SEPTEMBER IS THE LAST MONTH FOR CJRS “FURLOUGH” GRANTS
The Government are pulling the plug on support to employers for furloughed staff at the end of September as they anticipate that the economy will be back to normal by October. The grant claims for employees furloughed in the month of September are 60% of the employee’s usual pay up to a maximum cap of £1,875.
Make sure that you make your final claims for the month of September by 14 October and make any adjustments by 28 October 2021.
The end of furlough may be the trigger for many businesses to assess their staffing levels going forward and many may be considering making the tough decision about which staff to make redundant.
DEALING WITH REDUNDANCIES CORRECTLY
Remember that there are key steps that need to be followed as far as employment law is concerned. It is also important to treat any payments on termination of employment correctly for tax and national insurance purposes. In genuine redundancy situations the first £30,000 paid on termination of employment is tax free but many employers get this wrong.
The £30,000 includes statutory redundancy pay and any enhancement from the employer as well as continuing benefits such as private health insurance.
The excess is subject to income tax and employer's national insurance. We can of course assist you with the process to ensure that the redundancy process is dealt with correctly.
5% RATE ON TOURISM AND HOSPITALITY ENDS 30 SEPTEMBER
The temporary 5% VAT rate that has applied to supplies made in the tourism and hospitality sector since the start of the pandemic comes to an end at the end of September. The rate then increases to 12.5% from 1 October until 31 March 2022 when it reverts to the standard rate.
For those businesses operating in this sector this will mean an amendment to their accounting software and possibly prices. Note that the 20% rate continues to apply to the sales of alcohol.
Where deposits and other payments are taken before 30 September 2021 the 5% rate would apply to that supply as that would be the tax point for the supply.
ACCOUNTING FOR IMPORT VAT ON YOUR VAT RETURN
HMRC have recently updated their guidance on accounting for VAT on goods imported from outside the UK which, since Brexit, includes the European Union.
Businesses registered for VAT in the UK can account for import VAT on their VAT Return for goods imported into:
- Great Britain (England, Scotland and Wales) from anywhere outside the UK
- Northern Ireland from outside the UK and EU
Businesses can also account for import VAT for goods moved between Great Britain and Northern Ireland that are declared into a customs special procedure, when they are removed from that special procedure.
You do not need HMRC approval to account for import VAT on your VAT Return.
Accounting for import VAT on your VAT Return has significant cash flow benefits as you declare and recover import VAT on the same VAT Return, rather than having to pay it upfront when the goods are imported and recover it later.
NOTIFY OPTION TO TAX LAND AND BUILDINGS WITHIN 30 DAYS
If you are notifying HMRC of a decision to opt to tax land and buildings, you are normally required to notify HMRC within 30 days. The 30 day deadline was temporarily extended to 90 days to help businesses and agents during the pandemic, but that temporary extension has now ended for decisions made from 1 August 2021 onwards.
Supplies of land and buildings, such leasing or renting out a property, are normally exempt from VAT. This means that no VAT is payable, but the person making the supply cannot normally recover any of the VAT incurred on property expenses.
However it is possible to waive the exemption, or “opt to tax” the land. For the purposes of VAT, the term ‘land’ includes any buildings or structures permanently affixed to it.
Once you have opted to tax all the supplies you make of your interest in the land or buildings will normally be standard-rated, and this will normally enable you to recover any VAT you incur in making those supplies.
COMPANY LOSS RELIEF CAN BE CLAIMED EARLY
Where a company makes a trading loss of no more than £200,000 in an accounting period it is now possible to claim relief for that loss even though the corporation tax return CT600 has not been submitted.
This will enable the company to carry back the loss to earlier years and obtain a repayment of tax previously paid.
HMRC will however need evidence of the loss to support the claim, in particular a PDF of the company’s management accounts for the period.
In determining whether the loss is no more than £200,000 the company is required to claim all available reliefs, in particular capital allowances.
Where companies are members of a group the £200,000 limit applies to each individual company. Note that for members of a group the £2,000,000 limit on the temporary extended carry back applies to the group as a whole. The extended carry back allows companies to carry back trading losses two further years in addition to the normal one year carry back.
We can of course advise you on the best use of trading losses.
Losses carried back will result in a repayment of corporation tax at 19% whereas if carried forward against profits the losses may save tax at up to 25% after April 2023.
DIARY OF MAIN TAX EVENTS - SEPTEMBER/OCTOBER 2021
||PAYE & NIC deductions, and CIS return and tax, for month to 5/9/21 (due 22 September if you pay electronically)
||Corporation tax for year to 31/12/20 unless pay by quarterly instalments
||Deadline for notifying HMRC of chargeability for 2020/21 if not within Self-Assessment and receive income or gains on which tax is due
||Final date for CJRS Furlough grant claims for September 2021
||PAYE & NIC deductions, and CIS return and tax, for month to 5/10/21 (due 22 October if you pay electronically)
Please contact a member of our team if you would like to discuss any of the issues raised.
Dawn, James, Mark, Deb, Penn, Lucy and Becky
Telephone: 01969 624999