SELF ASSESSMENT TAXPAYERS MUST DECLARE COVID GRANTS ON TAX RETURNS

HMRC has reminded self assessment taxpayers to declare any COVID-19 grant payments on their 2020/21 tax return.

According to HMRC, more than 2.7 million customers claimed at least one Self-employment Income Support Scheme (SEISS) payment up to 5 April 2021.

The tax authority says these grants are taxable and customers should declare them on their 2020/21 tax return before the deadline on 31 January 2022.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said:

‘We want to help customers get their tax returns right, first time. We have videos, guidance and helpsheets available online to support you with your self assessment.’

The SEISS is not the only COVID-19 support scheme that customers should declare on their tax return. Information on which support payments need to be reported to HMRC and any that do not is available on GOV.UK.

Internet link: GOV.UK

HMRC ISSUES WARNING ON SELF ASSESSMENT SCAMS

HMRC has warned taxpayers completing their 2020/21 tax returns to ‘be on their guard’ and stay vigilant in regard to tax-related scams.

Nearly 800,000 tax scams were reported in the last year, HMRC revealed. It said that fraudsters use self assessment to attempt to steal money or personal information from taxpayers.

In the last year, HMRC received almost 360,000 bogus tax rebate referrals. HMRC will send more than four million emails and SMS messages this week to self assessment taxpayers, prompting them to think about how they intend to pay their tax bill.

It is warning taxpayers ‘not to be taken in’ by malicious emails, phone calls or texts, and to not mistake them for genuine HMRC communications.

Myrtle Lloyd, Director General for Customer Services at HMRC, said:

‘Scams come in many forms. Some threaten immediate arrest for tax evasion, others offer a tax rebate. Contacts like these should set alarm bells ringing, so if you are in any doubt whether the email, phone call or text is genuine, you can check the ‘HMRC scams’ advice on GOV.UK and find out how to report them to us.’

The self assessment deadline is 31 January 2022.

Internet link: HMRC press release

Merry Christmas and a Happy New Year

Merry Christmas and a Happy New Year from all at Gareth Hughes & Co.

Our office will close at 1pm on Friday 24 December 2021 and re open at 9am on Tuesday 4 January 2022.

 

HMRC’S TAX TAKE FALLS BY BILLIONS DUE TO PANDEMIC

HMRC saw a drop of almost £30 billion in tax revenues in the latest financial year because of the pandemic, according to its annual accounts.

In its 2020/21 annual report, HMRC reported that it had collected £608.8 billion in tax revenues, which is down from £636.7 billion collected in 2019/20.

HMRC said the drop was due to the ‘unprecedented economic circumstances caused by COVID-19, and because pandemic restrictions meant HMRC had to reduce its compliance activity’.

The reduction in compliance activity resulted in a drop of 18% in the additional tax generated by HMRC’s work tackling avoidance, evasion, and other non-compliance. This fell from £36.9 billion to £30.4 billion. The tax authority has estimated that the tax gap is now 5.3%.

HMRC reported that it delivered £60.7 billion in grants through the Coronavirus Job Retention Scheme (CJRS).

Jim Harra, HMRC’s First Permanent Secretary and Chief Executive, said:

‘Throughout this exceptionally challenging year, we kept all our core services running and ensured customers could access the right help when they needed it. To do this, we had to make choices about how we balanced our resources – for example, we took the conscious decision to divert some of our skilled advisers from PAYE and Self Assessment services to provide COVID-19 support because that’s what individuals and small businesses needed from us most urgently at a time of acute crisis.’

Internet link: GOV.UK

THREE-DAY WAIT FOR STATUTORY SICK PAY TO RETURN NEXT YEAR

The standard three-day waiting time for Statutory Sick Pay (SSP) will be reinstated for coronavirus (COVID-19)-related claims from 25 March 2022, unless the government intervenes.

Under standard rules in the UK, employers do not have to pay SSP to an employee until the fourth qualifying day in the Period of Incapacity for Work (PIW). The PIW is a period of sickness lasting four or more consecutive calendar days, not all of which may be qualifying days.

During the COVID-19 pandemic, the government suspended the three-day wait for COVID-related SSP, meaning that employers must pay it from the first qualifying day.

The amendment to the SSP rules was made in the Coronavirus Act 2020 which is due to expire after two years. This means that, unless there is an intervention to continue the measure, COVID-related SSP waiting time will automatically revert to three days on 25 March 2022.

Frank Haskew, Head of the Tax Faculty at the Institute of Chartered Accountants in England and Wales (ICAEW), said:

‘The SSP rules were not really designed with a highly infectious global pandemic in mind, which is why the current easements have been welcome.

‘While some employees who are ill from coronavirus or required to self-isolate may be unable to afford not to go to work unless they are paid SSP for the first three days, there are also small businesses where the unreimbursed cost of paying three days’ coronavirus-related SSP to employees is a real burden.’

Internet links: ICAEW website

CHANCELLOR DELIVERS BUDGET TO LAY FOUNDATION FOR A STRONG ECONOMY

On 27 October, Chancellor Rishi Sunak delivered a Budget to ensure the UK economy bounces back following the coronavirus (Covid-19) pandemic.

The Chancellor announced that total departmental spending will grow by £150 billion per year in cash terms by 2024/25, marking the largest real term increase in overall departmental spending for any Parliament this century.

Public research and development (R&D) investment will increase to a record level of £20 billion by 2024/25. Combined with R&D tax reliefs, which the government intends to modernise and refocus, total government R&D support as a proportion of GDP is forecasted to increase from 0.7% in 2018 to 1.1% in 2024/25.

