by Acuaccounts | Apr 2, 2020 | accounting
Self Employed income support scheme
- Government will pay self-employed people adversely affected by coronavirus a taxable
grant worth 80% of their average monthly trading profit over the last three years, up to
£2,500 per month, for at least three months (in line with the employed scheme)
- The scheme will be open to those with trading profits of £50,000 or less, who make most of their income from self-employment.
- Those who trade through a limited company and pay themselves a salary and dividends are
not covered but will be covered for their salary by the Coronavirus Job Retention Scheme if
they are operating PAYE scheme.
- It will not apply to anyone who started trading in 2019/20 i.e. those that have started a new
business in the last 12 months.
- Must have filed tax return for 2018/19, and intended to trade after April this year.
- If not already filed 2018/19 tax return, has be done within 4 weeks to qualify benefit from
the Government grant, deadline for submission of the same is 23 rd April 2020.
- If you receive more than 50% of income from other earning e.g salary, you won't be
eligible for this grant.
Illustration
Mr XYZ started part time self-employment in 2016 and his trading profit of last three-year average
was £20,000 and his employment income in the last two tax years amounts to £27000
Mr XYZ not eligible for the self-employed income support scheme as his majority income comes
from employed Earning, – More that 50% of the income sourced from employed earnings.
#selfemployed #business #update #coronavirus #covid19 #income #support
by Acuaccounts | Mar 29, 2020 | accounting
We are back but not in great circumstances.
Further to the Chancellor announcing a package of further help totalling more than £330bn. The key details are listed below. We are keeping a close eye on how the government will ensure the measures announced will be rolled out quickly, and what further measures will be needed.
Business Rates and Cash Grants
In England
• Expanding the 100% business rates holiday for the next 12 months to cover all retail, hospitality and
leisure businesses in England – not just those up to £51k Rateable Value.
• Providing a £25,000 cash grant to retail, hospitality and leisure businesses only, with a Rateable Value below £51k.
• Increasing the proposed £3,000 cash grant to 700,000 small businesses (those eligible for Small Business Rate Relief) to a £10,000 cash grant. We think this will also apply for those eligible for rural rates relief.
Cashflow and Lending
• Supporting liquidity amongst large firms, so they can pay their small suppliers, salaries and rents
• Supporting SMEs via banks to underwrite loans of up to £5m (formerly this was up to £1.2m); and with the first 6 months of that finance interest free (i.e. that the Government will pay for)
• The Development Bank of Wales has loan and equity funding available immediately to Welsh businesses. The Welsh Government is working closely with the Development Bank of Wales to consider additional support to help businesses through the Covid-19 impact.
• Confirming with lenders to provide mortgage payment holidays of at least 3 months for those facing finance issues as a result of coronavirus (there was later confirmation of future help for those that rent; but that remains unclear)
• Monday 23 March 2020.Timing-wise, the Government promises this will be available from
The UK government has advised there will be more help as the situation intensifies. Within draft emergency legislation now being published, the government is taking new legal powers to enable it to offer whatever further financial support is necessary to back business. We are awaiting further guidance and help for the self-employed and for those outside of the leisure, hospitality and retail sectors. As the virus accelerates we want to look at larger, more radical measures such as 3-6 month holidays on National Insurance Contributions, VAT, PAYE; changes to insolvency; and the suspension of paying rent, tax and utilities for the same time.
Statutory Sick Pay costs for your employees
The UK Government has agreed to cover the costs of 14 days of Statutory Sick Pay (SSP) per employee, for those off work due to coronavirus, in small and medium-sized firms. This may well come via HMRC BUT this is not yet confirmed. However, we do know:
• This will cover all companies up to 250 employees as at 28 February 2020
• This will come into effect from day one of sickness, rather than day four
• Employers will be able to reclaim this expenditure; this is a rebate – they are still working on the most appropriate repayment mechanism
• Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note
• This will kick in the day after the regulations on the extension of Statutory Sick Pay to those staying at home comes into force (This is expected to be announced soon)
Talk to Jobcentre Plus about benefits for the self-employed
The Government has suspended the ‘minimum income floor’ from Universal Credit (UC) for the self-
employed, so if you are in the system due to low income there is no longer an assumption you earn the equivalent of the living wage (which from next month this is £8.72 an hour, so for 35 hours a week that’s £305.20). UC is administered through Jobcentre Plus, which like the NHS is likely to switch to online/phone for consultations.
If you do not currently receive Universal Credit you can apply to do so. If you need income fast, you can apply for an advance on your first scheduled universal credit payment. You can apply for universal credit even if you are working – it is designed for people who are either out of work or on a low income. This includes someone who is self-employed and whose income has dropped as a result of this disruption. If you are self-employed and claiming Employment Support Allowance (ESA), and test positive for coronavirus or are in self-isolation, you will be able to claim from day one of a claim instead of waiting the usual seven days. You will also be able to apply for ESA if you have a disability or health condition that affects how much you can work.
More to follow…
info@acuaccounts.com or 02039079027
www.acuaccounts.com
by Acuaccounts | Apr 5, 2019 | latest news, tax
Welcome…
To AcuAccount’s April’s Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.
