TC Group: Government issues further guidance on the fifth Self-Employed Income Support Scheme

The fifth Self-Employed Income Support Scheme (SEISS) grant, which covers the period from May to September 2021, is available to be claimed from late July. If you are potentially eligible, then HMRC will contact you in mid-July.

The qualifying criteria under the fifth tranche of SEISS are very similar to those for the fourth tranche. You must also declare that you intend to continue to trade and reasonably believe that there will be a significant reduction in your trading profits due to COVID from 1st May 2021 to 30th September 2021.

The level of the fifth SEISS grant to be paid will depend on the reduction in your turnover between 2020 and 2021. If the reduction in turnover is 30% or higher, then the grant is 80% of the three-month average profits capped at £7,500, but if the turnover reduction is less than 30%, then the grant is 30% of the three-month average profits capped at £2,850.

The turnover calculation can be complicated; therefore, we suggest you contact your usual TC adviser on 0330 088 7111 to establish these numbers.

Patron: Changes To Furlough Pay – What You Need To Know

The amount employers can claim in furlough pay from the Coronavirus Job Retention Scheme (CJRS) will reduce at the end of June. Below we summarise everything you need to know.

What employers can claim:

  • For periods ending on or before 30th June 2021: 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month;
  • From 1st July 2021: 70% of an employee’s standard salary for hours not worked, up to a maximum of £2,187.50 per month, and will pay the other 10% themselves;
  • From 1st August 2021: 60% of an employee’s usual salary for hours not worked, up to a maximum of £1,875 per month, and will pay the other 20% themselves.

What employers will have to pay:

  • The cost of employer National Insurance and pension contributions;
  • Holiday pay for any holiday that the employee takes (the difference between 80% and 100% of pay);
  • From 1st July 2021: the contributions set out above.

If they choose to, employers can continue to top up wages to 100%.

If you require guidance on any of these changes, please contact our HR team at hr@tc-group.com or your TC adviser on 0330 088 7111.

Chancellor announces tax and spending plans in Budget

As the country continues to deal with the COVID crisis, Chancellor Rishi Sunak announced in his Budget today a broad range of measures to support businesses and households alongside details of how the ongoing support shall be financed.

The business support headlines include:

  • The extension of the Furlough scheme until the end of September at the 80% rate, although employers are required to cover 10% in July and 20% in August and September;
  • The 4th tranche of Self Employed Income Support Scheme (SEISS) will be at 80% of the 3-month average profits and can be claimed from late April;
  • A 5th tranche of SEISS is available for May to September but at a reduced rate depending on the reduction in profits of the business;
  • Business rates holidays for retail, hospitality and leisure will continue to the end of June and at a discount of up to 67% for the remainder of the year;
  • Recovery loan scheme providing loans from £250,000 to £10,000,000 that will be 80% guaranteed by the Government;
  • A super deduction allowance for businesses investing in new plant and machinery from 1st April 2021 to 31st March 2023, giving a deduction of 130% against profits in the year of acquisition or 50% on special rate assets.

In addition to these broad business support measures, the Chancellor outlined details of his sector-specific support:

  • The reduced VAT rate of 5% for the hospitality sector will continue until 30th September 2021. It will then increase to 12.5% until 31st March 2022 before returning to the full rate of 20% on 1st April 2022;
  • The construction sector is being supported by the Stamp Duty Land Tax nil rate band extension for residential properties. The temporary £500,000 nil rate has been extended to 30th June 2021. It will then be reduced to £250,000 until 30th September 2021 and then return to the standard band of £125,000.

The Chancellor also announced he would extend the Universal Credit increase of £20 for six months to support households on lower incomes.

The Chancellor has set out a plan to raises taxes to protect the Exchequer from these additional costs, including:

  • Increasing the rate of Corporation Tax to 25% from 1st April 2023 for companies with profits over £250,000, whilst for companies with profits up to £50,000 the Corporation Tax rate will continue at 19%. There will be a tapered rate between these two profit levels;
  • The freezing of personal allowances and income tax rate bands for 6th April 2022 to 5th April 2026;
  • The thresholds and bands for Pensions, VAT, Capital Gains Tax and Inheritance Tax will remain unchanged.

As expected, this was a generous Budget to support businesses and households, although a large burden will fall on successful businesses, who face a big tax increase from 2023 to finance the announced measures.

We will provide further guidance on these announcements as and when more details are made available.

If you would like to understand how this affects you, please contact TC group at www.tc-group.com.

TC Group: Detailed guidance on VAT deferral scheme

HMRC has now provided further detailed guidance notes on your payment options for VAT that was deferred in 2020.

The original deferral scheme was introduced to assist VAT registered businesses so that they did not have to make a payment with their VAT return during the VAT period ending between 20th March and 30th June 2020.

The VAT deferral new payment scheme extends the original deferral and will be open from 23rd February up to and including 21st June 2021. You will need to use your Government Gateway access to join the scheme – we cannot do this for you through our agent account.

Anyone on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme will be invited to join the new payment scheme later in March 2021.

The new scheme lets your business pay its deferred VAT in equal instalments, interest-free; and choose the number of instalments, from two to eleven (depending on when you join).