The Chancellor unveiled a new temporary business rates relief in England for 2022/23 for eligible retail, hospitality and leisure properties, worth almost £1.7 billion. The government stated that the reform of business rates will make the system fairer, more responsive and more supportive of investment.

Mr Sunak also announced significant changes to fuel duty and alcohol duties: fuel duty will be frozen at 57.95p per litre for 2022/23, and drinks will be taxed in proportion to their alcohol content, making the system ‘fairer and more conducive to product innovation in response to evolving consumer tastes’.

Meanwhile, the government will give £11.5 billion to help build up to 180,000 affordable homes, whilst an additional £4.7 billion will be invested in the core schools budget in England.

The Chancellor also confirmed that the government will increase the National Living Wage to £9.50 per hour from April 2022 and cut the Universal Credit taper rate from 63p to 55p.

Internet link: GOV.UK speeches

BUSINESS GROUPS GIVE MIXED RESPONSE TO BUDGET

Business groups gave a mixed response to Chancellor Rishi Sunak’s 2021 Autumn Budget speech.

Responding to the speech, the Confederation of British Industry (CBI) said that the Chancellor had shown a willingness to listen to business with measures that will help firms innovate and the economy grow.

However, Tony Danker, Director General of the CBI, warned:

‘This Budget alone won’t seize the moment and transform the UK economy for a post-Brexit, post-Covid world. Businesses remain in a high-tax, low-productivity economy with concerns about inflation.’

Meanwhile, the Federation of Small Businesses (FSB) also voiced concerns over the Chancellor’s Budget announcements.

Mike Cherry, National Chair of the FSB, said:

‘This Budget has delivered some measures that should help to arrest the current decline in small business confidence.

‘But against a backdrop of spiralling costs, supply chain disruption and labour shortages, is there enough here to deliver the government’s vision for a low-tax, high-productivity economy? Unfortunately not.’

The British Chambers of Commerce (BCC) welcomed the changes to the business rates system in England. Shevaun Haviland, Director General of the BCC, commented:

‘The Chancellor has listened to Chambers’ long-standing calls for changes to the business rates system and this will be good news for many firms. This will provide much needed relief for businesses across the country, giving many firms renewed confidence to invest and grow.’

Internet links: CBI press release BCC press release FSB press release

MAKING TAX DIGITAL FOR INCOME TAX SELF ASSESSMENT DELAYED FOR A YEAR

The government has delayed the introduction of Making Tax Digital (MTD) for Income Tax Self Assessment (MTD for ITSA) for a year, HMRC recently announced.

The government says it has made the move in recognition of the challenges faced by many UK businesses as the country emerges from the pandemic.

It will now introduce MTD for ITSA in the tax year beginning in April 2024, a year later than planned.

It says the later start for MTD for ITSA gives those required to join more time to prepare and for HMRC to deliver a robust service, with additional time for customer testing in the pilot.

Lucy Frazer, Financial Secretary to the Treasury, said:

‘The digital tax system we are building will be more efficient, make it easier for customers to get tax right, and bring wider benefits in increased productivity.

‘But we recognise that, as we emerge from the pandemic, it’s critical that everyone has enough time to prepare for the change, which is why we’re giving people an extra year to do so.

‘We remain firmly committed to MTD and building a tax system fit for the 21st century.’

Internet linkGOV.UK

COVID-19 SICK PAY REBATE SCHEME CLOSED IN SEPTEMBER

The government’s scheme that enables small businesses to recoup statutory sick pay costs caused by COVID-19 closed at the end of September.

Legislation ending the Coronavirus Statutory Sick Pay Rebate Scheme (SSPRS) was laid before parliament on 9 September.

Before the COVID-19 pandemic, employers were obliged to pay Statutory Sick Pay (SSP) to eligible employees unable to work because of sickness. It is paid at a flat rate of £96.35 (at the current rate) for up to 28 weeks. The full cost of SSP is met by the employer.

To support employers during the pandemic, the government legislated to allow certain small and medium size employers to reclaim some, or all, of their SSP costs from HMRC via the SSPRS.

Under the new regulations, employers will not be able to reclaim SSP from 30 September 2021 and any claims relating to periods prior to that date must have been filed by 31 December 2021.

The Institute of Chartered Accountants in England and Wales (ICAEW) said:

‘It would appear that the suspension of the requirement to wait for three days before SSP is paid has not yet been repealed. The three-day rule was suspended temporarily during the peak of the COVID-19 crisis to encourage people to stay at home as soon as they felt ill.’

Internet link: ICAEW website GOV.UK

CHANCELLOR WARNED OF REDUNDANCIES AS FURLOUGH SCHEME ENDS

The government’s Coronavirus Job Retention Scheme (CJRS) ended on 30 September after supporting millions of workers during the pandemic.

The government said the wages of more than 11 million people were subsidised for at least some of the scheme’s duration at a cost of around £70 billion.

Economists say there is likely to be a rise in unemployment due to new redundancies, despite the fact that some may be able to find work in recovering sectors such as travel and hospitality.

The Federation of Small Businesses (FSB) said the end of the furlough scheme, the scrapping of the small employer sick pay rebate and the closure of the government’s apprenticeship incentive scheme will only add pressure on companies.

Mike Cherry, the FSB’s National Chair, said:

‘It’s potentially a dangerous moment. As the weather turns colder, so too will the operating environment for many firms. With recent economic growth numbers having fallen below expectations, the upcoming festive season may not provide as much of a boost as hoped to many small businesses’ bottom lines.’

Internet link: GOV.UK FSB website