If you need further assistance just let us know or you can send us a question for our Question and Answer Section.
We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year. Please contact us for advice in your own specific circumstances. We’re here to help!
Making Tax Digital Update
Biggest change from HMRC has come into effect! Meaning VAT-registered businesses with a taxable turnover above the VAT threshold are required to use the Making Tax Digital (MTD) service to keep records digitally and use software to submit their VAT returns from 1 April 2019.
Updated guidance
HMRC have published an updated version of their Making Tax Digital Mythbusters factsheet. The ‘myths’, and HMRC’s comments covered in the factsheet are summarised as follows:
- Businesses don’t know it’s happening or what to do: HMRC state that over 80% of businesses had stated to make preparations for MTD by December 2018
- Everyone will have to join the service by 1 April: Businesses are required to join MTD and submit their VAT returns using the new service for their first VAT period which begins on or after 1 April. For the majority, who file quarterly, their first MTD returns won’t be due until August or later
- Under MTD, businesses will have to provide more information than they already do: business will need to provide information to HMRC more regularly than they do now
- MTD won’t reduce errors: HMRC maintain that the integrated approach offered by MTD will, in the long term, reduce reporting errors
- HMRC have underestimated the admin burden and costs to businesses for MTD: costs will differ from business to business but there are MTD-compatible solutions available at low cost for most businesses
- Businesses can’t use spreadsheets as part of MTD: Businesses can choose to use spreadsheets to both maintain digital records and perform tax calculations, provided the spreadsheets combine with some form of ‘bridging’ software that will allow their VAT return data to be sent to HMRC from the spreadsheet
- Small businesses should be automatically exempt: Only those with taxable turnover above the VAT threshold of £85,000 are required to join MTD, although the c.1m VAT registered businesses below the threshold can choose to join voluntarily.
- HMRC will penalise me if we get the new process wrong: During the first year of mandation HMRC will take a light touch approach to digital record keeping and filing penalties where businesses are doing their best to comply with the law.
For further information on MTD, see the GOV.uk website.
Employee Mileage Allowances
Confusion often arises over differing tax treatment of mileage allowances paid to employees using their own cars for business, and those provided with a company car.
An employee using their own car for work can claim a mileage allowance from their employer, which is designed to cover the costs of fuel and wear and tear for business trips. The mileage allowance will be tax-free if it does not exceed HMRC’s Approved Mileage Allowance Payment (AMAP) rates, which are currently as follows:
Cars and vans: first 10,000 business miles per year – 45p per mile; over 10,000 miles – 25p per mile
Motor cycles: fist 10,000 business miles per year – 24p per mile; over 10,000 miles – 24p per mile
Bicycles: first 10,000 business miles per year – 20p per mile; over 10,000 miles – 20p per mile
Unless the employer reimburses employees at a higher rate, the payments can be paid tax-free and do not need to be reported to HMRC. However, anything paid above the approved rates is tax deductible, and must be reported to HMRC on form P11D.
If an employer pays less than the approved rates, the employee can claim income tax relief from HMRC for the shortfall. This can be done via a self-assessment tax return or by completing form P87.
For NIC, the 45p per mile rate is used for all business miles in the tax year, not just the first 10,000 miles.
The AMAP scheme does not apply for company cars. However, employees can still claim fuel expenses for all business mileage where they pay for the fuel. The rates are lower than the AMAP rates and are updated quarterly. Current and previous rates can be found on the Gov.uk website at https://www.gov.uk/government/publications/advisory-fuel-rates.
Amounts paid in excess of HMRC’s advisory rates will be taxable.
If the company pays for all fuel (business and private), the fuel benefit will be charged, which is based on the cash equivalent of the benefit each tax year. The fuel benefit is fixed each year (for 2019/20 it is £24,100). This figure is multiplied by the CO2 percentage figure applicable to the company car.
It is also worth noting that if the company pays for all fuel, but the employee reimburses the company for private use, as long as the amount paid back is equal to, or more than, the amount for personal fuel in the same tax year, the employer will not have to pay anything to HMRC or report on such transactions.
NMW and NLW increases take effect
New rates for the National Minimum Wage (NMW) and National Living Wage (NLW) (aged 25 and over) apply from 1 April 2019, and employers must ensure that they implement them accordingly. The rates are as follows:
– 25 and over – £8.21 per hour;
– 21- to 24-year-olds – £7.70 an hour;
– 18- to 20-year-olds – £6.15 an hour;
– under 18s – £4.35 an hour; and
– Apprentice rate – £3.90 an hour.
All other workers including pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers must receive at least the NMW.
Severe penalties may be imposed for failure to comply with NMW/NLW obligations. Broadly, the penalty percentage which may be imposed for non-compliance is now 200%. The maximum penalty is a hefty £20,000 per worker, although it may be reduced by 50% if the unpaid wages and the penalty are paid within 14 days.
Workplace Pension
The minimum contributions you and your staff pay into your automatic enrolment workplace pension scheme will increase from 6 April 2019. This is also sometimes known as phasing.