It is important to note that in order to use the online service, businesses and sole traders registered for VAT must:

  • join the scheme yourself;
  • still have deferred VAT to pay;
  • be up to date with your VAT returns;
  • join by 21st June 2021;
  • pay the first instalment when you join; and
  • pay instalments by direct debit (if want to use the scheme but cannot pay by direct debit, there’s an alternative entry route for you).

If you join the scheme, you may still have a Time to Pay arrangement for other HMRC debts and outstanding tax (subject to acceptance).

Please call your usual TC Group contact if you require further assistance on 0330 088 7111.

Taylorcocks: Construction Industry Domestic Reverse Charge to apply from 1st March 2021

Taylorcocks has reported that the Domestic Reverse Charge due to be introduced in October 2019 but was twice delayed due to Brexit and Coronavirus, but will now come in from 1st March.

The charge will apply to all VAT registered construction businesses in the UK and effectively moves the VAT liability from the supplier to the customer. It does not apply on supplies made to non-VAT registered customers or the end-user of the property, such as a business who uses the property in their business. It also does not apply to zero-rated supplies, activities not covered by CIS or supplies of staff or workers.

All VAT-registered subcontractors who are supplying building and construction services to a VAT registered contractor, who is CIS registered, will need to inform the contractor on their invoices that Reverse Charge applies and the need to account for the VAT under the reverse charge rules.

The subcontractor will not charge VAT on their invoice and therefore will only include the amount charged for their service in box 6 of their VAT return. This differs from the current position where the sub-contractor has to include the VAT on their invoice and account for this to HMRC in their VAT return.

The contractor receiving the construction service will have to account for VAT by including it in both box 1 & 4 of their VAT return, rather than simply processing the sub-contractors VAT invoice.
If you require any assistance with this, please contact your local partner at Taylorcocks or on 0330 088 7111.

Patron: TC Supplying services to businesses in the EU

In this Brexit Newsletter, we look at the rules which will apply to the VAT treatment of services being supplied to businesses in the EU (B2B supplies).

The good news is that the rules for services will largely stay the same after 1st January 2021 (unless some changes are announced at a late stage).

Since 2010, the place of supply for VAT purposes of most B2B services has been where your customers are based – where you carry out the work is irrelevant (although there are some exceptions which we will mention later).  This is known as the general rule, and this will not change.  Therefore where your customer is outside the UK and is in business, no UK VAT is charged on the services in question.  In addition, you will no longer be required to submit EC sales lists.

Please be aware, that if your customer also has a place of business in the UK you will have to determine which place of business is most closely concerned with the supply you make to them; if it is their UK office rather than their office outside the UK, then UK VAT will have to be charged.

Just to complete the picture on general rule services; if you receive such services from a business outside the UK, you will still have to apply the reverse charge.  This means that you calculate VAT on the value of services received and include this in box 1 of your VAT return with a corresponding entry in box 4, subject to any partial exemption restriction.  The value of the services received also needs to be included in boxes 6 & 7.

An important change will take place on 1st January for services where the place of supply depends on where they are ‘used and enjoyed’.  This relates to the hire of goods including means of transport, electronically supplied and telecommunication services, repairs to goods under an insurance claim and radio and television broadcasting services.

Because it would take more space than we have available here to outline these rules, we would refer you to VAT Notice 741A section 13, if you supply such services to overseas businesses.  A link is available here. When reading these, from 1st January 2021, references to ‘outside the EU’ will change to ‘outside the UK’.

Finally, the place of supply rules relating to services where performed (e.g. admissions to events, catering, education services etc.) and those relating to land (e.g. construction, surveying, providing accommodation in hotels etc.) will not change – further details can be found in Notice 741A sections 7 & 9.  These can result in the supplier having to register for VAT in another EU member state.

We will issue further Brexit Newsletters when we receive any further information on the subjects already covered or changes which you need to know about.

If you have any queries, please contact our Brexit Team at brexitsupport@tc-group.com or on 0330 088 7111.

Patron: Further guidance and legislation announced on the Self-Employed Income Support Scheme

The self-employed can make a claim under the third tranche of the Self-Employed Income Support Scheme (SEISS) from 30th November.

As previously announced, self-employed businesses can claim an SEISS grant for the three months to 31st January 2021 for 80% of average business profits with the grant capped at £7,500 in total.

In order to qualify the sole trader or partner must:

  • have traded in both 2018/19 and 2019/20;
  • be trading currently and intend to continue to trade;
  • have had trading demand adversely impacted by COVID or COVID restrictions;
  • have a reasonable belief that trading profits for the trading year will be significantly reduced due to the impact of COVID or COVID restrictions on activity, capacity or demand.

The qualifying criteria have been tightened, and businesses will need to consider them carefully. The main restriction is the claimant must have a reasonable belief that trading profits for the year will be significantly reduced due to the impact of COVID, and they will need to keep records to demonstrate this.

Therefore, before making a claim, businesses need to consider whether the trading profits that they would have achieved in the current period have been adversely impacted by reduced activity due to COVID and that this can be demonstrated.

As with previous tranches, the claim for the grant has to be made by the sole trader or partner and cannot be made by their adviser.

If you would like to discuss whether you qualify for the third tranche of SEISS, please contact your local partner on 0330 088 7111.