Coronavirus Job Retention Scheme (CJRS)
The Coronavirus Job Retention Scheme has been extended until 30 September 2021. For the month of August 2021, the government will pay 60% of wages up to a maximum cap of £1,875 for the hours the employee is on furlough.
For claims from 1st July 2021, employers must top up employees’ wages to make sure they receive 80% of their wages (up to £2,500) for the hours they are on furlough. The caps are proportional to the hours not worked.
Claims for furlough days in August 2021 must be made by 14 September 2021.
Self-Employment Income Support Scheme (SEISS) fifth grant
The online service to claim the fifth grant will be available from late July 2021. You’ll need to confirm that you meet other eligibility criteria when you make your claim.
You must make your claim on or before 30 September 2021.
The fifth grant is different from previous grants. To make your claim, you’ll need to have 2 different turnover figures. You’ll need to work out your turnover for:
- April 2020 to April 2021
- either 2019 to 2020 or 2018 to 2019
There are 2 levels of grant. HMRC will work out your grant amount based on how much your turnover is down by after HMRC have compared your 2 turnover figures.
|How much your turnover is down by||What you’ll get||Maximum grant amount|
|30% or more||80% of 3 months’ average trading profits||£7,500|
|less than 30%||30% of 3 months’ average trading profits||£2,850|
VAT reduction for the UK’s tourism and hospitality sector
The government extension of the temporary reduced rate of 5% VAT for goods and services supplied by the tourism and hospitality sector will last until 30 September 2021. A 12.5% rate will apply for the subsequent six months until 31 March 2022.
Temporary Stamp Duty Land Tax (SDLT) cut
From 1 July 2021, the Nil Rate Band will reduce to £250,000 until 30 September 2021 before returning to £125,000 on 1 October 2021.
New Health & Social Care Tax
Boris Johnson has announced an increase to National Insurance and Dividend tax rates effective from April 2022.
The tax will begin as a 1.25% rise in National Insurance (NI) from April 2022, paid by both employers and workers, and will then become a separate tax on earned income from 2023 – calculated in the same way as NI and appearing on an employee’s payslip.
Income from share dividends – earned by those who own shares in companies – will also see a 1.25% tax increase.
VAT Reverse charge on construction and building services
In January 2021, every VAT registered construction business received a letter, which followed letters previously sent out in February and September 2020, advising them to check if they’re liable for the reverse charge. If they’re liable, they need to apply these rules going forward.
The key aspects are:
- it applies to standard and reduced-rated supplies of building and construction services made to VAT registered businesses, who in turn also make onward supplies of those building and construction services
- the contractor is responsible for paying the output VAT due rather than the sub-contractor and can continue to reclaim this amount as input tax
- the scope of supplies affected is closely aligned to the supplies required to be reported under the Construction Industry Scheme (CIS), but does not include supplies of staff or workers for use by the customer
The legislation introduces the concept of ‘end users’ and ‘intermediary suppliers’. This covers businesses or groups of associated businesses that do not make supplies of building and construction services to third parties and, as such, are excluded from the scope of the reverse charge if they receive such supplies.
- property developers
- public bodies who are deemed contractors for CIS purposes
In order to be treated as end-users and intermediary suppliers, the customer needs to notify the supplier in writing. This can be done by correspondence or as part of terms and conditions.
MTD for Income Tax
Under the requirements of MTD for Income tax, individuals who are subject to income tax on the profits of their trade, profession, vocation or property business will be required to keep their accounting records electronically (either using suitable software or on a spreadsheet) and file quarterly returns to HMRC with details of their income and expenditure together with any other information that HMRC specifies. A final end of period statement will then be submitted after the tax year to complete the individual’s tax affairs.
Although the frequency of reporting is to change, the timing of tax payments will not and the current system of payments on account and balancing payment by 31 January after the tax year is currently expected to remain in place.
On 21 July 2020, HMRC confirmed that MTD for Income tax will be introduced from April 2023, for unincorporated businesses and landlords with gross income over £10,000. The rules will also apply to partnerships and trusts with business or property income. The rules will also apply from April 2023 to partnerships with business or property income that only have individuals as partners.
Self Assessment 2020-2021
The deadline for completing and filing an individual or partnership tax return for the tax year ending 5 April 2021 is 31 January 2022. The deadline for making payment of any taxes due is also 31 January 2022.
This is a particularly busy time for accountants as there are a number of deadlines in a short space of time. Many clients also choose to put off dealing with their tax return until the very last minute.
If you are due to submit your tax return then we would have sent you monthly reminders via email to provide the information allowing us to prepare the tax return in good time. If you have not already done so, please provide this information as soon as possible to beat the end of year rush and allow you to plan ahead for the tax payment.
With the advent of MTD for income tax explained above it has never been a better time to digitalise your bookkeeping and accounting practices. In the near future all taxes will need to be reported to HMRC showing accounting records have been kept electronically. One of the easiest and most efficient ways to do this is to move to a cloud-based bookkeeping service. As well as ensuring compliance with the latest HMRC rules it allows businesses to maintain greater financial oversight.
At Sigma we have successfully delivered this service to a number of clients. Feel free to contact us to see how this can be of benefit to you.