Is your business ready for Brexit?
Is your business ready for Brexit? The UK left the European Union on 31 January 2020. The transition period ends on 31 December 2020.
Is your business ready for Brexit? The Covid-19 pandemic has dominated the news headlines this year but Brexit is still progressing. During the transition period, the UK remains in both the EU customs union and single market. Until the end of the transition period (31 December this year), most things stay pretty much the same. So, what do businesses need to think about in terms of UK-EU trade, supply chains, etc. from 1st January?
Is your business ready for Brexit?
Is your business ready for Brexit? Brexit could affect your business in a number of ways. For example, businesses that import or export goods between the UK and the EU will need to consider what operational changes they will need to make in advance of January 1st. The UK Government has set up a helpful webpage which includes useful guides and checklists https://www.gov.uk/transition.
Customs Regime
A new customs regime will come into force on 1 January 2021. Hopefully, a trade deal can be agreed by then, as the final arrangements are still not clear. UK businesses that trade with countries outside the European Union will already be familiar with an Economic Operation Registration Identification (EORI) number. From 1 January, British companies will not be able to trade with the EU without an EORI. In the absence of an EORI number, goods could be held up at ports. In addition, non-compliant businesses won’t be able to take advantage of any special measures such as deferred tariff payments that look set to be introduced to smooth the flow of trade. Another consideration for businesses is taxation.
Business Planning
HMRC offers guidance on its website for the future treatment of payments between UK companies and EU member states. As ever, tax can be a complicated subject and it is often best to invest in some tax advice from an expert. Finally, businesses that trade with the EU may need to consider any additional regulatory obligations that come about as a result of Brexit.
Guidance
As things currently stand, there are a lot of unanswered questions as we still don’t know if a last-minute trade deal will be agreed between the UK and the EU. Either way, it’s worth keeping an eye on the gov.uk website for any additional guidance or updates. Please talk to us if you would like any more information.
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Please contact us if you would like to see how you may be able to benefit from incentives on offer.
Please click our link to see the video of our blog here.
Digitaccs can work with you to make sure your accounting systems are MTD compliant. To find out how, please contact us on 020 3367 1108.
Coronavirus: Business Planning for 2021
Coronavirus: Business Planning for 2021 – Building Resilience
Coronavirus: Business Planning for 2021 – As we enter the fourth week of lockdown in England and reflect on improved testing, new vaccine trial results and a host of experts talking on the news about the timing of rollout and when Covid-19 will no longer be a threat to normality, it is worth remembering our lives are and will remain different for the remainder of 2020 and most of 2021. With that in mind we need to be resilient as individuals, families and businesses.
Coronavirus: Business Planning for 2021 – Our Economy
Coronavirus: Business Planning for 2021 – The latest indicators for the UK economy found nearly half (49%) of currently trading UK businesses reported a decrease in their turnover below what is normally expected for this time of year. On 8 November, overall UK footfall dropped to 33% of the level seen on the equivalent day last year as national restrictions were introduced in England.
Government Support
Clearly we are living in tough times and it makes sense to take advantage of Government supports both directly such as the extended job retention and self-employed support schemes, deferring tax and using bounce back loans. There are also grants available to help firms with Brexit changes for import and export administration.
Business Planning: Practical Tips
1. Review your budgets and set realistic and achievable targets for the remainder of 2020 and for 2021.
2. Get your employees involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues.
3. Use ‘bottom up’ budgeting where everyone in the business gives input on areas over which they have control – target a 10% cost saving.
4. Review and flowchart the main processes in your business (e.g. sales processing, order fulfilment, shipping etc.) and challenge the need for each step.
5. Encourage team members to suggest ways to streamline and simplify processes (e.g. sit down and brainstorm about efficiencies and cost reduction).
6. Put extra effort into making sure your relationships with your customers are solid.
7. Review your list of products and services and eliminate those that are unprofitable or not core products/services.
8. Review efficiency of business processes and consider alternatives such as outsourcing certain activities locally or overseas.
9. Agree extended payment terms with all suppliers in advance.
10. Pull everyone together and explain the business strategy and get their buy-in.
Guidance
Please talk to us about cashflow planning for the next six months. We can help with a template so you can do this yourself or we can work together to produce estimates for a variety of scenarios.
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Please contact us if you would like to see how you may be able to benefit from incentives on offer.
Please click our link to see the video of our blog here.
Digitaccs can work with you to make sure your accounting systems are MTD compliant. To find out how, please contact us on 020 3367 1108.
FURLOUGH: UPDATES TO THE CJRS
FURLOUGH: UPDATES TO THE CJRS (CORONAVIRUS JOB RETENTION SCHEME)
Furlough: Updates to the CJRS – The scheme has been extended. Government guidance has been updated with details of how to claim for periods after 1 November 2020. The CJRS will remain open until 31 March 2021. From 1 November 2020 employers can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month.
