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April 2020

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To April’s Tax Tips & MYOB News.

Coronavirus Outbreak
We are working as normal to help you at this difficult time.  As the Government tightens measures to try and control the spread of coronavirus (Covid 19) we will continue to update our advice as things change. 

We will highlight potential actions you can take if your business is struggling. See the Coronavirus Support page on our website.  And please help us to help you by reading these regular newsletters!
purple star.pngPayroll Star
We would like to thank Lorraine, our payroll manager, for working so hard over the past few days. Lorraine has had to navigate through a new payroll procedure (furloughing) without any detailed advice from government.  Meanwhile clients have made numerous changes to their payrolls as their circumstances have changed – many giving little
notice before the March deadline.
April 2020
· Help for the Self-Employed
· Reduction in the lifetime limit for entrepreneurs’ relief
· Furlough Agreement Letters
· Employer Pension Contributions
· April questions and answers
· April key tax dates
Help for the Self-Employed
Freelancers and contractors will be able to claim up to 80% of their profits from the state if they can prove they have been adversely affected by coronavirus. However not all people who work for themselves will be eligible.
What help is there?
If they have suffered a loss in income, a taxable grant will be paid to the self-employed or partnerships, worth 80% of their profits up to a cap of £2,500 per month. Initially, this will be available for three months in one lump-sum payment, and will start to be paid from the beginning of June.

It will be called the Coronavirus Self-employment Income Support Scheme, and is open to those who were trading in the last financial year, still trading now, and planning to continue doing so this year.

Who is eligible?
More than half of a claimant’s income needs to come from self-employment.

The scheme will be open to those with a trading profit of less than £50,000 in 2018-19, or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19. Those who are recently self-employed, having set up since April 2019, will not receive any help under this scheme. This is because they will not have filed a tax return and therefore HM Revenue and Customs (HMRC) will not know of their self-employed status.

The government’s new help comes on top of a six-month delay for tax payments through the self-assessment system. Those with the lowest incomes are in line to receive more generous benefits payments, announced previously. The chancellor said those applying for universal credit should be paid within a few days.
Reduction in the lifetime limit for entrepreneurs’ relief top
Furlough Agreement Letters
At Budget 2020 the Chancellor of the Exchequer announced that the lifetime limit of entrepreneurs’ relief (ER) would be reduced from £10 million to £1 million for ER qualifying disposals made on or after 11 March 2020.

Rules will also apply the revised limit to certain arrangements and elections that seek to apply the earlier £10 million lifetime limit. These rules are:

– forestalling arrangements involving uncompleted contracts; and
– elections made under TGCA 1992, s 169Q in connection with a share reorganisation or exchange.
Read More
Under the Coronavirus Retention Scheme employees must give agreement to being furloughed. We have prepared a draft letter which can be amended as necessary and given to all employees that are to be furloughed. For payroll clients we need to have a copy of each signed letter on file.

To make this easy for clients, we have put a copy of the draft furlough agreement letter in our shared Dropbox folder with you.  If you are not yet one of our clients and would like a copy please just .

For more information about furloughing see our special March payroll newsletter.
Employer Pension Contributions
This is the time of year when we are able to change the contribution rates for your pension scheme should you want us to. 

Delaying Pension Contributions
If you will struggle to pay pension contributions due to the coronavirus outbreak please let us know. We will then submit the contribution schedules as normal but we can delay the payments from your Direct Debit. Do not cancel your direct debit – as this is difficult to reinstate. Once pension contributions are a few weeks late the pension provider may contact the Pensions Regulator (PR). But we think it is unlikely that they will impose fines if there are extenuating circumstances .

Minimum Contribution rates
Since 2019 the total minimum contribution rates for workplace pensions have been 8% of qualifying earnings – of which at least 3% must be paid by the employer. The government has made no announcement to increase these rates again in the future. However the range of pay assessed for qualifying earnings may change slightly to the band between £520 (previously £512) and £4,167 (unchanged) per month. The earnings trigger for auto enrolment remains at £833 per month .

Our recommendation – Employer-only Contributions
Some employers, in these difficult times, will only pay 3% of the new contribution rates themselves, expecting employees to cough up the remaining 5% of contributions. We usually propose that the Employer pays the full 8% of qualifying earnings with no employee contributions.

Our reasons are as follows:
  • Unfair tax relief on Employee Contributions. When making employee contributions you can choose to have contributions taken before tax or after tax (with 20% tax relief then applied). The first option results in those paid less than £12.5k missing out on the tax relief. The second option latter means that higher rate tax payers will not necessarily get all their tax back. Neither option is ideal.
  • Meanwhile Employer Pension Contributions do not suffer NI. Employee pension contributions suffer Employer NI and (depending on the tax treatment) Employee NI. It is actually more efficient tax-wise for employees to forgo a pay increase and receive the full 8% of pension contributions from their employer.  There is no Employer or employee NI wasted on employer pension contributions.
  • Fewer complaints from staff and follow ups from Pensions Regulator. The PR offers a complaints service for employees who are unhappy about the administration of their workplace pension schemes.  We haven’t yet had any of our clients’ staff make a complaint.  We think this is because nearly all our clients pay full employer contributions.  

Temporary and Seasonal Workers
Even if staff are temporary or seasonal you have to give them the option of joining your workplace pension scheme, as you would do any other employees.   However, you can use postponement (of up to three months)  to postpone the date you assess whether they are eligible to join the pension scheme. So if they work for you less than three months you won’t need to enrol them. Please contact us if you would like a draft postponement letter to give to staff.

If you Want to Make Changes
If you would like to make changes to your scheme from April 2020 please let us know within the next two weeks.  Then we will update the details in our payroll software and with your pension provider.

For more information see our Auto Enrolment Web Page.
April questions and answers top
April key tax dates top
Q. My business imports goods from the EU. What is the current position reading postponed accounting for VAT? Answer

Q. My business produces digital publications. I am aware of the decision in the recent case of News Corp UK and Ireland Ltd (UT/2018/0065), following which HMRC maintained that the zero rate of VAT only applies to the sale of printed matter (that is, supplies of goods). However, I understand that this policy has now changed. Is this true? Answer

Q. I have recently sold a buy-to-let property in the UK, which generated a capital gain. Can I off-set this gain against a rental property development in France? Answer
5 – End of 2019/20 tax year. Last day to use up annual exemptions for capital gains tax, inheritance tax and ISA’s

6 – Start of the 2020/21 tax year

14 – Return and payment of CT61 tax due for quarter to 31 March 2020

19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/4/2020 or quarter 4 of 2019/20 for small employers. Interest will run on any unpaid PAYE/NIC for the tax year 2019/20

Need Help? top
New Clients Welcome top
Please contact us if we can help you with these or any other coronavirus or accounts matters.

We can provide further advice or documentation, for example detailed advice about claiming SSP or furlough agreement letters for your staff to sign.
If you are not already a client and are interested in becoming one, we would love to discuss how we can help and provide you with a competitive quote for our services.

See details of our Business Companion Service.
About Us top
Simple Accounting Limited offers a cost effective Business Companion service to business owners who use MYOB, Acclivity, Mamut, Solar Accounts, Quickbooks or Clearbooks.

‘All clients using these software packages can benefit from our support. Visit our website for a look at the resource on offer.’

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