Tax Diary September/October 2020

1 September 2020 – Due date for Corporation Tax due for the year ended 30 November 2019.

19 September 2020 – PAYE and NIC deductions due for month ended 5 September 2020. (If you pay your tax electronically the due date is 22 September 2020)

19 September 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2020. 

19 September 2020 – CIS tax deducted for the month ended 5 September 2020 is payable by today.

1 October 2020 – Due date for Corporation Tax due for the year ended 31 December 2019.

19 October 2020 – PAYE and NIC deductions due for month ended 5 October 2020. (If you pay your tax electronically the due date is 22 October 2020.)

19 October 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2020. 

19 October 2020 – CIS tax deducted for the month ended 5 October 2020 is payable by today.

31 October 2020 – Latest date you can file a paper version of your 2020 self-assessment tax return.

Redundancy factsheets for employers and employees

The government has published two factsheets on redundancy, one for employers and one for employees. 

The fact sheet for employers provides guidance on the support and information available to them from the government’s free “Rapid Response Service”. It advises employers to get in touch as soon as employees are at risk of redundancy, as it can provide a tailored package of free support through the process of redundancy from its network of partners. The fact sheet also links to other governmental and non-governmental sources of useful information on redundancy.

The fact sheet for employees offers guidance on the support and information available to help them find a new job. The document explains where to look for jobs, how individuals can improve their skills, what benefits are available and how claims are made, where advice can be sought on redundancy-related issues and where information can be found on pensions. 

Access to Work scheme extended to working from home

The government has announced that disabled workers who are working from home during the coronavirus pandemic can now benefit from financial support following an extension to the Access to Work scheme. 

Workers can now apply to the Access to Work Scheme for grant funding if they are disabled and need support to work from home because of coronavirus. The grant can help pay for special equipment such as a screen reader or support worker services. If they are travelling into the workplace and, due to their health condition, public transport is not currently a safe option, the grant can now cover taxi fares. This funding can be fast-tracked if the worker is in the clinically extremely vulnerable group. Finally, if the worker is anxious about returning to work and needs additional support, they can also get mental health support through Access to Work with a tailored package for up to nine months.

An Access to Work grant can be applied for online or over the phone: 0800 121 7479. The worker must apply for it; their employer cannot do so.

Settlement legislation

The settlement rules are intended to prevent an individual from gaining a tax advantage by entering into arrangements which divert his or her income to another person who is liable at a lower rate of tax or is not liable to Income Tax.

Where a settlor has retained an interest in a property, the income arising is treated as the settlor’s income for all tax purposes. A settlor can be said to have retained an interest if the property or income may be applied for the benefit of the settlor, a spouse or civil partner.

In general, the anti-avoidance settlements legislation can apply where an individual enters into an arrangement to divert income to someone else and in the process, tax is saved.

These arrangements must be:

  • bounteous, or
  • not commercial, or
  • not at arm’s length, or
  • in the case of a gift between spouses or civil partners, wholly or substantially a right to income.

However, there are a number of everyday scenarios where the settlements legislation does not apply. In fact, after much case law in this area, HMRC has confirmed that if there is no 'bounty' or if the gift to a spouse or civil partner is an outright gift which is not wholly, or substantially, a right to income, then the legislation will not apply.

Support clients with grant aid 

At the end of July, the government announced £20m of new grant funding was to be allocated to Growth Hubs, specifically to help smaller businesses that have been negatively impacted by the COVID-19 pandemic to access much needed professional support.

These grants will provide businesses between £1,000 and £5,000 to help them access or adapt new technology and other equipment as well as to pay for professional, legal, financial or other advice to help them get back on track. The grants could be used, for example, to cover certain support services provided by accountants.  

The exact amount of the grants will be decided at a local level but are expected to typically be up to £3,000. Under certain circumstances the maximum grant of £5,000 may be awarded. 

The support will be delivered from the England European Regional Development Fund. The funding has been allocated to Growth Hubs within each Local Enterprise Partnership and the scheme is expected to open shortly. It should be noted that this funding is extremely limited and available on a first come, first served basis. There will be no obligation for businesses to contribute financially as the grant will be fully funded by the government. 

To establish a viable grant programme, the government has set a minimum of £250,000 for all Local Enterprise Partnership areas. The allocation of resources will be reviewed as the grant funding is delivered. The funding is being provided to address immediate needs and all grants must be awarded by 28 February 2021 and all activity fully completed by 31 March 2021.

Property not let at commercial rates

There are special rules that apply when a property is let at less than a commercial rate or is not let on commercial terms. These rules also apply if a property is occupied rent free or at less than a commercial rate, for example, a property is occupied by a family member at a reduced or nil rent.

In these circumstances, HMRC can take the view that unless the landlord charges a full market rent for a property and imposes normal market lease conditions, it is unlikely that the expenses of the property are incurred ‘wholly and exclusively’ for business purposes.  Problems may also arise when considering the deduction of expenses during periods when the property is lived in by ‘house sitters’ who do not make any payment whilst staying at the property.

HMRC generally accepts that if a property is let at below the market rate (as opposed to providing it rent-free), the landlord can deduct the expenses of that property up to the rent they receive from letting the property. This means that the affected property produces neither a profit nor a loss. Any excess expenses cannot be carried forward to be used in a later year.

If the landlord is actively seeking a tenant and a relative house sits while it is empty, relief will not be restricted as long as the property remains genuinely available for letting. Relief for capital expenditure on uncommercial lettings may also be restricted.