FURLOUGH: UPDATES TO THE CJRS – DETAILS
Furlough: Updates to the CJRS – Employers can claim for employees who were employed on 30 October 2020, as long as they have made a PAYE RTI submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. This may differ where they have re-employed an employee after 23 September 2020. All employers with a UK bank account and UK PAYE schemes can claim the grant.
ELIGIBILITY
They do not need to have previously claimed for an employee before the 30 October 2020 to claim for periods from 1 November 2020. Employers can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked.
CONTRIBUTIONS
Employers might need to contribute towards the cost of their furloughed employees’ wages for these periods. For periods from 1 November 2020, they will need to pay for the cost of employer NICs and pension costs.
CLAIMS
Claims for furlough days in November 2020 must be submitted by 14 December 2020. This is a tight deadline, so it is important we work together to get any claims submitted promptly. We can also guide you through the information you need to gather, ensure you follow the rules and record any changes of employment terms with your employees. Please see the Government site here.
CONTACT US
Please contact us if you would like to see how you may be able to benefit from incentives on offer.
Digitaccs can work with you to make sure your accounting systems are MTD compliant. To find out how, please contact us on 020 3367 1108.
Furlough Scheme Extended at 80% Usual Pay
Furlough Scheme Extension: Details
Furlough Scheme extended at 80% usual pay: On 22 October the Chancellor announced that the CJRS furlough scheme would end on 31 October 2020, to be replaced by a new Job Support Scheme (JSS). However, at 6.45 pm on 31 October 2020 when the Prime Minister announced a month long lockdown for England, he announced that the CJRS furlough scheme would be extended for one further month. This means the CJRS has now been extended until December.
Furlough Scheme Extended at 80% Usual Pay: More Information
The grant will allow employers to be able to claim 80% of employees’ usual pay for hours that they are unable to work. Businesses will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time. Employers will be asked to cover National Insurance and employer pension contributions. As with the existing CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
Furlough Scheme Extended at 80% Usual Pay: Details
Details on the CJRS can be found here. Please also feel free to contact us.
Job Support Scheme (JSS)
The JSS scheme that replaces CJRS was originally announced in September. The scheme was originally scheduled to commence on 1 November 2020 but will now commence when the extended CJRS scheme ends and will run until the end of April 2021.
JSS: Further Details
It has been made more generous than in the original announcement to support businesses that are legally forced to close their premises as a direct result of Coronavirus. This is referred to as JSS Closed. For those employers that are able to operate safely but continue to face reduced demand such that they may need extra support over the winter to help keep their employees attached to their workforce, there is JSS Open.
CONTACT US
Please contact us if you would like to see how you may be able to benefit from incentives on offer.
Please click our link to see the video of our blog here.
Digitaccs can work with you to make sure your accounting systems are MTD compliant. To find out how, please contact us on 020 3367 1108.
The Coronavirus Job Support Scheme 2020
The Coronavirus Job Support Scheme starts 1 November
The Coronavirus Job Support Scheme: The Chancellor has announced a new 6 month Job Support Scheme to help businesses and employees survive the winter months. We are still awaiting full details of the scheme that will replace the current “flexible furlough” scheme but the main features are highlighted below.
The Coronavirus Job Support Scheme: Details
The Coronavirus Job Support Scheme: Employers of all sizes will be eligible for the new scheme but large organisations will need to demonstrate that their turnover is reduced as a result of COVID-19. Eligible employees will be those on the PAYE payroll at 23 September 2020 that are working for at least 33% of their usual hours. For example an employee whose usual pay is £450 a week who works 2 days a week would be paid £180 for the 2 days worked and £180 for the other 3 days. The employer could claim a grant of £90 from the Government.
Other Measures Announced
In addition to the Job Support Scheme the Chancellor announced that the Self-Employed Income Scheme would also be extended for a further 3 months but the grant will be 20% of average monthly profits capped at £1,875.
VAT
The temporary 5% rate of VAT for the hospitality sector, accommodation and attractions will be extended to 31 March 2021.
What else…
Businesses that have deferred their VAT payments will be able to pay back the deferred amount over 11 months.
CONTACT US
Please contact us if you would like to see how you may be able to benefit from incentives on offer.
Please click our link to see the video of our blog here.
Digitaccs can work with you to make sure your accounting systems are MTD compliant. To find out how, please contact us on 020 3367 1108.
The Coronavirus Job Retention Scheme: The Final Phase
The Coronavirus Job Retention Scheme: The Final Phase
The Coronavirus Job Retention Scheme: The Chancellor, Rishi Sunak, presented A Plan for Jobs at the time of the Summer Economic Update on 8 July 2020. This included incentives for employers who retain furloughed staff and who offer training and apprenticeships.
