Welcome to the May 2020 Newsletter from Walsh & Co
The UK economy continues to be gripped by the coronavirus (COVID-19) pandemic, with the government's compulsory lockdown being extended by 'at least' three weeks until 11 May. Businesses across the country continue to feel the adverse effects of the lockdown, whilst the government announces measures to keep the economy buoyant during the pandemic.
Meanwhile, the start of the 2020/21 tax year ushered in a range of fiscal changes, including greener benefit rates for employer-provided cars, a rise in the flat rate income tax deduction for employees who work from home and alterations to the deadline for sellers of residential property who are liable for capital gains tax (CGT).
Coronavirus Job Retention Scheme goes live as it is extended to end of June
The government's Coronavirus Job Retention Scheme went live on 20 April after Chancellor Rishi Sunak extended it until the end of June.
The scheme allows businesses to furlough their employees, with the government paying 80% of their wages up to a maximum of £2,500. The government recently widened the eligibility criteria for furloughed employees: in order to be eligible, employees previously needed to be on an employer's Pay as You Earn (PAYE) payroll on or before 28 February 2020. This date was pushed back to 19 March 2020, the day before Chancellor Rishi Sunak first announced the scheme.
HMRC emailed two million employers providing a link to a five-step guide to claiming and warned them to be aware of the scams that are circulating.
The Coronavirus Job Retention Scheme was initially open for three months and was backdated from 1 March 2020 to the end of May. The Chancellor stated that the scheme would be kept under review and extended if necessary. The Treasury stated that further decisions on the Job Retention Scheme will take into account developments on the wider measures to reduce the spread of the coronavirus.
Meanwhile, on 21 April the government unveiled a billion-pound support package for innovative businesses affected by COVID-19. The 'targeted and tailored help' provided by the package will help ensure firms in dynamic sectors of the UK economy are protected during the COVID-19 crisis so they can 'continue to develop innovative new products and help power UK growth'.
The £1.25 billion Future Fund package includes a £500 million investment fund for high-growth firms adversely affected by the pandemic, which is made up of funding from both the government and the UK private sector.
Additionally, on 27 April, Chancellor Rishi Sunak announced a micro loan scheme for small businesses. The Bounce Back Loan Scheme will allow small businesses adversely affected by COVID-19 to apply for up to £50,000, with the government guaranteeing 100% of the advance. Businesses can apply for a minimum of £2,000, up to a maximum of £50,000, or 25% of business turnover, with the government paying the interest for the first 12 months. The scheme will open at 9am on 4 May and, according to the Chancellor, most loans will be paid within 24 hours of approval. Businesses will be able to access the loans through the existing network of accredited lenders.
These are challenging times for businesses. Our latest Hot Topic analyses the Coronavirus Job Retention Scheme and offers some practical advice on applying for it.
We understand that this is an ever-changing situation, and we will endeavour to keep you up to date on the latest announcements.
Start of new tax year ushers in raft of fiscal changes
The 6 April start of the new tax year saw important fiscal changes come into effect, including the changes to the deadline for sellers of residential property who are liable for capital gains tax (CGT).
Other fiscal changes for 2020/21 include greener benefit rates for employer-provided cars and an increase in the flat rate income tax deduction for homeworkers.
From 6 April 2020, if a UK resident sells a residential property in the UK, they will have 30 days to tell HMRC and pay any money owed. The seller must submit a standalone tax return covering the CGT, which can no longer be included as part of a self assessment return. Failure to tell HMRC about any CGT within 30 days of completion may incur a penalty, as well as interest on the sum owed.
Also, as the government continues to promote greener business motoring, it has introduced new emissions tests and reduced benefit rates for cleaner vehicles.
The new Worldwide harmonised Light vehicle Test Procedure (WLTP) is more accurate than the New European Driving Cycle (NEDC) test it is replacing. The WLTP is expected to show higher vehicle carbon dioxide (CO2) emissions; however, for cars registered before 6 April 2020, the NEDC test will still be used.
For most company cars registered from 6 April 2020 car benefit rates will be reduced by two percentage points for 2020/21 from the rates previously announced. Additionally, all zero-emission models, regardless of when they were registered, will be subject to a 0% rate.
The start of the new tax year also brought changes to the national insurance contribution (NIC) threshold, which rose from £8,632 to £9,500. This gives the average full-time employee a £104 reduction in their tax bill, whilst the self-employed benefit from a £78 reduction in their tax bill.
Finally, the flat rate income tax deduction, which is available to employees to cover additional household expenses where employees work at home, has risen. This was set at a rate of £4 per week but rose to £6 per week from 6 April.
ESSENTIAL TAX DATES FOR MAY
Deadline for submitting P46(Car) for employees whose car/fuel benefits changed during the quarter to 5 April 2020.
PAYE, Student loan and CIS deductions are due for the month to 5 May 2020.
Deadline for forms P60 for 2019/20 to be issued to employees.
QUOTE OF THE MONTH
'The fall in inflation, in addition to low energy prices, is an indication of the steep recession we will see in the coming months.'
Sarah Hewin, Senior Economist at Standard Chartered Bank, commenting on the recent fall in the UK rate of inflation to 1.5%.
WEBSITE OF THE MONTH
Provides information on the COVID-19 schemes available to UK businesses.
ON OUR WEBSITE
A wealth of resources for businesses
With topics ranging from Making Tax Digital to employee expenses, the Your Business section of our site is a hub of essential information.
Useful information for individuals
For a comprehensive bank of guides covering individual savings accounts, pensions tax reliefs and much more, please visit the Your Money area of our website.