By Mel Hackney

This year could be more important than ever to know what liabilities you may face in January, with many businesses and individuals facing cash flow issues due to Covid.

HMRC announced in March 2020 that they would waive interest on the taxpayer delaying their second payment on account towards 2020/21 tax year from the usual due date on 31 July 2020 to 31 January 2021.

However, this delay means that taxpayers may need to make a significant payment to HMRC by 31 January 2021, which means finding out the final 2019/20 liability through the prompt completion of self-assessment is key this year.  

If the taxpayer is unable to make the full payment due on 31 January 2021, they should consider a time to pay arrangement with HMRC.

In September 2020 it was announced that, if the taxpayer is unable to make the full payment due on 31 January 2021, they can consider a time to pay arrangement. This is applied for through one of two ways, depending on the level of outstanding liability.

Self-assessment taxpayers who have a payment to make in January of up to £30,000 can use a self-service facility in order to agree a plan with HMRC to spread their payment over 12 months, where as those with liabilities of more than £30,000 can also access time to pay to spread their payments, but they must contact the time to pay helpline to do so.

If you have not completed your personal tax return yet, get in touch and we can help.

By Emma Hooper

The Job Retention Scheme (JRS) is coming to an end on 31 October and will be replaced with a new wage subsidy scheme called the Job Support Scheme (JSS). The JSS will begin on 1 November 2020 and will run for 6 months, aiming to support employees and businesses by topping up salaries where returning to work full-time is still not viable.

The JSS is completely independent of the JRS, meaning neither the employee nor employer needs to have previously used the JRS to be able to make a claim through the JSS.

Who is eligible?

All small and medium sized businesses are eligible, as well as larger businesses who can prove revenue has been negatively impacted by COVID-19.

Employees must be able to work at least one-third of their normal hours to be eligible.

What financial support is available?

For the unworked hours, the government and employer will each be responsible for paying one-third of the employee’s remaining wages. This means the employee will receive at least 77% of their normal pay.

The contribution payable by the JSS will have a monthly cap of £697.92.

Employer’s NIC and pension payments will not be covered by the JSS and will be payable by the employer.

An example

If an employee who usually earns £1,000 a month has only worked 50% of their normal hours, their normal pay will be reduced to £500. The government will then pay one-third of the unworked hours, being £166.67, and the employer will pay the same. The total amount the employee will therefore receive will be £833.34.

If you have any questions about the JSS or would like us to process claims on your behalf, please let us know, as this is a service we provide.

by Steve Wiltshire

I mowed my lawn last week.

Amidst all the gloom surrounding the crisis currently facing the world, how lovely it has been to see some sunshine over the last few weeks.  I love this time of year, when lighter evenings and brighter, warmer days make us feel more inclined to be out in the open air.

Looking out of the window, I decided that a good tidy up of the lawn would help my mind to feel more ordered as I look at the view from my desk, and get some fresh air in my lungs during this enforced period of working from home.

Hauling the mower at the back of the shed, I put in some fresh petrol, and tried to start the engine.

But it didn’t want to start.  After several minutes of increasingly fatigued tugging at the starter cord, the engine reluctantly came to life, spluttering unhappily.

I adjusted the wheels to their highest setting, so as not to overwork the mower as it tackled the long grass, and one of the front ones was stuck.  I eventually freed it, and began to move around the lawn, but the wheel didn’t want to stay in place, seemingly determined to keep moving back to its preferred low, ‘cricket pitch at the height of summer’ level, repeatedly sending the mower off course without notice.

And that was when it occurred to me: “Perhaps this is the year for a new mower!”

It’s the thought I have every year during the first mow of the season.  The business case is certainly there: I’ve had this trusty old mower for many years, and I’ve had good use out of it.  Yes, buying a replacement one would mean some investment, but it would make mowing the lawn so much easier.  It’d be quicker for a start – no more struggling to get it started at the beginning of the season, and it would be much more willing to move in the direction I want it to.  And I’d be much happier with the state of the lawn afterwards too.  Which would make me more content when I’m back at my desk looking out of the window.

