27thNov
News article

Business survival hanging by a thread in toughened tiers, warns CBI

Many businesses will struggle to survive despite the end of lockdown, according to the Confederation of British Industry (CBI).

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Many businesses will struggle to survive despite the end of lockdown, according to the Confederation of British Industry (CBI).

Prime Minister Boris Johnson has confirmed that all parts of England will see the end of the national lockdown on 2 December. Gyms and non-essential shops will be allowed to re-open while spectators will be allowed to return to some sporting events, and weddings and collective worship will resume.

However, three-tiered regional measures will return from 2 December and each tier will be toughened.

Commenting on the new restrictions, Matthew Fell, Chief UK Policy Director at the CBI, said: 'For many businesses in England, going into toughened tiers while waiting for a vaccine will feel like suspended animation.

'Some parts of the economy, such as retail, can begin to re-open and look towards a recovery. It gives our high streets a chance to rescue some of the vital festive trading period.

'But for other businesses the ongoing restrictions in tiers two and three will leave their survival hanging by a thread. Hospitality will remain frozen. And supply chains that cross regions in different tiers will be hit even if they don't face direct restrictions.'

26thNov
News article

Chancellor presents Spending Review

On 25 November Chancellor Rishi Sunak delivered his latest Spending Review to the House of Commons, and stated that the coronavirus (COVID-19) pandemic has caused 'lasting damage' to the UK economy.

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On 25 November Chancellor Rishi Sunak delivered his latest Spending Review to the House of Commons, and stated that the coronavirus (COVID-19) pandemic has caused 'lasting damage' to the UK economy.

The economy is forecast to shrink by 11.3% this year and is not expected to return to its pre-pandemic size until the end of 2022. Government borrowing is also expected to rise to its highest level ever outside of wartime. The Chancellor revealed that the government has already provided £280 billion to help the UK combat COVID-19, and said that 'the costs of inaction would have been higher'.

Mr Sunak said: 'We have a responsibility, once the economy recovers, to return to a sustainable fiscal position. This is an economic emergency. That's why we have taken, and continue to take, extraordinary measures to protect people's jobs and incomes.'

In the Spending Review, the Chancellor announced a number of measures, including increases to the National Minimum Wage (NMW) and National Living Wage (NLW) rates. The NMW will rise to £8.36 per hour from 1 April 2021, whilst the NLW will rise to £8.91 per hour and will be extended to 23 and 24-year-olds for the first time.

The Chancellor also announced that 1.3 million public sector workers will see their pay frozen in 2021/22; the overseas aid budget will be reduced by £4 billion; and a new £4 billion 'levelling up' scheme that will fund the upgrading of local infrastructure across the UK.

25thNov
News article

Applicants for third SEISS grant will face new test, ICAEW warns

Applicants for the third Self-employment Income Support Scheme (SEISS) grant will face a new test as the government tightens eligibility criteria, warns the Institute of Chartered Accountants in England and Wales (ICAEW).

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Applicants for the third Self-employment Income Support Scheme (SEISS) grant will face a new test as the government tightens eligibility criteria, warns the Institute of Chartered Accountants in England and Wales (ICAEW).

The guidance for the third SEISS grant has been published ready for the portal to open for claims on 30 November.

To qualify for SEISS grants, businesses must be adversely affected due to the coronavirus (COVID-19). They must either be currently trading but be impacted by reduced demand, or have been trading but be temporarily unable to do so due to COVID-19. 

The latest guidance on checking if you can claim a grant and new guidance on how trading conditions affect eligibility include an additional test. This requires the claimant to intend to continue to trade and reasonably believe there will be a significant reduction in their trading profits due to reduced activity, capacity or demand or inability to trade due to COVID-19.

The ICAEW said: 'For many taxpayers, for example those that use a 31 March or 5 April accounting date, the significant reduction of trading profits will be expected to appear in the results they report on their 2020/21 tax return. However, some taxpayers, for example those that use a 30 April accounting date, will not report the trading results for the relevant period until their 2021/22 tax return.'

Claimants can check their eligibility for the SEISS here.

