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Mel’s COVID-19 Update: 23rd February 2021
Pre 6 April tax planning
With 6 weeks to go until the end of the Tax Year, it is time to make the most of your tax allowances this year. The first step to making the most of your tax allowances can mean looking closely at your pension. UK residents under 75 can add money to a pension and receive tax relief on it. You’ll automatically get basic rate tax relief (currently 20%) paid into your pension by the government.
If you pay tax at a higher rate you could get up to a further 25%, but you’ll need to claim it by declaring any pension contributions you’ve made on your tax return.
To make the most of your pension, you need to know the Pension allowances that you are entitled to. If you have not used them to the full, there may still be time to top them up – and start planning on how you will use them next tax year.
The annual allowance is the maximum you can invest in your pension each year that would be eligible for tax relief. It is currently £40,000, or your entire income, whichever is the smaller and there are lifetime allowances to consider.
If you run a limited company then there are some actions you could consider such as dividend and salary planning, purchasing capital items to maximise capital allowances, research and development tax credits and a range of other matters.
Please talk to us about pre-tax year end planning for your business and for specific pension planning advice, we can refer you to an independent financial adviser.
Health and safety spot checks and inspections during coronavirus (COVID-19)
We have heard from a number of clients that the Health and Safety Executive (HSE) is carrying out spot checks and inspections on all types of businesses in all areas to ensure they are COVID-secure.
HSE are making calls to businesses so they can give advice on how to manage the risks and protect workers, customers and visitors. They are also working closely with local authorities, assisting them in the sectors they regulate such as hospitality and retail.
HSE state that Inspectors will make COVID-secure checks as part of their normal role in visiting workplaces during the pandemic. To ensure they reach as many workplaces as possible nationally and support the core work of inspectors, they are working with trained and approved partners to deliver the spot check calls and visits.
Officers that visit premises will be carrying identification from their business and a letter of authorisation from HSE. If you wish to verify an officer that calls or visits your organisation, please call 0300 790 6896.
Business planning for recovery
We cannot predict the date of a return to normality, but there are some practical steps you can take to minimise potential disruption to your business and maximise opportunities for recovery:
- Review your Budgets and set realistic and achievable targets for the remainder of 2021.
- Review and flow chart the main processes in your business (e.g. Sales processing, order fulfilment, shipping etc.) and challenge the need for each step.
- Encourage team members to suggest ways to streamline and simplify processes (e.g. sit down and brainstorm about efficiencies and cost reduction).
- Put extra effort into making sure your relationships with your regular and long-standing customers are solid.
- Review your list of products and services and eliminate those that are unprofitable or not core products/services.
- Use the current lockdown as an opportunity to reflect on the exceptional challenges you have faced as a result of COVID-19 over the last 12 months. What were your most significant accomplishments? Have you encountered any setbacks or disappointments? Consider what you have learned from your experiences to improve your prospects for later on in 2021.
- Your final task is to set yourself and the business some specific goals for recovery. Make sure to keep them visible and share them.
Please talk to us about cash flow planning for the next six months, we can help with a template so you can do this yourself or work together to produce estimates for a variety of scenarios.
Self- Assessment payments including Class 2 National Insurance contributions
Information about payment of Class 2 National insurance contributions through a Time to Pay arrangement, has been added and the Pay in Instalments section has been updated in the guidance by HMRC on how to pay self-assessment.
As one of the Governments coronavirus (COVID-19) supporting measures, Self-Assessment taxpayers were given the option of deferring payment of their July 2020 Payment on Account until 31 January 2021.
If you deferred this payment, you may have had these 3 payments to make on 31 January 2021:
- Your deferred July 2020 payment on account (if it remains unpaid)
- Any 2019 to 2020 balancing charge
- Your first 2020 to 2021 payment on account
If you had difficulty in making all 3 payments at once, you may have chosen to set up a Time to Pay instalment arrangement with HMRC.
If you are Self-Employed and Pay Class 2 National Insurance contributions, you will usually pay them as part of your annual balancing payment.
If you are paying the 3 payments mentioned above through a Time to Pay arrangement, your deferred July payment on account will be cleared first, having the oldest due date. This is to minimise the interest you will be charged.