But every year, what do I do about it?  Nothing.

Sure, I have a look online at the mowers I might buy, and perhaps even doing some price comparisons on a particular model.  But I never actually buy one.  “Well, I’m busy you see.”  “…And the lawn needs mowing now, I’ll just use the old one this time”.  “Perhaps I’ll order a new one next week…”

Then every week, I have the same fight with the starter cord, the same wrestle to make it go in the direction I want, and the same continual need to adjust the height of the front right-hand wheel so that the lawn doesn’t end up a mess at the end of the day.

You might have the same situation with your accountants.  You’ve been with them for years, and you trust them.  Sure, they might seem unhurried to get under way with your accounts and tax return once the tax year has ended, but they get going eventually.  And the job they do is fine – not great, and not exactly the way you’d like it done – but it’s fine.  And you do find yourself having to step in and make sure they’re going in the direction you want them to.  And changing to a new accountant would need you to invest lots of time and effort too, wouldn’t it?

You go through a similar thought process every year, but stick with the status quo, even though you know you’ll wish you’d moved when you find out how much tax you owe at the last minute in January… again.  After all, you did last year.

At Frost Wiltshire, we’re different.  We won’t try to sell you the idea that your accounts or tax return process is going to excite you.  But you can be assured of dealing with people who think that the process needn’t be boring.  And we certainly believe that the client experience should be hassle-free – and maybe even a little bit enjoyable.  We will agree a clear timetable with you at the outset, tell you exactly what we need from you, and aim to get your accounts and tax return sorted swiftly after the end of the tax year, so you know your liability in plenty of time and can plan for it.

I’ve ordered my new lawn mower.  Perhaps this will be the year when you make the change too.  Go on… get in touch!

 

Photo by Fauzan Saari on Unsplash

By Mel Hackney

In the past, whenever a client has posed the question “….and how about a company car?” (usually with a hopeful glint in their eye), I have always been pretty quick to quash their dream of a sparkling new Jaguar, paid for by their company, being a brilliant, tax efficient benefit of business ownership.

Up until now.

From 6 April 2020, the taxable benefit of an electric company car is going down to nil.  This means that a director (or employee) of a company can use an electric car owned by the business with no personal tax liability arising.  In addition, the company will suffer no Class 1A National Insurance on the benefit either.  Although this is set to rise very slightly from 2021, compared to previously this is potentially an extremely tax efficient way of remunerating employees or owners.

Not only does the employee have the unrestricted use of a car with no income tax or national insurance arising, the company also gets a corporation tax deduction in the year of purchase.  If the car is new, the full cost can be deducted from profit when working out corporation tax.  So, for example, if the company buys a car for £40,000, the corporation tax saved in the year of purchase would be £7,600.  Currently, this tax saving is only available until April 2021.  But it’s possible that this will be extended into future years.

The array of electric cars available, such as the Jaguar I-PACE, is increasing all the time.  But if a fully electric car is unavailable, or unsuitable for your needs, the tax rules for ultra-low emissions cars with CO2 emissions of less than 75g/km are still pretty attractive.

So perhaps the time has come to splash out on that new Jaguar.  And with the blessing of your accountant too.  How times have changed.

If this might be of interest to you, please get in touch – we’d be happy to discuss the options with you.

by Steve Wiltshire

This week, HMRC will begin to contact people who may be eligible for the Self-Employment Income Support Scheme (‘SEISS’).

The scheme, which will provide a taxable grant worth 80 per cent of a self-employed individual’s average trading profits up to a maximum of £7,500, will be paid in a lump sum by the start of June.

 Eligibility

HMRC has developed an online tool that allows the self-employed and their accountants, to assess whether they are eligible for the funding.  You can access the tool here.

