By Katie Business Advice • Business News • Tax Advice • Tax News 0 Comments

Get ready for leaving the European Union on 1st January 2021

Leaving the European Union: The United Kingdom leaves the European Union at 11pm on 31 December 2020 when the transitional period ends. It is still unclear whether a trade deal will have been agreed with the EU by that date, and such an agreement is looking increasingly unlikely. HMRC have started writing to businesses alerting them to important changes from 1 January 2021 and suggesting that they have new procedures in place if they wish to trade with the EU from that date.

In particular, businesses will need to submit declarations when importing and exporting goods that are categorised as ‘controlled’. Import processes for non-controlled goods will be phased in over a 6 month period. ‘Controlled’ goods include alcohol, explosives and certain drugs.

OBTAIN AN EORI NUMBER

If you have been trading internationally you should already have an Economic Operator Registration and Identification (EORI) number. You will need this to complete customs declarations. If you do not yet have one, you can register for free by going to www.gov.uk/eori

Businesses need to decide how they are going to make customs declarations. Customs agents, freight forwarders and express operators can help with declarations and ensure the business is providing the necessary information.

IMPORTS OF GOODS SUBJECT TO STAGED CONTROLS

Most traders with a good compliance record will be able to defer import declarations on most goods for up to 6 months after 1 January 2021 depending on the nature of the goods.

KEY VAT ISSUES AT THE BORDER

Businesses will need to decide how they will account for import VAT when they make a customs declaration. From 1 January 2021, businesses will be able to use postponed VAT accounting to account for import VAT on their VAT Return for goods imported from anywhere in the world.

They will also need to check if Import VAT is due at the border.  Import VAT will not be due at the border if goods in a consignment do not exceed £135 in value. The only exceptions will be excise goods and gifts.

WHAT TARIFFS APPLY FROM 1 JANUARY?

From 1 January 2021, there will be new rates of Customs Duty for imports – called the UK Global Tariff.

The Tariff rates for transactions with the EU will depend upon whether or not a deal is reached. For example, if there is no deal with the EU the Tariff on motor cars will be 10% so many car dealers are suggesting that business should consider acquiring a new vehicle before 1 January. To check the tariffs that will apply to goods you import, go to www.gov.uk/guidance/uk-tariffs-from-1-january-2021

Need more information?

Do you need help with changes made by leaving the European Union? We offer a wide range of services for global businesses. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

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    By Katie COVID-19 • Covid-19 Hub • Tax News 0 Comments

    Job support scheme starts 1st November

    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 as follows:-

    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.

    The employee will be entitled to 2/3 of their usual pay for hours not worked and the Government will pay a grant of 1/3 of usual pay for hours not worked. The maximum grant will be £687.92 a month.

    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 BY THE CHANCELLOR

    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.

    The temporary 5% rate of VAT for the hospitality sector, accommodation and attractions will be extended to 31 March 2021.

    Businesses that have deferred their VAT payments will be able to pay back the deferred amount over 11 months.

    The “Bounce-back” and CBILS loans can be repaid over 10 years instead of 6 years.

     

    Need more information?

    Does your business need support on the Job Support scheme . We have supported all our clients during the Coronavirus and many new clients. Our services are unique to your business and ur team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

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      By Katie Business News • Tax Advice • Tax News 0 Comments

      Chancellor outlines Winter Economy Plan

      The Chancellor, Rishi Sunak has outlined the Winter Economy Plan with additional government support to provide certainty to businesses and workers impacted by coronavirus across the UK. Central to the plan is a new Job Support Scheme and an extension of the Self Employment Income Support Scheme and help to pay back loans. Please find more information below.

      Support for workers
      From 1st November 2020, a 6 month scheme will be available to to protect viable jobs in businesses who are facing lower demand over the winter months due to coronavirus. The government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand. Employers will continue to pay the wages of staff for the hours they work – but for the hours not worked, the government and the employer will each pay one third of their equivalent salary. This means employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they can’t work. In order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.

