The government has further extended Tax-Free Childcare (TFC) to 31 October 2020 for parents who may have fallen below the minimum income requirement as a result of the coronavirus (COVID-19) pandemic.

HMRC confirmed that key workers who may exceed the income threshold for the 2020/21 tax year as a result of working more due to the pandemic will continue to receive support.

The TFC scheme provides families with a £2 government top-up for every £8 they pay into their child's account, up to the value of £2,000 per child, or £4,000 per disabled child. The money can be used towards the cost of qualifying childcare for a child up to the age of 11, or 17 for a disabled child.

Commenting on the matter, Angela MacDonald, Deputy Chief Executive at HMRC, said: 'HMRC has been providing vital financial support to families during a time when it has been needed most, and we will continue to help them as they gradually transition back to a normal life.

'We want to make sure families will not be adversely affected by any abrupt change in circumstances, which is why we have extended available support through TFC to give families that extra boost.'

The Bank of England (BoE) left interest rates unchanged at 0.1% as it predicted a record slump for the UK economy due to the coronavirus (COVID-19) pandemic.

The BoE's Monetary Policy Committee (MPC) voted unanimously to hold rates as it said it expected Britain's economy to take longer to get back to its pre-pandemic size.

The BoE expects the economy to shrink by 9.5% in 2020, which would mark the biggest annual decline in 100 years. However, that is better than its initial estimate of a 14% contraction.

However, the BoE warned that the jobs market recovery would take longer.

In its first official forecast since the pandemic hit, the BoE said the recovery had been 'earlier and more rapid' than it had assumed in May, reflecting a faster easing of lockdown restrictions.

It said spending on clothing and household furnishings was now back to pre-COVID levels, while consumers have carried on spending more on food and energy than before the lockdown.

However, it stated that leisure spending and business investment 'remained subdued', which would weigh on the recovery.

The Institute of Chartered Accountants in England and Wales (ICAEW) has urged businesses to ensure that they understand the interaction between VAT and the government's Eat Out to Help Out scheme.

The new Eat Out to Help Out discount is applicable to food and/or non-alcoholic drinks purchased for immediate consumption on premises, up to a maximum discount of £10 per diner, which includes VAT.

The discount can be used unlimited times and is valid Monday to Wednesday on any eat-in meal for the month of August across the UK. 

HMRC has published guidance which outlines how the scheme operates, including the accounting treatment for VAT. The guidance covers many different situations, such as food purchased with or without alcohol and the interaction with the temporary VAT rate of 5% for the hospitality sector.

In the guidance HMRC also highlights how the £10 cap applies and how it interacts with other offers provided by the serving establishment.

The ICAEW has outlined that VAT will always be due on the whole amount of the bill, including the subsidy received from the government.

The guidance can be read here.

SME manufacturing output volumes fell at the fastest rate on record, according to the latest quarterly Confederation of British Industry (CBI) SME Trends Survey.

The survey of 331 small and medium-sized enterprise (SME) manufacturers reported that output volumes were down by 53% in the three months to July, the worst quarter since October 1988.

In addition, total new orders in the three months to July were down 56%, the quickest pace on record, reflected in the fastest falls on record in both domestic and export orders.

However, business sentiment in the quarter to July improved slightly, following its record pace of decline in April, while firms expect output to recover at a slow pace in the next three months.

Commenting on the figures, Alpesh Paleja, Lead Economist at the CBI, said: 'SME manufacturers faced an exceptionally challenging quarter due to the coronavirus (COVID-19) crisis. While firms believe that the worst of the downturn is behind them, ongoing cashflow issues and tough trading conditions mean that they aren't back on their feet yet. Expectations of another heavy fall in headcounts is a sign of what is to come.

'It's clear that firms need more immediate support, from grants to further business rates relief, to tide them over until demand conditions improve more substantially.'

HMRC recently published guidance on the eligibility requirements for the Job Retention Bonus.

From February 2021, employers will be able to claim the Job Retention Bonus through the gov.uk website. The Job Retention Bonus will be a one-off payment of £1,000 to the employer for every eligible employee that is claimed for. The bonus will be taxable, so the business must include the whole amount as income when calculating their taxable profits for corporation tax or self assessment.

The guidance states that an employer will be able to claim the Bonus for any employees that were eligible for the Coronavirus Job Retention Scheme (CJRS). Where a claim for an employee was incorrectly made, a Job Retention Bonus will not be payable.