24thNov
News article

ATT calls for clarity on virtual seasonal parties

The Association of Taxation Technicians (ATT) is calling for guidance from HMRC on the status of virtual office seasonal parties this year.

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The Association of Taxation Technicians (ATT) is calling for guidance from HMRC on the status of virtual office seasonal parties this year.

The ATT is asking for clarity on whether a 'virtual party' – particularly one that includes a party box – will be eligible for the usual tax exemption that applies for annual parties. Current rules allow employers to spend up to £150 per head (including VAT) towards the costs of an annual function such as a seasonal party, without creating a tax liability.

To qualify the party must be an annual event which is open to all staff generally, or all staff at a specific location, if the employer has more than one location. If the employer has more than one annual event in a tax year, for all the events to be tax-free the combined cost per head must be under £150.

The ATT has warned that with employers considering alternative ways to express seasonal greetings and boost morale, online events and so-called 'virtual parties' could create unintended tax consequences.

Jeremy Coker, President of the ATT, said: 'It is a pity that HMRC are still on mute about virtual Christmas parties.

'There have been suggestions that a 'virtual party' is not really a party for tax purposes – even though so many other activities such as conferences and training have been moved online.

'We are also concerned that HMRC will seek to split out the cost of any food, drink or party favours sent to employees' homes as a party box to accompany the online event, and treat this element as a taxable benefit because some employees could opt out of the event itself.'

23rdNov
News article

HMRC begins 'Eat Out to Help Out' compliance checks

HMRC has started writing to 4,000 businesses in the hospitality sector requesting them to verify their claims made under the government's Eat Out to Help Out scheme.

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HMRC has started writing to 4,000 businesses in the hospitality sector requesting them to verify their claims made under the government's Eat Out to Help Out scheme.

The compliance checks are part of an effort to recover money paid out in error, HMRC said. Treasury figures revealed that more than 84,700 food and drink establishments took part in the Eat Out to Help Out scheme, which offered customers a 50% discount on sit-down meals purchased on Mondays, Tuesdays and Wednesdays in August.

130,000 claims were recorded under the scheme, with an estimated cost of £522 million. HMRC has revealed that around 4,000 claims were made in error, and it is now writing to those businesses that submitted the claims to request that they check their records.

HMRC is giving affected businesses 60 days to respond to the letter. Businesses that fail to respond may be subject to a formal compliance check.

In a statement, HMRC said: 'We understand mistakes happen, particularly in these challenging times. This means we will not look for innocent errors and small mistakes for compliance action.'

20thNov
News article

Self assessors warned to watch out for scammers posing as HMRC

HMRC has warned self assessment taxpayers to be alert to the danger of scammers posing as the tax authority in the lead up to the tax return deadline.

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HMRC has warned self assessment taxpayers to be alert to the danger of scammers posing as the tax authority in the lead up to the tax return deadline.

Every year HMRC issues thousands of SMS messages and emails as part of its push to remind people to file before the 31 January deadline. HMRC says it is aware that fraudsters use calls, emails and texts to contact customers.

In the last 12 months, it has responded to more than 846,000 referrals of suspicious HMRC contact from the public and reported over 15,500 malicious webpages to internet service providers so that they can be taken down.

Many scams target customers to inform them of a fake tax rebate or tax refund. The imposters use language intended to convince the customer to hand over personal information, including bank details, in order to claim the refund.

Karl Khan, Interim Director General for Customer Services at HMRC, said: 'We know that criminals take advantage of the self assessment deadline to panic customers into sharing their personal or financial details and even paying bogus 'tax due'.

'If someone calls, emails or texts claiming to be from HMRC, offering financial help or asking for money, it might be a scam. Please take a moment to think before parting with any private information or money.'

19thNov
News article

£1 million Annual Investment Allowance cap extended for a year

The Treasury has confirmed that the £1 million cap on the Annual Investment Allowance (AIA) is to be extended for an additional year as the government continues to look at ways to stimulate the economy.

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The Treasury has confirmed that the £1 million cap on the Annual Investment Allowance (AIA) is to be extended for an additional year as the government continues to look at ways to stimulate the economy.

The AIA provides a tax write off against profits for expenditure incurred on plant and machinery by businesses and owners of commercial property.