      A Job Support Scheme Factsheet can be found here with more information.

      Tax cuts and deferrals
      Those who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year. On top of this, self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.

      Additionally, as part of the package, the government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year. This will give businesses in the sector – which has been severely impacted by the pandemic – the confidence to maintain staff as they adapt to a new trading environment.

      Flexibility to pay back loans
      A new Pay as You Grow flexible repayment system will provide flexibility for firms repaying a Bounce Back Loan. This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses. These measures will further protect jobs by helping businesses recover from the pandemic. The government also intend to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.

      In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes that are helping over a million businesses until the end of November. As a result, more businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund. This change aligns all the end dates of these schemes, ensuring that there is further support in place for those firms who need it.

      Need more information?

      If you need more guidance on the Winter Economy Plan, please do not hesitate to contact our team. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

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        By Katie Business News • Tax Advice • Tax News 0 Comments

        Certain property business owners are liable to class 2 National Insurance Contributions

        Class 2 National Insurance Contributions (NICs) are currently paid at the rate of £3.05 per week by self-employed earners. A person who is liable to Income Tax on the profits arising from the receipt of property rental income will only be a self-employed earner for NICs purposes if the level of activities carried out amounts to running a business.

        HMRC have recently issued clarification which states that in order for a property owner to be a self-employed earner, their property management activities must extend beyond those generally associated with being a landlord which include, but are not limited to, the following:-

        • undertaking or arranging for external and internal repairs
        • preparing the property between lets
        • advertising for tenants and arranging tenancy agreements
        • generally maintaining common areas in multi-occupancy properties; or
        • collecting rents.

        The HMRC guidance suggests that the ownership of multiple properties, actively looking to acquire further properties to let, and the letting of property being the property owner’s main occupation could be pointers towards there being a business for NICs purposes.

        A landlord will also be a self-employed earner if any of their activities amount to a trade for Income Tax purposes. This could include, for example, receiving income from other services provided to tenants.

        Need more information?

        Do you need more guidance on National Insurance Contributions? We offer a wide range of services which are unique to your business. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

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          By Katie Making Tax Digital • Tax Advice • Tax News 0 Comments

          MTD for VAT to be extended to all VAT registered businesses in 2022

          Since 2019, the vast majority of VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) have been mandated to keep digital VAT records and send returns using Making Tax Digital (MTD)-compatible software.

          From April 2022 these requirements will apply to all VAT-registered businesses.

          It has also been announced that MTD for Income Tax Self-Assessment (ITSA), which was originally intended to start in 2018, will finally be introduced from April 2023 for unincorporated businesses and landlords with total business or property income above £10,000 per year.

          Most businesses will have 2 years to prepare and test the service voluntarily prior to its introduction.

          Need more information?

          We offer a wide range of services for VAT registered businesses. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want VAT advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

          Our fantastic team at A&C Chartered Accountants are here to help.

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            By Katie Business Advice • Tax Advice • Tax News 0 Comments

            VAT definition of “motor car”

            For VAT purposes the definition of a motor car has been amended several times over the years.

            The current definition states:   “Motor car” means any motor vehicle of a kind normally used on public roads which has three or more wheels and either:

            1. a) is constructed or adapted
              solely or mainly for the
              carriage of passengers; or
            2. b) has to the rear of the
              driver’s seat roofed
              accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows;

            There are a number of exceptions to this rule: notably vehicles constructed to carry a payload of one tonne or more, i.e. double cab pick-ups such as a Toyota Hilux.

            COMPANY VANS WERE MOTOR CARS

            The Court of Appeal have now ruled on the tax status of certain vehicles provided to employees of Coca Cola. The court has upheld the HMRC view that vans with windows and a second row of seats behind the driver are not goods vehicles but motor cars for benefit in kind purposes.

            Consequently, the income tax and national insurance payable by employee and employer is significantly higher than if the vehicles had been classified as goods vehicles.