This could result in your 2019 to 2020 Class 2 National Insurance contributions being paid after their due date of 31 January 2021. Where Class 2 National Insurance contributions are paid after that date it can have a detrimental effect on certain contributory benefits claimed.
If this affects you, contact us and we will notify HMRC on your behalf. HMRC may be able to allocate monies you have already paid for your 2019 to 2020 Self-Assessment liabilities against the Class 2 National Insurance contributions that you owe. You may incur a small amount of interest if they do this, but your contributory benefit claim should be protected.
Pay In Instalments
You can pay your tax by instalments if you were unable to pay in full by 31 January 2021. If you have not filed your 2019 to 2020 Self-Assessment return, you will need to file it as soon as possible. HMRC will then know what payments you owe, and you will be able to set up a Time to Pay instalment arrangement with them.
If you owe up to £30,000 you can do this online without having to contact HMRC directly.
When you have filed your return you will need to wait at least 72 hours before you can set up your Time to Pay arrangement online.
Late payment penalties are charged when tax remains unpaid for 30 days, 6 months and 12 months after the payment due dates. You can avoid the penalties if you enter into a Time to Pay arrangement before they become due and you pay all the tax owing under that arrangement on time.
For Self-Assessment payments that were due on 31 January 2021, you will avoid the first late payment penalty if you set up a Time to Pay arrangement by 2 March 2021. The 6 month and 12 month penalties can be avoided if you pay all the tax owing under that arrangement on time.
Interest is payable on Time to Pay instalments so you should check the interest rates for late and early payments.
If you are unable to pay your self-assessment tax please talk to us about your options and we will endeavour to assist with informing and talking to HMRC.
Self-Employment Income Support Scheme (SEISS)
Claims for the third SEISS grant have now closed. The last date for making a claim for the third grant was 29 January 2021.
Details about the fourth grant will be announced on 3 March 2021. We will keep you up to date on any new developments.
Coronavirus Job Retention Scheme claims (CJRS)
You can now submit your claims for periods in February. These must be made by Monday 15 March.
You can claim before, during or after you process your payroll. If you can, it’s best to make a claim once you are sure of the exact number of hours your employees will work so you don’t have to amend your claim later. Talk to us about how we can submit and estimate your February claim.
The guidance has been updated to show we can, as your agent, request CJRS claim details are not published. If publishing your claim details could leave individuals at risk of violence or intimidation, then you can request that HMRC does not publish details about the scheme claim, if you can show evidence that it would result in serious risk of violence or intimidation to:
- You or anyone living with you
- An individual associated with your business, or anyone living with them
Examples of individuals associated with your business include:
- An employee
- A director, officer or employee of that company
- A partner, officer or employee of that partnership
- A member or employee of a limited liability partnership
- A settlor, trustee or beneficiary of a trust
HMRC will not publish any of your details until a decision has been made and you have been informed.
Please contact us if you would like us to submit a request on your behalf.
Eat Out to Help Out Scheme: receiving payments you were not entitled to
HMRC has produced a factsheet containing information about the recovery of overclaimed Eat Out to Help Out payments. It also tells you about the penalties HMRC can charge.
An overclaimed Eat Out to Help Out payment includes any amount of a payment which a business was not entitled to receive.
When HMRC talk about ‘you’ in their factsheet, this means the business that registered to take part in Eat Out to Help Out.
If you need assistance or have made an error in a claim please talk to us. The factsheet can be found here: https://www.gov.uk/government/publications/eat-out-to-help-out-scheme-receiving-payments-you-were-not-entitled-to?utm_medium=email&utm_campaign=govuk-notifications&utm_source=6d5c5528-4a76-468d-ae22-bce57595626c&utm_content=daily
Guidance for Landlords and Tenants
Guidance for landlords and tenants in the private and social rented sectors to explain the possession action process in the county courts in England and Wales.
The guidance has been updated to reflect new legislation extending the prevention on enforcement of evictions in England during the national lockdown and launch of the mediation pilot.
During COVID-19 I want to ensure that everyone is as up to date as possible with regards to Government changes and support that impacts businesses. Please note that this update is correct as of date of publishing (23rd February 2021).