30,000 you can agree with HMRC to spread over the 12 months (please see previous newsletters for guidance on how to arrange this)

For any businesses struggling with payments, please contact HMRC to see if they will agree a Time To Pay arrangement - https://www.gov.uk/difficulties-paying-hmrc

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Moore Accountancy · 1 Northway · Altrincham · Cheshire, WA14 1NN · United Kingdom