All employers are eligible for the scheme, including recruitment agencies and umbrella companies.

The guidance can be read in full here. HMRC stated that additional guidance on the Job Retention Bonus will be published by the end of September.

Data published recently by HMRC has revealed that there has been a significant drop in inheritance tax (IHT) receipts.

According to the data, HMRC collected £5.2 billion in IHT during 2019/20. This represents a decrease of 4% (£223 million) on 2018/19. The data covers the 2019/20 tax year and is based on payments received by HMRC.

The introduction of the main residence nil-rate band (RNRB) is cited as a cause for the decrease.

Commenting on the RNRB, Clare Moffat, Head of Intermediary Development and Technical at insurers Royal London, said: 'If you are a cohabiting couple this will not apply to you.

'In addition, the RNRB can only be used for direct descendants. This means that if you are single, have no children and your property is passing to a nephew that might be your full-time carer, then your estate would only be able to claim the nil-rate band of £325,000. Careful estate planning is vital to avoid nasty shocks and potential huge tax bills.'

The Federation of Small Businesses (FSB) has called for the government to provide further help to employers as the Coronavirus Job Retention Scheme (CJRS) begins to be wound down.

From 1 August, employers have to pay national insurance contributions (NICs) and pension contributions for furloughed employees. Starting from this date the level of the grant will be reduced each month. Employers will take on an increasing proportion of pay for employees who are furloughed.

The CJRS will close at the end of October, and will be followed by the Job Retention Bonus, which will see UK employers receive a one-off payment of £1,000 for each furloughed employee who is still employed as of 31 January 2021.

Commenting on the matter, Mike Cherry, National Chairman of the FSB, said: 'One in five small firms have been forced to let staff go over the last three months. Even with critical emergency measures in place, jobs are sadly being lost in the here and now.

'As we look to the autumn, it's clear that we cannot afford to pull up the business support drawbridge any time soon. Giving firms £1,000 for every employee they bring back from furlough is welcome, but Job Retention Bonus funds won't manifest until next year – jobs are being lost today.'

The FSB is urging the government to help employers in regard to NICs, either through an uprating of the Employment Allowance or an NICs holiday for firms who employ those furthest from the workplace.

HMRC has published details on its refund scheme for taxpayers who made voluntary payments of income tax or national insurance prior to a change in the rules regarding the loan charge.

The loan charge, which came into effect on 6 April this year, applies to anyone who used 'disguised remuneration' schemes. The legislation added a 45% non-refundable charge on all loans advanced through the schemes, unless the individual had agreed with HMRC to settle their tax affairs by 5 April.

The charge mainly affects freelancers and agency workers: however, many of the 50,000 people caught up in the issue are low paid and were persuaded by their employers to join the schemes. The typical sum owing, according to the Loan Charge Action Group, is almost £120,000.

The refund scheme applies to those who settled the tax due with HMRC on or after 16 March 2016 and before 11 March 2020.

Individuals who paid some or all the tax or national insurance contributions (NICs) voluntarily to avoid the loan charge may be eligible for a refund or waiver, and will be contacted by HMRC with details of how to apply.

For certain payments of income tax and NICs, HMRC may refund amounts that were paid in disguised remuneration scheme settlements and waive amounts that may be due if an individual is paying their settlement in instalments.

More information, including how to apply for a refund, can be found here.

Changes to state aid rules mean that more small businesses can benefit from the government's Coronavirus Business Interruption Loan Scheme (CBILS).

As a result of EU rules, previously small firms in the 'undertakings in difficulty' category were unable to make use of the CBILS. From 30 July businesses in undertakings in difficulty with a turnover of less than £9 million and fewer than 50 employees can apply for a loan under the CBILS.

Commenting on the issue, John Glen, Economic Secretary to the Treasury, said: 'Our loan schemes have been a key part in supporting businesses, enabling them to bounce back as we kick start the economy.'

Meanwhile, Chris Wilford, Head of Financial Services Policy at the Confederation of British Industry (CBI), said: 'These eligibility hurdles have been a real stumbling block for many firms across the UK throughout the crisis.

'These were put in place to avoid governments bailing out failing companies, but those rules were established in normal times. They have had a real impact on the ability of some high-growth firms and those with more complex structures being able to access the loan schemes.'