Agent update August 2020

HMRC has released the latest bi-monthly issue of the 'Agent Update' publication which includes summaries of recent changes and updates that have been announced. The document, that is aimed at taxation and accountancy practitioners, includes links to more detailed information on each of the topics covered. 

The topics covered in the latest edition include the following:

  • COVID-19. A reminder that the GOV.UK portal includes details of all the various financial support and other measures available to employers, businesses and employees.
  • VAT payment deferrals period. The option to defer your VAT payments ended on 30 June 2020. The Coronavirus VAT payment holiday gave businesses the chance to defer the payment of any VAT liabilities between 20 March 2020 and 30 June 2020. VAT payments now need to be made as normal. 
  • Confirmation of Payee process. Some UK banks have introduced Confirmation of Payee (COP) as a new way of giving individuals or businesses greater assurance that they are sending payments to the intended recipient. When you request a repayment from HMRC you must ensure that the details you provide match the details of the recipients account.
  • Top Slicing Relief (TSR) on life insurance policy gains. New legislation has been introduced that changes how reduced personal allowances interact with the calculation for top slicing relief. It will provide additional relief for taxpayers whose entitlement to the personal allowance has reduced because a gain is included as part of their income. The new legislation to TSR cases will apply from tax year 2018-2019.
  • Disguised Remuneration Loan Charge. Taxpayers that have outstanding disguised remuneration loans that are subject to the loan charge need to file their 2018-19 Self-Assessment tax return by 30 September 2020, including a report of any loan balances subject to the loan charge, and put in place any arrangements they need to pay the charge due on that date. Taxpayers can now elect to spread the loan balance over 3 tax years.
  • Links to new Revenue & Customs Briefs.

Eviction ban extended by 4 weeks

The government has announced a further four-week extension to the eviction ban for tenants affected by the Coronavirus pandemic. This means that landlords in England and Wales will be banned from evicting tenants until at least 20 September 2020. This takes the total ban to 6 months.

The government has also announced plans to give tenants greater protection from eviction over the winter by requiring landlords to provide tenants with a new 6 months’ notice period (extended from 3 months’) in all bar those cases raising other serious issues such as those involving anti-social behaviour and domestic abuse perpetrators, until at least 31 March 2021. The Scottish government has also introduced a ban on evictions until March 2021 and there is currently an extended 12-week notice period in Northern Ireland.

The government has said it will keep these measures under review with decisions guided by the latest public health advice.

When courts do resume eviction hearings they will carefully prioritise the most egregious cases, ensuring landlords are able to progress the most serious cases, such as those involving anti-social behaviour and other crimes, as well as cases where landlords have not received rent for over a year and would otherwise face unmanageable debts.

According to independent research, 87% of tenants have continued to pay full rent since the start of the pandemic, with a further 8% agreeing reduced fees with their landlords. However, landlords and tenants continue to face situations where tenants are unable to pay their bills resulting in lost rental income.

Taking a vehicle out of the UK?

The length of time you intend to export your car from the UK will determine declarations that you will need to make to the UK authorities and to overseas customs. It will also play an important role in determining the documentation that will be required both in the UK and on arrival at the overseas destination.

If you are taking your vehicle out of the UK for more than 12 months, it will be considered permanently exported and you must notify the DVLA. You can do this by completing the ‘permanent export’ section of your vehicle log book (V5C) to show the intended date of export. The completed V5C form should then be returned to DVLA along with a letter confirming you have moved abroad and require a vehicle tax refund (if you’re entitled to one) be sent to your new address.

You should keep the rest of your log book with you as you may have to hand it over to the relevant authority when the vehicle is registered abroad.

If you’re buying a vehicle to take abroad make sure the seller follows the correct process for vehicles that will be registered in another country. They must give you the full log book (V5C) – not just the new keeper slip. The process is more complex if you do not have a vehicle log book (V5C).

If you are taking your vehicle out of the country for less than 12 months then this is known as a ‘temporary export’ and the rules are different.

The rules for driving may change from 1 January 2021 when the UK leaves the EU. For example, you might need an international driving permit (IDP) to drive in some countries.

Did you benefit from the Eat Out campaign?

The Eat Out to Help Out scheme to encourage the struggling restaurant sector was announced as part of the Chancellor’s Summer Economic announcements. The scheme was designed to help restaurants recover from the effects of the lockdown and has been a great success. 

The scheme was launched on 3 August 2020 and was available every Monday, Tuesday and Wednesday. The last day you can benefit from the scheme is 31 August 2020. In the first two weeks of the scheme over 35 million meals were enjoyed across the country with over 85,000 restaurants taking part. 

Meals that were eaten in at any participating restaurant on the designated days were discounted by 50% up to a maximum discount of £10 per head including children. The discount also applied to non-alcoholic drinks but could not be claimed on alcoholic drinks or service charges. 

One restaurateur commented that:

'The response to Eat Out to Help Out has been phenomenal. Even though venues are operating at reduced capacity and with smaller teams following more thorough safety measures, we’re still managing to serve a similar number of customers on Mondays – Wednesdays that we were this time last year. That makes a huge difference to independents like us.'

The scheme aimed to help protect the jobs of the hospitality industry’s 1.8 million employees by encouraging people to safely return to their local restaurants, cafes and pubs where social-distancing rules allow. Around 80% of hospitality firms stopped trading in April, with 1.4 million workers furloughed, the highest of any sector.

It will be interesting to see if any further measures are announced to help this sector once the scheme closes.