It is your responsibility to make sure these increases are implemented.
Who does this apply to?
All employers with staff in a pension scheme for automatic enrolment must take action to make sure at least the minimum amounts are being paid into their pension scheme. This applies to you whether you set up a pension scheme for automatic enrolment or you decided to use an existing scheme.
However, you don’t need to take any further action if you don’t have any staff in a pension scheme for automatic enrolment, or if you are already paying above the increased minimum amounts.
What are the increases?
This table below shows the minimum contributions you must pay and the date when they must increase:
| Date |
Employer minimum contribution |
Staff contribution |
Total minimum contribution |
| New rate: 6 April 2019 onwards |
3% |
5% |
8% |
| Current rate: 6 April 2018 to 5 April 2019 |
2% |
3% |
5% |
If you need further assistance on any of the above topics just let us know or you can send us a question.
We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year. Please contact us for advice in your own specific circumstances. We’re here to help!
by Acuaccounts | Mar 13, 2019 | latest news, tax
Under Making Tax Digital (MTD) for VAT, which is coming into effect from 1st April 2019, these records must now be kept digitally within functional compatible software. See the following outline as a guide to what HM Revenue & Customs (HMRC) are looking for:
Essential Details
- Your Business Name
- The address of your principal place of business
- Your VAT registration number
- A record of any VAT accounting schemes that you use
For each Supply you Make you must record:
– The date
– The value
– The rate of VAT charged. Where no VAT is charged, you must record whether the supply is zero rated, exempt or outside the scope of VAT.
If you account for VAT using a retail scheme you are not required to keep a separate record of the supplies that make up your Gross Daily Takings (GDT) within functional compatible software.
Values – OUTPUT (SALES)
To show the link between the output tax in your records and the output tax on the return, you must
have a record of:
- The output tax you owe on sales
- The output tax you owe on acquisitions from other EU member states
- The tax you are required to pay on behalf of your supplier under a reverse charge procedure
- The tax that needs to be paid following a correction or error adjustment
- Any other adjustment required by VAT rules
For each supply you Receive you must record:
To show the link between the input tax in your records and the input tax on your return you must
have a record of:
– The date
– The value
– The amount of input tax that you will claim
Values – INPUT (PURCHASES)
To show the link between the input tax in your records and the input tax on your return you must
have a record of:
- The input tax you are entitled to claim from business purchases
- The input tax allowable on acquisitions from other EU member states
- The tax that you are entitled to reclaim following a correction or error adjustment
- Any other necessary adjustments
The complete set of digital records to meet MTD requirements do not all have to be in one piece of software. It there is a digital link between the pieces of software, records can be kept in a range of compatible digital formats.
To ensure your records are prepared according to the upcoming changes speak to one of our VAT experts.
by Acuaccounts | Mar 11, 2019 | accounting, tax
Making Tax Digital (MTD) is the new regime for record keeping and filing of VAT returns.
We are fast approaching the start of this new regime and we know that change can be painful so here is a quick reminder of the upcoming changes and some pointers as to how you can prepare.
When do things need to change?
From 1 April 2019, if you are registered for VAT, or are in the process of registering, you must start using MTD. This means that you may already be operating within an accounts year that includes a VAT return period that will require digital records.
Filing with HMRC
Under the new regime, VAT Information must go to HMRC via an Application Programme Interface (API). This means that you will need software, bridging software or API enabled spreadsheets. For VAT return periods starting on or after 1 April 2019, there will no longer be an option to submit your return through the Government Gateway by logging in and completing the boxes.
It will become mandatory for businesses that fall within MTD to keep digital records.
How can businesses get ready?
HMRC are not developing MTD compatible VAT software. However, their website details MTD compliant software providers here: https://www.gov.uk/government/publications/software- suppliers-supporting-making-tax-digital-for-vat/software- suppliers-supporting-making-tax-digital-for-vat
If you currently use accounting software, you may need to upgrade. You should be able to obtain advice and support from your existing provider via a telephone or online support service but if you prefer then please call us as we may even get you a better deal.
If you currently use only spreadsheets and then submit the return through the Government Gateway, please get in touch to discuss the options available to you and the services we can provide as agent.
If you currently maintain records on paper, your processes must change. You will need to either acquire and use appropriate software or engage us to do your record keeping and reporting for you.
If you have authorised us to submit your VAT return for you as agent, we can still do this. We will need to have access to the functional compatible software that holds your mandatory records.
Will there be penalties if businesses are not ready on 1 April 2019?
HMRC are aware that these changes are challenging to businesses and they are proposing a soft-landing period of at least 12 months, with no record keeping penalties. This should allow businesses time to update their systems. During that soft-landing period, it will be acceptable for data to be transferred between software and spreadsheets manually; although the final submission will have to be made to HMRC using API enabled software.
What will not change?
Businesses will not need to adjust their VAT reporting dates or be required to provide any more VAT information than they do already.
The current exemptions for electronic submissions will also apply to MTD, e.g. on the grounds of a taxpayer’s religious beliefs, practical inability to use a functional compatible software system or when subject to insolvency procedures.
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