Newsletter - December 2020
Welcome to this months Newsletter.
We hope you find the articles in this month’s issue of our newsletter of interest.
More on extended furlough scheme
Self-Assessment filing deadline draws near
Trivial benefits are not so trivial
Customs changes from 1 January 2021
Tax Diary December 2020/January 2021
Business Support - More on extended furlough scheme
Most employers who are eligible will be aware that the furlough scheme (the Coronavirus Job Retention Scheme) has been extended for five months – from 1 November 2020 to 31 March 2021.
The general terms for the first quarter to 31 January 2021 are:
- Maximum claim per employee is 80% of hours not worked.
- Furlough claims will be capped at £2,500 per employee per month for hours not worked.
- Employers will remain responsible for paying for any hours worked, albeit on a flexible basis, and for any pension and National Insurance costs.
- Employers can top-up wages for hours not worked at their discretion.
This is a welcome extension for many businesses that were facing difficult choices as the previous furlough scheme ended 31 October 2020.
Readers should note that the amounts of government support – 80% capped at £2,500 for hours not worked – only applies to 31 January 2021. During January, these rates may be changed, and much will depend on the economic challenges at that time. We will of course publish any changes announced in the new year.
Employers claiming under the new scheme should also note:
- The previously announced £1,000 Job Retention Bonus has been withdrawn now that the furlough scheme is extended to 31 March 2021.
- One condition of the new scheme is that employers accept that HMRC will publish information about their claim on the internet. This will include the name of the employer and a reasonable indication of the amount claimed.
- Furlough agreements must be in place before the start of a claims period. These agreements can be subsequently varied.
- Claims cannot be made if an employee is serving a notice period between 1 December 2020 and 31 January 2021.
Income Tax - Self-Assessment Filing deadline draws near
If you have still not submitted all of the information we need to complete your 2019-20 tax return, could we ask you to respond as soon as you can as the deadline is fast approaching – 31 January 2021.
HMRC has made no announcement that this deadline will be extended. Accordingly, the initial £100 late filing penalty will apply to any 2019-20 return filed electronically after 31 January 2021.
If you are having difficulties tracking down information, lost P60s etc, please call so that we can agree on a strategy to secure the missing data.
None of us need any additional pressure at this point in time as we all grapple with the effects of COVID disruption. However, we hope you can respond to this request – if it applies to you – in good faith and in the knowledge that our first priority is to keep you compliant and to avoid penalties.
Finally, can we thank readers who have supplied the required tax return information prior to this reminder.
Payroll - Trivial benefits are not so trivial
A reminder that It is possible to make small tax-free payments to employees, including directors, and this might be an appropriate time to make a small tax-free bonus in advance of the annual Christmas, New Year holidays.
Employers and employees don’t have to pay tax on small benefits provided they comply with the following rules:
- it cost you £50 or less to provide,
- it isn’t cash or a cash voucher,
- it isn’t a reward for work or performance related activity
- it isn’t in the terms of an employees’ contract.
HMRC describes these payments as a ‘trivial benefit’. Based on the national mood following months of COVID disruption, these so-called trivial benefits now seem a possible means to spread a little good cheer.
A word of caution
Where the employer is a close company, and the benefit is provided to an individual who is a director or other office holder of the company (or a member of their family or household) the exemption is capped at a total cost of £300 in the tax year.
Secondly, if you provide a benefit to a group of employees and it is impractical to work out the exact cost per head, then it is acceptable to average the cost per employee.
Customs Duties - Customs changes from 1 January 2021
Most smaller businesses will not have the resources to train and employ their own customs clearance staff in which case you may have to consider using a customs agent or broker. We have reproduced the advice on the GOV.UK website on this critical issue below.
If you do import or export goods from and to the EU you could consider one of the options that follow:
You can hire a person or business to deal with customs for you, such as:
- freight forwarders
- customs agents or brokers
- fast parcel operators
What they can do for you (and who will be liable) depends on:
- the services they provide
- what you want them to do
- the commercial agreement you have with them
They can act for you either as a:
- direct representative
- Indirect representative
They cannot act on your behalf without written instructions from you. The instruction must show whether they’re acting for you directly or indirectly. HMRC will only ask for evidence of the authorisation when required.
Freight forwarders move goods around the world for importers.
A freight forwarder will arrange clearing your goods through customs. They’ll have the right software to communicate with HMRC’s systems.
Customs agent or broker
Customs agents and brokers make sure your goods clear through customs.
Fast parcel operators
Fast parcel operators transport documents, parcels and freight across the world in a specific time frame. They can deal with customs for you, as part of their delivery.
Tax Diary - Tax Diary December 2020/January 2021
1 December 2020 - Due date for Corporation Tax payable for the year ended 28 February 2020.
19 December 2020 - PAYE and NIC deductions due for month ended 5 December 2020. (If you pay your tax electronically the due date is 22 December 2020)
19 December 2020 - Filing deadline for the CIS300 monthly return for the month ended 5 December 2020.
19 December 2020 - CIS tax deducted for the month ended 5 December 2020 is payable by today.
30 December 2020 - Deadline for filing 2019-20 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2021-22.
1 January 2021 - Due date for Corporation Tax due for the year ended 31 March 2020.
19 January 2021 - PAYE and NIC deductions due for month ended 5 January 2021. (If you pay your tax electronically the due date is 22 January 2021)
19 January 2021 - Filing deadline for the CIS300 monthly return for the month ended 5 January 2021.
19 January 2021 - CIS tax deducted for the month ended 5 January 2021 is payable by today.
31 January 2021 – Last day to file 2019-20 self-assessment tax returns online.
31 January 2021 – Balance of self-assessment tax owing for 2019-20 due to be settled on or before today unless you have elected to extend this deadline by formal agreement with HMRC.
Also due is any first payment on account for 2020-21.
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DISCLAIMER - PLEASE NOTE: The ideas shared with you in this newsletter are intended to inform rather than advise. Taxpayers’ circumstances do vary and if you feel that tax strategies we have outlined may be beneficial it is important that you contact us before implementation. If you do or do not take action as a result of reading this newsletter, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.