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Welcome… To August’s Tax Tips & News, our monthly newsletter designed to bring you tax tips and news.  Summer Work Parties Don’t forget that HMRC allows your company to spend up to £150 (in total) per staff member on annual parties. With coronavirus most staff missed out on a special Christmas Works Do, so maybe it’s time to plan a  Summer Barbeque or Day at the Races?  You don’t need to report to the HMRC is as long as it is: £150 or less per employee (per year), and open to all your staff. August 2021 · Latest news round up · R&D Tax Credits now less Generous · Hospitality VAT Flat Rate Scheme · Tax-Free Childcare and summer activities · August questions and answers · August key tax dates Latest news round up top COVID-19 From 1 August the government contribution will fall to 60%, meaning the employer will need to pay 20% to ensure the employee receives their entitlement of 80% (subject to a £2,400 per month). This will remain in place until the end of September when the scheme is set to close. HMRC published new guidance for those who have received SEISS grant payments last month. The guidance covers situations where the SEISS income may not have been correctly reported on the self-assessment return. The income needs to be reported in specific boxes on the return, and HMRC are automatically correcting returns where the amounts in these boxes do not match the taxpayers’ SEISS record. Read More   R&D Tax Credits now less generous top Hospitality VAT Flat Rate Scheme top Since April a new R&D SME tax credit PAYE cap has been in force. As usual with the HMRC they claim that this is to curb fraudulent claims.  The cap will limit the payable R&D tax credit to £20,000 plus three times the total PAYE and NIC liability of the company for the year.  Companies claiming more than £20,000 may have to reconsider their remuneration strategies. The R&D claim A robust claim will need the following:  Assessment of eligibility  Identification of R&D activity: Identifying R&D activities (using BEIS guidelines) on the meaning of R&D for tax purposes, Accurate descriptions of projects, project aims and activities Identification of eligible expenditure: confirming qualifying expenditure; ensuring non-qualifying cost categories are excluded; Analysis of externally provided workers and subcontractors at lower rate Calculation of staff costs including employer NI and pension. Calculation of the claim Supporting the analysis:ensuring sufficient supporting analysis or records, staff time to show where allocations have come from, correct allocation of costs between project periods and return periods. The reduced rate of VAT of 5% to the hospitality, holiday accommodation and attractions sector is extended until 30 September 2021. After this date, the VAT rate will be 12.5% to the end of 31 March 2022, before returning to the standard rate of VAT of 20% from 1 April 2022. The related lower flat rates under Flat Rate Scheme (FRS) will also increase to 8.5% for cafes and takeaways, 4% for pubs and 5.5% for hotels (currently 4.5%, 1% and 0% respectively). What’s interesting is that the first and second of these ratios are much higher than you would expect given the original 2019 FRS rates of 12.5% for cafes and takeaways, 6.5% for pubs and 10.5% for hotels.   Is this a good time to leave FRS for smaller businesses in these sectors?   Tax-Free Childcare and summer activities top HMRC has issued a reminder to working parents that Tax-Free Childcare (TFC), the scheme the government phased in between 2017 and 2018, is not just for “traditional” childcare costs, such as regular hours after school during term time. It’s also possible to use the account to pay for things like accredited clubs or sports activities over the summer. Read More   August questions and answers top August key tax dates top Q1. My partner has been suffering with “long COVID” for several months, and unfortunately has had to leave her job as a result. As our son is in his second year of university, we can’t really afford the drop in income, and so I am taking a second job. The hours will vary, but I am certain that the additional income will push me into the higher rate tax band for 2021/22. I have heard that the NI contributions I pay should be capped as a result, but I’m not sure how to go about securing this. Do I need to make a claim? Answer Q2. I am very keen on investing in entrepreneurial companies, and over the years have made several investments that qualified for the EIS. Two years ago, I made such an investment, and three months later gifted half of the shares to my wife. Unfortunately, we have recently separated (amicably) and are managing our own straightforward divorce. She has mentioned the possibility of selling the shares I gifted to her, but the minimum holding period has not expired. Will I be subject to income tax relief clawback? Answer Q3. I am a builder who is registered for the CIS. The vast majority of my work is as a subcontractor for a number of large companies. I am VAT registered and so have been subject to the new reverse charge rules since 1 March 2021. However, the changes combined with a downturn in work due to COVID-19 has seriously affected my finances. Could I use the Cash Accounting Scheme to help with this? Answer 1 – Due date for payment of Corporation Tax for accounting periods ending 31 October 2020 2 – P46 (Car) deadline for quarter to 5 July 2021 7 – Electronic VAT return and payment due for quarter ended 31 June 2021 16 – Claim deadline for employers for furlough days in July 19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/8/2021 31 – Last date to submit PSA figures to HMRC in order to be advised of payable amount by payment deadline in October   Need Help? top New Clients Welcome top Please contact us if we can help you with these or any other tax or accounts matters. In addition, if there’s anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list. 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, Xero, FreeAgent, Quickbooks or Clearbooks. ‘All clients using these software packages can benefit from our support. Visit our website http://www.simpleaccounting.co.uk for a look at the resource on offer.’   If the images do not show. If the images contained within this email do not show correctly please add this email to your safe senders list.

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