 Making a claim

The claims portal will open on 13 May 2020.  It’s important to note that it will be down to each individual to make their own claim – agents cannot do this on their behalf.  HMRC has reassured taxpayers that the process will be simple and that eligible individuals will receive the grant in their bank account by 25 May, or within six working days of completing a claim whichever is later.

 Any questions?

If you need help checking whether you are eligible, or with calculating your average trading profits and income for the purposes of a claim, please get in touch – we’ll be happy to help.

 

Photo by Matthew Waring on Unsplash

by Emma Hooper

The Coronavirus Job Retention Scheme went live yesterday, with over 140,000 businesses applying for the support within 24 hours.

The scheme is available for businesses that, as a result of Covid-19, cannot maintain their current workforce and would be forced to make employees redundant as a result. These employees need to be furloughed by written communication to be eligible.

The Government will be providing 80% of the employee’s usual monthly wage up to £2,500 a month. Employer National Insurance contributions and employer pension contributions (at the minimum percentage required) will also be reimbursed to the business. Once a claim has been submitted, HMRC plan to pay the amounts directly to the business bank account within 6 working days.

At Frost Wiltshire we want to make this as smooth as possible for our clients. We have a template furlough letter that can be issued to your employees if needed and will be making claims on behalf of all our payroll clients to help ease the financial pressures during this difficult time.

If you have any questions regarding the scheme please contact our team who will be more than happy to help by emailing payroll@frostwiltshire.co.uk.

 

image by Finn Hackshaw on Unsplash

By Emma Hooper

The Government has announced a temporary change to VAT payments as a way to help businesses manage cash flow during this difficult time. Any VAT liabilities becoming due between 20 March 2020 and 30 June 2020 can now be deferred, with payment needing to be settled on or before 31 March 2021.

As of now (3 April 2020) any VAT payments becoming due after 30 June 2020 will be payable as normal. But as things are constantly changing and uncertainty over the COVID-19 situation continues, these measures may be extended in the future.

It’s important to remember that whilst the VAT payments can be deferred, the return still needs to be submitted on time to avoid any late filing penalties.

If you’d like to take advantage of the VAT deferral and you currently pay by Direct Debit you will need to contact your bank and get this cancelled, otherwise the payment will be automatically taken.

If you have any questions around the deferral of VAT payments please contact emma.h@frostwiltshire.co.uk

by Lydia Westmore

The outbreak of Coronavirus will inevitably impact all of our businesses.  In the short term, the current situation is likely to have a significant impact on cash flow, with loss of revenues and productivity.  Government support for impacted businesses is coming, but careful management of your short-term cash flow is essential for decision making such as prioritising payments, taking on new debt and negotiating payment plans with creditors.

An industry standard is to use a rolling 13-week cash flow forecast, which enables you to continually track your current cash position and estimate your future inflows and outflows, as well as run various ‘what if’ scenarios to prepare for these uncertain times.

A fully populated and working cash flow forecast demonstrates your active cash management approach and could be shared with your bank, HMRC or other stakeholders.

We have developed such a forecast model, which we can help you to implement quickly and easily, helping you to gain some welcome clarity in these very challenging circumstances.

If you would like to find out more, please get in touch with Lydia by email at lydia@frostwiltshire.co.uk or on 01454 529 529.

 

image: fabian blank

In these uncertain times, we want to reassure you that Frost Wiltshire remains open for business and available to help you.

As a paperless business with robust IT arrangements for remote working, we are confident that we can continue to provide an excellent service to our clients, with minimal disruption as all members of the team work from home for the foreseeable future.  Telephone calls to the office will be diverted to us, emails will be answered as usual and, where appropriate, we will conduct meetings normally done face-to-face via Zoom.

We do ask that you do not visit or send any paperwork to our office for the foreseeable future.

We recognise this is an extremely difficult period, so please do not hesitate to get in touch if you have any questions regarding your business or finances.