The Coronavirus Job Retention Scheme: Job Retention Bonus
The Coronavirus Job Retention Scheme (CJRS) is now in its final phase. Government support under the scheme is withdrawn gradually from August and the scheme comes to an end on 31 October 2020. Where staff are still furloughed in October, employers will need to decide whether they can bring their furloughed employees back to work.
What is the Job Retention Bonus?
To encourage employers to retain furloughed staff, a bonus – the Job Retention Bonus – of £1,000 will be paid to the employer for each furloughed employee who is employed continuously from the end of the CJRS until 31 January 2021. However, to qualify for the bonus, the employer must pay the employee, on average, earnings that are at least equal to the lower earnings limit for Class 1 National Insurance purposes, set at £120 per week (£520 per month) for 2020/21.
Timelines
The Government will pay the bonuses from February 2021.
What else…
The scheme is not without its critics, with Jim Harra, Chief Executive of HMRC, questioning whether it offers value for money. Some employers, including Primark and Rightmove, have stated that they will not claim the bonus.
CONTACT US
Please contact us if you would like to see how you may be able to benefit from incentives on offer.
Please click our link to see the video of our blog here.
Digitaccs can work with you to make sure your accounting systems are MTD compliant. To find out how, please contact us on 020 3367 1108.
HOSPITALITY VAT REDUCTION
HOSPITALITY VAT REDUCTION
Hospitality VAT: When the Chancellor announced a temporary cut in the rate of VAT for the hospitality sector and attractions in his Summer Statement on 8 July there were a number of areas that needed clarification. The reduction applies to supplies made between 15 July 2020 and 12 January 2021. HMRC have now set out more details of which supplies will attract the 5% temporary rate as well as the impact on invoicing, deposits and the flat rate scheme.
HOSPITALITY VAT: WHAT DOES THE 5% TEMPORARY VAT RATE APPLY TO?
The temporary 5% rate applies to catering, including hot food takeaway, accommodation in hotels, guest houses and similar places and to tourist attractions such as zoos, cinemas and theme parks. Please note this is not an exhaustive list.
HOSPITALITY VAT: WHAT TYPES OF DRINKS DOES THE RATE APPLY TO?
Note that as far as catering is concerned, the 5% rate only applies to food and non-alcoholic drinks. The 20% rate continues to apply to alcoholic drinks. Please contact us if you are unsure as to whether the 5% rate applies to any of your supplies.
HOSPITALITY VAT REDUCTION: WHAT ABOUT DEPOSITS?
It is fairly common, particularly in the summer holidays, to pay a deposit when booking a hotel or self-catering accommodation but how should the deposit be accounted for? HMRC have confirmed that the hotel has the option of charging VAT according to the ‘basic tax point’ (dates of the stay) rather than the ‘actual tax point’ (invoice/payment dates).
EXAMPLE VAT DEPOSIT SITUATION
For example where the customer paid a non-refundable £300 deposit in February 2020 for a £1000 holiday in Cornwall in August, using the actual tax point, the hotel would account for 20% VAT on the deposit received in February 2020 and 5% on the balance payable after 15 July 2020. The hotel could choose to use the basic tax point rule which would mean that the 5% rate would apply to the entire cost of the stay and make an adjustment for the VAT already accounted for.
CONTACT US
Please contact us if you need advice on dealing with the invoicing or accounting for such transactions.
Please click our link to see the video of our blog here.
Digitaccs can work with you to make sure your accounting systems are MTD compliant. To find out how, please contact us on 020 3367 1108.
Deferring July Self-Assessment Payments
Deferring July Self-Assessment Payments: Option to defer July Self-Assessment Payment on Account
Taxpayers facing financial difficulties as a result of the COVID-19 pandemic can opt to delay making their second self-assessment payment on account for 2019/20, due by 31 July 2020. As long as the amount is paid in full, together with any outstanding balance for 2019/20, by 31 January 2021, HMRC will not charge any interest or penalties.
Under the self-assessment system, taxpayers are required to make payments on account of their tax and Class 4 National Insurance liability if their self-assessment bill for the previous tax year was £1,000 or more, unless at least 80% of the tax owed for that year was deducted at source, for example, under PAYE.
Each payment on account is 50% of the previous year’s tax and Class 4 National Insurance liability. Although Class 2 National Insurance contributions are collected via the self-assessment system, they are not taken into account when working out payments on account. Payments on account are made on 31 January in the tax year and on 31 July after the end of the tax year, with any balance being paid by the tax return filing date of 31 January after the end of the tax year. If the payments on account are more than the eventual liability, the excess is refunded or set against the next year’s liability. The first payment on account for 2019/20 was due by 31 January 2020. The second payment would normally need to be paid by 31 July 2020.