            The income tax legislation defines a “goods vehicle” as “a vehicle of a construction primarily suited for the conveyance of goods or burden of any description…”

            At the Tax Tribunal it was decided that modified VW Kombi vans failed this test whereas modified Vauxhall Vivaro vans did fall within the definition of goods vehicles.

            It has now been determined that the Vauxhalls should also be taxed as motor cars for P11d benefit in kind purposes. This means that where the vehicle is available for private use the taxable benefit will be based on the original list price multiplied by a percentage based on the vehicle’s CO2 emissions.

            The decision means that employers may need to reconsider providing such vehicles. They may also need to rectify the P11d reporting in respect of earlier years and we await further guidance from HMRC.

            What is also particularly confusing, and thus difficult for businesses to deal with, is that the benefit in kind rules are not the same as the rules for recovery of input VAT and it would be useful if there was a common definition for tax purposes

            Need more information?

            Do you need more guidance on the VAT definition of “motor car?” We offer a wide range of services and our team of chartered accountants have a wealth of experience with company cars. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

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              By Katie Tax Advice • Tax News 0 Comments

              Rumours of capital gains tax increase

              There has been a lot of speculation in the Press that the Chancellor may introduce radical changes to capital gains tax to start to repay the substantial Government borrowings to support businesses and employees affected by the coronavirus pandemic.

              It has been suggested that the current £12,300 CGT annual exemption will be reduced and the rates aligned with the rates of income tax. It has also been suggested that the capital gains uplift on death may be abolished following recommendations by the Office of Tax Simplification and the House of Commons Treasury Select Committee.

              The Treasury Committee has recently launched a new inquiry called ‘Tax after coronavirus’. That inquiry will consider different ways of raising taxes, in particular a thorough review of UK tax reliefs which has also been recommended by the Public Accounts Committee.

              The Chancellor has also hinted that there may be radical changes to the way that the self-employed and directors of family companies may be taxed in future.

              Need more information?

              Do you need help with capital gains tax? We offer a wide range of services and have a dedicated team of tax specialists. We work with businesses from a large range of sectors and are here to help you whenever you need us. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

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                By Katie Tax Advice • Tax News 0 Comments

                Reporting property gains within 30 days

                Reporting property gains within 30 days

                Since 6 April 2020 where UK residential property is disposed of, the resulting capital gain needs to be reported and the capital gains tax paid within 30 days of completion of the disposal. There have been a number of teething problems with the new online reporting system and HMRC stated that there would be no penalties imposed for late returns, provided the returns were submitted by 31 July 2020. Taxpayers need to obtain a Government Gateway account and apply for a CGT or property reference number to report disposals, although they can authorise their accountant to report the disposals on their behalf.

                Currently only the first disposal may be reported using the online reporting system with any subsequent disposals being reported using a paper return. We have been told that the new system will be fully functional shortly.

                Need more information?

                Do you need help with property gains? We offer a wide range of services and our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

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                  By Katie Business News • Tax News 0 Comments

                  Changes to CJRS furlough claims

                  Furlough claims changes: The government has been paying the wages of more than nine million furloughed workers as part of the coronavirus job retention scheme during the pandemic. Rishi Sunak announced that the scheme would be coming to an end on October 31, with changes coming in each month until then to wind it down.

                  The changes will mean little for employees, who will continue to receive 80 per cent of their wages, up to £2,500 a month, until the scheme ends.

                  But from August, employers will need to start making a contribution. For the month of August the Government will continue to pay 80% of employees’ regular pay for hours that they are furloughed but will no longer pay the associated employer NICs and pension costs. The government support then reduces to 70% in September and 60% in October. Contact us if you need help with your claims.

                  Need more information?

                  We have dedicated team members looking after furlough claims for our clients. We offer a variety of services which are unique to your business. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

                  Our fantastic team at A&C Chartered Accountants are here to help.

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