To help businesses navigate the coming months, we are developing a simple-to-use short-term cash flow forecasting tool which will be available soon; if this may be of interest to you, please get in touch and we can provide more details.

In the meantime, please find below a summary of the latest information (as of 1 April 2020) provided by the government and HMRC, which may be of relevance and assistance to you.

Whilst we may not be able to advise on some of these areas (particularly those not directly related to your accounts or tax compliance affairs), we will do our best to support and guide you, and will continue to update our website with latest news.

What are the latest government support offerings for business?

These include:

• Government grants to cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis. Find out more information about this here.

• Government grants to cover 80% of self-employed income up to a level of £2,500 per month for a three month period. Find out more about this here.

• In very specific circumstances, it is possible that an extension to statutory accounts filing deadlines will be available if this is anticipated due to ill health. If you believe this applies, please contact us for more details. Please note that, as yet, there are no extensions to filing deadlines of statutory accounts due to other circumstances outside of this.

• HMRC Time to Pay scheme which may enable businesses and individuals in temporary financial distress as a result of Covid-19 to delay payment of outstanding tax liabilities. Find more about this here.

• Self-assessment tax payments on account due on 31 July 2020 have been deferred to 31 January 2021. Find out more about this here.

• VAT payment deadlines have been deferred, meaning businesses will not need to make VAT payments until the end of June 2020. Businesses will then have until the end of the 2020/21 tax year to settle any liabilities that have accumulated during the deferral period. Find out more about this here.

• Small and medium sized business will be able to reclaim statutory sick pay (‘SSP’) for absence due to COVID-19. For businesses with fewer than 250 employees, the cost of providing 14 days of SSP per employee will be refunded by the government in full. More information on this can be found here.

• For businesses in retail, hospitality and leisure, business rates will be waived for 12 months for 2020/21. More information can be found here.

• Grants to small businesses eligible for Small Business Rate Relief will be increased from £3,000 to £10,000. Please see more information here.

• Further £25,000 grants for retail, hospitality, and leisure businesses operating from smaller business premises defined as those within a rateable value between £15,000 and £51,000. Please see here for more details.

• The Coronavirus Business Interruption Loan Scheme expanded from £1.2m to £5.0m with an interest waiver for first 6 months. As well as loans, there are many other types of finance supported by the programme, depending on the provider and will offer more attractive terms for both businesses applying for new facilities and lenders. For further details on this, please follow the links here and here.

• A new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans. More details can be found here.

• Potential availability of insurance claims for businesses advised to close are available; please see here.

If you have any questions, please do not hesitate to contact one of the team.  Our email address is hello@frostwiltshire.co.uk and our telephone number is 01454 529529.

We wish you, your families and your businesses the best of luck and health in these challenging times.

By Mel Hackney

Entrepreneurs’ relief (ER) is a relief applied to the sale of certain business assets or shares under qualifying circumstances. The relief is generous; any taxable gain generated is taxed at 10% rather than 18% or 28%. A common example of when this may arise is when closing a company down and extracting funds.

There has been much in the press over the past few weeks about ER being at risk in the upcoming budget, and whether it might be restricted or even abolished altogether.

At this point in time, the implementation options appear to be:

1. The Chancellor will make his Budget speech on the 11 March and it is possible that he will announce immediate changes to ER;

2. The new tax year begins on 6 April, and it is probably more likely that if there is a Budget announcement that it will be effective on disposals after 6 April, (although there might be a provision that also captures transactions from 11 March that have been artificially constructed as an anti-avoidance move)

3. There are no immediate changes, and any change is implemented from a later date following a consultation process (such as Royal Assent for the Finance Act 2020, or 6 April 2021).

As such, until 11 March there is little which we can ascertain. Alternatively, the Government may simply announce a review or consultation process. If you believe that the potential new measures may affect you and would like further information or advice, please do not hesitate to contact us.