Deferring July Self-Assessment Payments: Option to Defer
This year, taxpayers have the option to defer the second payment on account if they are finding it difficult to make the payment by 31 July 2020 due to Coronavirus. There is no obligation to defer – taxpayers can still make the payment by 31 July 2020 if they so wish.
Where a taxpayer takes the deferral option, the outstanding payment can be made whenever the taxpayer is able to meet the payment, as long as this is no later than 31 January 2021. Any balance owing for 2019/20 must be paid by the same time, together with the Class 2 National Insurance liability for the self-employed and the first payment on account for 2020/21.
Taxpayers choosing the deferral option do not need to tell HMRC – they simply pay the tax by 31 January 2021; nor do they have to provide evidence that they were adversely affected by the COVID-19 pandemic.
Guidance on the deferral option is available on the Gov.uk website. Also feel free to contact us.
Deferring July Self-Assessment Payments: Pros and Cons
Delaying the payment will no doubt help those struggling as a result of the COVID-19 pandemic. Indeed, it may provide a lifeline for particular groups of taxpayers, for example, those who are self-employed and who do not qualify for a grant under the Self-employment Income Support Scheme and who have been unable to work due to the restrictions.
However, the deferred tax has to be paid eventually, and the payback for having nothing to pay in July is a big bill in January 2020. Not only will the deferred tax be payable then, but also any balance due for 2019/20 and the first payment on account for 2020/21.
Digitaccs can work with you to make sure your accounting systems are MTD compliant. To find out how, please contact us on 020 3367 1108.
“Flexible Furlough” and Self Employed Grants
“Flexible Furlough” and Self Employed Grants: “Flexible Furlough” starts 1st July
“Flexible Furlough” and Self Employed Grants: From 1 July the new CJRS “Flexible furlough” grant scheme starts, which will allow employers to gradually bring their furloughed employees back to work part-time. The new scheme will be in place until the end of October and the Government will gradually reduce the amount of grant towards employees’ furlough pay to 70% in September and 60% in October.
The grant paid by the Government via HMRC will remain at 80% of the employee’s normal pay for July and August but they will stop reimbursing NICs and pension contributions from 1 August 2020.
Further details on the operation of the new scheme were announced on 12 June 2020 which are summarised below. We will of course continue to assist you in making furlough claims.
“Flexible Furlough”: Key Conditions for New “Flexible Furlough”
Only those employees who have been furloughed and included in a claim under the original CJRS scheme may be included in a claim for the new flexible furlough. That means they must have been furloughed on or before 10 June to allow a full 21 days prior to the end of the original scheme.
A further restriction is that the maximum number of employees that can be included in a flexible furlough claim cannot exceed the maximum number included in a claim under the original scheme. Thus if the employer has 8 employees split into teams of 4 and furloughed team A for three weeks and then team B for 3 weeks the maximum number of employees that can be included in a flexible furlough claim will be limited to 4.
Unlike the original CJRS furlough scheme there is no minimum furlough period as the intention is to allow employers the flexibility to gradually bring employees back to work. The hours/days worked will need to be agreed between employee and employer which is likely to involve amending the employees’ contracts.
Employees will be entitled to their normal contractual pay for the hours that they work and must be paid at least 80% of their normal pay for the hours that they are furloughed, even when HMRC are only reimbursing 70% or 60%. Employers will need to notify HMRC of the employee’s usual hours and the hours worked in the claim period. The furloughed hours will be the difference. This will be complicated where the employee’s hours vary. There is currently a lack of clarity in the HMRC guidance on the calculation of “usual hours” and we will of course be available to assist you in making your claim. We will also be able to make the claims on your behalf. Each claim made by an employer must be for a week or more and no claim period can straddle a calendar month end.
Second Self Employed Income Support Grants
On 29 May the Chancellor announced that the grant scheme to support the self employed would also be extended with a further payment based on 70% of average profits for the 3 years ended 2018/19, limited to £6,570 rather than £7,500. The eligibility criteria remain broadly the same as the first grant claim. Self employed profits in 2018/19 must not exceed £50,000 and must be more than 50% of your total income.
If that test is not met, then the same £50,000 and 50% tests are applied to average profits and total income over the three years (or shorter period) to 5 April 2019. Self employed traders need not have claimed a grant under the old scheme to qualify for the August payment and are required to confirm that their business continues to be adversely affected by Covid-19. The deadline for making a claim for a grant under the original SEIS scheme is 13 July 2020.
Digitaccs can work with you to make sure your accounting systems are MTD compliant. To find out how, please contact us on 020 3367 1108.
The Budget – 11 March 2020
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