04 May 2021
The latest news from Stewart & Partners4th SEISS grant
Self-employed traders and partners who HMRC believe are eligible for the fourth grant under the Self-Employment Income Support Scheme (SEISS) should now have received a letter or e-mail telling them the date from which they can make a claim. The claim portal on the Gov.uk website is open and will remain open until 1 June 2021.
A claim can only be made where a person meets the eligibility conditions for the fourth grant. It should be noted that some of the conditions are unique to SEISS4 – the fact that a trader was eligible for previous grants does not necessarily mean that they will qualify for the fourth grant.
For the first time, a person who commenced trading in 2019/20 can claim, as long as they had filed their 2019/20 tax return by midnight on 2 March 2021 and traded in 2020/21. The trader must either be currently trading but impacted by reduced demand due to coronavirus or have been trading but is temporarily unable to do so due to coronavirus (for example, where the business has had to close due to lockdown restrictions). As previously, trading income must account for at least 50% of the trader’s total income and not be more than £50,000, either for 2019/20 or on average over the period from 2016/17 to 2019/20.
When making a claim, the trader must declare that they intend to continue to trade and that they ‘reasonably believe’ that there will be a ‘significant reduction’ in their trading profits. The test is applied over the period from 1 February 2021 to 30 April 2021. HMRC have not set out what they regard to be a ‘significant reduction’ in trading profits – instead they expect the trader to make an ‘honest assessment’ that their trading profits will be significantly reduced. In making this assessment, coronavirus support payments do not need to be taken into account.
Claims can only be made by the claimant themselves – as with previous grants, a claim cannot be made by a tax agent on the claimant’s behalf. This is to be avoided as doing so will trigger a fraud alert which will delay payment of the grant. It should be remembered that HMRC will check claims for their validity and will take action to recover payments for incorrect or fraudulent claims.
Claim the working from home allowance
Employees can be paid £6 a week tax free Home Working Allowance whilst working from home. The amounts are free from income tax and Class 1 national insurance contributions (‘EEs and ‘ERs). The normal rule to take advantage of this exemption is that the employee is required by their employer to work from home from time to time and is normally not available where the employee works from home as a matter of choice.
£6 a week tax free for a higher rate taxpayer is equivalent to £538 gross pay (after 40% income tax and 2% employee NICs). The employer would also save 13.8% NICs.
This rule was temporarily relaxed due to the COVID-19 pandemic for 2020/21. HMRC have advised that as long as an employee has been required to work from home at some point during 2020/21 as a result of the COVID19 pandemic they will accept a claim for home-working for the whole 2020/21 tax year. This has now been extended to 2021/22 up until the end of the pandemic.
Where the employer does not pay the allowance, the employee may make a claim for a deduction of £6 a week from their earnings and this has also been extended to 2021/22. That would result in a tax refund of £124.80 for a higher rate taxpayer.
The quickest way for an employee to make a claim is to use the HMRC online claims service which requires the employee to set up a Government Gateway account. Alternatively, employees should use HMRC form P87 to make their claim.
VAT deferral – spread payments
The VAT deferral new payment scheme is open from 23 February 2021 up to and including 21 June 2021.
The new scheme lets you:
- pay your deferred VAT in equal instalments, interest free
- choose the number of instalments, from 2 to 11 (depending on when you join)
How to join:
Before joining, you must:
- have your VAT registration number
- create your own Government Gateway account (if you do not already have one)
- submit any outstanding VAT returns from the last 4 years – otherwise you’ll not be able to join the scheme
- correct errors on your VAT returns as soon as possible
- make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid
To use the online service, you must:
- join the scheme yourself, we as your agent cannot do this for you
- still have deferred VAT to pay
- be up to date with your VAT returns
- join by 21 June 2021
- pay the first instalment when you join
- pay your instalments by Direct Debit (if you want to use the scheme but cannot pay by Direct Debit, there’s an alternative entry route for you)
With the anniversary of Bounce Back Loans and CBILS loans now passed repayments of these loans will have recommenced for many and will be due for more. Those businesses with payments due will need to ensure that they have sufficient funds to start the repayments on the due date. Whilst it may be possible to defer the start of the payments without careful planning cashflow in the future could be compromised. Talk to us if you are not sure whether you can afford the repayments when they commence.
Reduced filing deadlines for accounts
The Department for Business, Energy and Industrial Strategy (BEIS) has published a consultation on improving the financial information which is filed with Companies House.
The Government believes there are opportunities to improve the way financial information is filed with, and published by, Companies House. It is seeking to deliver benefits for those filing information, the users of that information, for Companies House and for the rest of government.
The headline proposals are to:
- Shorten the time limits for filing annual accounts at Companies House from six months to three months for public companies (plcs) and from nine months to six months for private companies;
- Require all accounts filings to be digital with full i-XBRL tagging;
- Introduce a ‘file with government once’ approach which would also cover tax filings;
- Require directors to make a formal declaration of entitlement to small and micro company accounting exemptions;
- Remove some small and micro company exemptions; and
- Give Companies House greater powers to make checks on financial information.
Whilst these are only proposed items in the consultation document it is possible that some if not all of them could be introduced as law in the next few years.
If they are implemented we will ensure, as far as possible, that all clients company accounts are filed in the correct format and on time. We can only do this with our clients’ help. If the deadline for filing accounts is shortened again (they last reduced from 10 months to 9 months in 2008 for private companies) then we will need our clients to be providing us with the information to produce the accounts in a more timely manner. This would probably mean that we would start to insist that clients use online bookkeeping to keep their records.
Please talk to us if this is likely to cause you concern.
I wish you the best for the next month.
If you have any queries you can book a free 15 minute zoom meeting with me.
Also there is the client zoom drop in session which continues for clients at 11.00am every Wednesday.
Zoom meeting details:
Meeting URL: https://us02web.zoom.us/j/83879726978
Meeting ID: 838 7972 6978