I hope you're all having a good summer - I have purposefully held back on these updates so that you can concentrate on either returning to trade, and/or enjoying a break. There are a few updates that I now need to communicate, the most prevalent at this stage is the second SEISS grant.
SEISS Grant
This week HMRC are writing to self-employed people who may be eligible. The scheme will open for claims on 17th August and customers will have been given a date to make a claim. They can claim any time between their allocated date and the 19 October 2020.
The eligibility criteria for the second grant is exactly the same as the first grant – so self-employed people who were eligible for the first SEISS grant will be eligible for the second grant, so long as their business has been adversely affected since 14 July 2020. This typically means that their business has experienced lower income and / or higher costs because of coronavirus (COVID-19) since 14 July. There is no minimum threshold over which a business’s income, costs or activity need to have changed by, but clients will be asked to keep appropriate records as evidence of how their business has been adversely affected.
The second taxable grant is worth 70% of average monthly trading profits, a reduction from the 80% available under the first grant. This will be paid out in a single instalment and will be based on three months’ worth of trading profits and capped at a maximum of £6,570.
Eligible Parents
Self-employed parents whose income may have been affected if they took time out to have children will also now be able to claim if they meet the eligibility criteria. There’s more information for new parents, including an online form on GOV.UK
Job Retention Bonus
Employers will be able to claim a one-off payment of £1,000 for every employee they have previously received a grant for under the Coronavirus Job Retention Scheme (CJRS) and who remains continuously employed through to the end of January 2021.
To be eligible, the employee must have received earnings in November, December and January, and must have been paid an average of at least £520 per month, and a total of at least £1,560 across the three months.
As the employer, they will be able to claim the bonus after having filed PAYE information for January 2021, and the bonus will be paid from February 2021. More detailed guidance, including how employers can claim the bonus online will be available by the end of September.
What clients need to do now
If you or your clients intend to claim the Job Retention Bonus, you must:
ensure all employee records are up to date
accurately report employees’ details and wages on the Full Payment Submission (FPS) through the Real Time Information (RTI) reporting system
make sure all of your CJRS claims have been accurately submitted and you have told us about any changes needed (for example if you’ve received too much or too little).
Changes to Coronavirus Job Retention Scheme
From 1 August 2020 CJRS continue to provide grants for furloughed employees but no longer funds employers’ National Insurance (NI) and pensions contributions. Employers now have to make these payments from their own resources for all employees, whether furloughed or not. HMRC guidance has been updated to reflect these changes.
Making sure your data is right
It’s important that clients clients provide the data we need to process your claim. Payment of your grant may be at risk or delayed if you submit a claim that is incomplete or incorrect. We may be in touch to request employee data if it’s missing from your previous claims.
National Insurance numbers
Employers need to provide a National Insurance number (NINO) for all employees as part of their CJRS claim. The only exception is in the very limited circumstances where an employee genuinely does not have a NINO, for example if they are under 16 years old.
If you are claiming for an employee whose NINO you don’t currently know, you can check their number by searching GOV.UK for 'Check a National Insurance Number using basic PAYE Tool'.
We can no longer accept claims for fewer than 100 employees by phone where employers do not have all employee NINO's unless the employees they are claiming for genuinely do not have these.
Claimed too much in error?
If you or your clients have claimed too much for a CJRS grant and have not repaid it, you must notify us and repay the money by the latest of whichever date applies below:
90 days after receiving the CJRS money you’re not entitled to
90 days from when circumstances changed so that you were no longer entitled to keep the CJRS grant
20 October 2020 if you received CJRS money you’re not entitled to, or if your circumstances changed on or before 22 July.
If you do not do this, you or your clients may have to pay a penalty. We do understand mistakes happen, particularly in these challenging times, and will not seek out innocent errors and small mistakes for compliance action. We will act, however, against anyone who deliberately sets out to defraud the system or claims money they aren’t entitled to.
How to let us know about claiming too much
If you or your clients have received more than you are entitled to, you can let us know as part of your next online claim without needing to call us – the system will prompt you to add details on if you have received too much. For more information, search for ‘if you claim too much or not enough from the Coronavirus Job Retention Scheme’ on GOV.UK.
If you or your clients received too much and do not plan to submit further claims – or you have claimed less than you were entitled to – please contact us by searching ‘Contact HMRC' on GOV.UK.
What employers need to do from 1 September
• From 1 September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours furloughed employees do not work
• Employers will need to pay 10% of furloughed employees’ wages to make up 80% of their total wages up to a cap of £2,500. The wage cap is proportional to the hours not worked
• Employers will continue to pay furloughed employees’ NI and pension contributions.
Redundancies
The Government has introduced legislation which will ensure that employees who have benefitted from the Coronavirus Job Retention Scheme do not lose out on certain entitlements. The legislation will ensure that a number of statutory rights including redundancy pay, notice pay and compensation for unfair dismissal are based on an employee’s normal pay, rather than their furlough pay (potentially 80% of their normal wage). The announcement of the legislation is available on GOV.UK. The new legislation will ensure that the entitlements outlined above, relating to termination of employment, are based on an employee’s normal pay rather than on any reduced rate relating to being furloughed. Whilst the Government hope that employers will do everything they can to avoid making redundancies, this legislation will ensure that where someone who had previously been furloughed does lose their job, they receive the full compensation they are due. ACAS can advise you about how to work out average weekly pay for someone that has been on furlough.
VAT Reverse Charge for Builders and Those in the Construction Industry
The reverse charge measure will now come into effect on 1 March 2021, in order to help the construction sector deal with the impacts of COVID-19; this will allow businesses more time to prepare. An HMRC brief was issued in June, giving more information.
Every VAT registered construction business will have received an individual letter in February 2020, advising them to check if they might be liable for the reverse charge. If so, they should start to prepare now. The key aspects are:
• It will apply to standard and reduced-rated supplies of building and construction services made to VAT registered businesses, who in turn also make onward supplies of those building and construction services
• The contractor will be responsible for paying the output VAT due rather than the sub-contractor but can continue to reclaim this amount as input tax
• The scope of supplies affected is closely aligned to the supplies required to be reported under the Construction Industry Scheme but does not include supplies of staff or workers for use by the customer
• The legislation introduces the concept of “end users” and “intermediary suppliers”. This covers businesses or groups of associated businesses that do not make supplies of building and construction services to third parties and as such are excluded from the scope of the reverse charge if they receive such supplies. Examples include landlords, tenants and property developers.
End of VAT Payment Deferrals
To provide government support during the early stages and peak of the COVID-19 pandemic, HMRC gave businesses the option to defer VAT payments if they were unable to pay on time. They could do this without incurring late payment interest or penalties. Under the scheme, payment of VAT due between 20 March and 30 June could be deferred until 31 March 2021. VAT deferred through the scheme can be paid through ad hoc payments and overpayments ahead of the deadline if preferred, so long as full payment is made by that date. As planned, the scheme came to an end on 30 June. Businesses now need to set up any cancelled direct debits in time for payment of their next VAT return. Further information can be found on Gov.uk
Thought of the Day
This time, the thought of the day comes from the great Dolly Parton, in which she is quoted;
"The way I see it, if you want the rainbow, you've gotta put up with the rain"
Continue to stay safe, everyone.
Until the next one...
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