Businesses can now continue to claim up to £1 million in same-year tax relief through the AIA for capital investments in plant and machinery assets until 1 January 2022. The temporary £1 million cap was originally due to revert to £200,000 on 1 January 2021.

Commenting on the extension, Jesse Norman, Financial Secretary to the Treasury, said: 'It is vital that we support business through the difficult months ahead.

'Extending the AIA's £1 million cap will give businesses the confidence they need to invest into next year, helping them to grow whilst benefitting the wider economy too.'

18thNov
News article

Contactless payments reached record level in August

Contactless payments via debit cards reached a record level in August, accounting for 62% of all debit card transactions during the month, according to data released by UK Finance.

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Contactless payments via debit cards reached a record level in August, accounting for 62% of all debit card transactions during the month, according to data released by UK Finance.

UK Finance found that 46% of all credit card transactions were contactless during August, representing an increase of 14.6% when compared to the previous month.

The easing of lockdown restrictions and the government's 'Eat Out to Help Out' scheme, combined with the increased £45 contactless spending limit, boosted all contactless card transactions in August by 7%, the data revealed.

Eric Leenders, Managing Director of Personal Finance at UK Finance, said: 'As lockdown restrictions continued to be eased in August, we saw record numbers of customers choosing to make contactless payments using debit cards. Contactless card transactions using either debit or credit cards also increased compared to July, suggesting that consumers are taking advantage of the £45 contactless spending limit.

'Meanwhile, the amount of spending on UK debit cards fell slightly in August following a record high in July but remained strong at £58.4 billion. 

'The percentage of credit card balances attracting interest and the annual growth rate of outstanding balances on credit cards continued to decline – the latter dropping by 12.6% over the 12 months to August.'

17thNov
News article

HMRC confirms MTD for corporation tax to be mandated from 2026

In a new consultation HMRC has confirmed that Making Tax Digital (MTD) for corporation tax (CT) (MTD for CT) will not be implemented until 2026 'at the earliest'.

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In a new consultation HMRC has confirmed that Making Tax Digital (MTD) for corporation tax (CT) (MTD for CT) will not be implemented until 2026 'at the earliest'.

The consultation considers how the principles created for MTD could be established for companies within the charge to CT. It outlines the potential design of the MTD for CT system and provides companies with information in regard to what may be required of them following the introduction of MTD for CT.

HMRC is seeking feedback on the plans from companies and agents.

Commenting on the consultation, Tina Riches, Chair of the joint Association of Taxation Technicians (ATT) and Chartered Institute of Taxation (CIOT) Digitalisation and Agent Services Committee, said: 'We are disappointed that the consultation presupposes that most entities within the charge to CT should be within the scope of MTD before the costs and benefits arising to different parts of the population have been established.

'If a key purpose of MTD is to encourage taxpayers to become digital then it is not necessary to extend it to CT, as a large proportion of companies are VAT registered and so already in MTD for VAT, or using digital records anyway.'

The consultation runs from 12 November 2020 to 5 March 2021. The details can be found here.

16thNov
News article

Wealth gap widening as result of coronavirus pandemic, research suggests

Research carried out by think tank the Centre for Enterprise, Markets and Ethics (CEME) has suggested that the UK's wealth gap is widening as a result of the ongoing coronavirus (COVID-19) pandemic.

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Research carried out by think tank the Centre for Enterprise, Markets and Ethics (CEME) has suggested that the UK's wealth gap is widening as a result of the ongoing coronavirus (COVID-19) pandemic.

Around a third of individuals now have less than £1,500 in savings, the CEME found. In the three months to September, 314,000 workers lost their jobs as a result of the pandemic. Redundancies have caused many households to make use of savings they have stored up, according to the think tank.

However, a proportion of workers have strengthened their financial situation by saving more of what they earn. The CEME revealed that savings ratios have risen from 5% in 2019 to almost 30% in 2020.

Commenting on the research, Andrei Rogobete, Associate Director of the CEME, said: 'Financial inequality is rising fast against a historic background of big differences between the wealth of the rich and the poor. The so-called wealth gap is becoming a chasm as lockdowns inflict the greatest pain on people with low paid, insecure jobs.'