Domestic VAT Reverse Charge 2021
Domestic VAT Reverse Charge 2021 for Building and Construction Services
Domestic VAT Reverse Charge 2021
The domestic VAT reverse charge for building and construction services finally comes into effect on 1 March 2021. The start date was originally 1 October 2019, but it was postponed by one year until 1 October 2020 to allow those affected more time to prepare. The start date was further delayed – until 1 March 2021 — as a result of the COVID-19 pandemic. Detailed guidance on the charge can be found on the Gov.uk website.
Nature of the Charge
Under the domestic VAT reverse charge, the customer receiving the service must pay the associated VAT to HMRC rather than paying it to the supplier. The charge will be relevant to you if you are an individual or a business that is registered for VAT in the UK, and you supply or receive specified services that are reported under the Construction Industry Scheme (CIS). If you are a customer, you will pay the supplier the amount net of VAT and pay the VAT to HMRC. If you are a supplier, you will receive payment net of VAT and will no longer need to pay the VAT to HMRC.
Preparing for the Charge
If you are an individual or business that falls within the scope of the charge, you will need to ensure that you are ready to apply it from 1 March 2021. In preparation, you will need to check that your accounting systems and software can cope with the reverse VAT charge, and upgrade them if necessary. You should also ensure that any staff who deal with VAT understand the changes and what they need to do to comply. It is also prudent to assess how the charge will impact on your cash flow, particular if you supply services that fall within the scope of the charge as you will no longer receive the associated VAT.
Completing the VAT Return
If you are a supplier, you must not enter any output tax on any sales that fall within the domestic VAT reverse charge on building and construction services on your VAT return. Instead, you only need to enter the net sales value. If you are a customer purchasing services within the scope of the charge, you must account for the associated VAT to HMRC by including it as output tax on your VAT return. You should not enter the net value of the purchase as a net sale. You can reclaim the input tax on your reverse charge purchases in accordance with normal VAT rules.
Help and Advice
We can help you to prepare for the introduction of the charge, and comply with your obligations in relation to it.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
Building your 2021 Flexible Business Strategy
New Year, New Strategy: Building your 2021 Flexible Business Strategy
Building your 2021 Flexible Business Strategy in Uncertain Times
Building your 2021 flexible business strategy – We live in uncertain times and planning for the future is challenging. Rather than paying attention to what you can’t do, focus on what you can do. For example, when restaurants couldn’t serve customers indoors, they transitioned to delivery, take-away and outdoor dining. Regardless of the type of business that you manage, this is the mindset to develop and use for your 2021 business strategy.
Building your 2021 Flexible Business Strategy: Can-Do
Your “can-do” business strategy should start with a list of what is possible. Perhaps you can transition to doing business online, research new markets, or utilise the shift to video conferencing to create a new and more personal experience for your customers while they are in the comfort of their home. Once you have considered what you can do, you can then create some strategic objectives for the year ahead.
Consumer Centricity
Consider how you can shift your business strategy to one that is more customer centric. The best businesses are those that deliver added value to their customers. For example, you could provide new payment options to customers in order to encourage them to make a purchasing decision. Your customers will be more focused on cash flow due to the prevailing economic uncertainty, so offering structured payment plans, 12 months interest free credit and so on, could make your firm more attractive than your competitors.
Business Planning: Practical Steps
If you are considering launching new products or services in 2021, you may need to extend the timeline. The world is not back to normal (whatever the “new normal” will be) and supply chains are struggling with issues related to transportation, production backlogs, availability of materials, etc. As such, it would be prudent to allow some extra lead time in your plan for any new product or service launch. With an uncertain operating environment anticipated to continue for some time yet, it makes sense to have a backup plan. As you develop your strategy, take some time to consider what potential contingencies you can put in place in order to be ready to move in a different direction, should you run into some headwinds. If you are unsure where to start, it can be helpful to research some of the tactics that worked for other businesses, even those that may be operating in a completely different sector. You can then apply the best bits of those tactics to your own strategic plan.
Help and Advice
Please talk to us about your business strategy for this year. As you develop your 2021 business strategy, you will most likely identify some actions that you can undertake with certainty, which will help you to manage some of the risks that are inherent in operating in uncertain economic times. Perhaps you can bolster your firm’s cash reserves, reduce fixed costs, or negotiate better terms with suppliers. By proactively focusing on delivering against these actions, you will keep moving your business forward, which will help to make your firm more resilient in the medium to long term.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
New Year’s Resolutions to Save Tax
New Year’s Resolutions to Save Tax
New Year’s Resolutions to Save Tax: Planning
New Year’s Resolutions to Save Tax – At this time of year we think about New Year’s resolutions. It is also a good time to start planning your tax affairs before the end of the tax year on 5th April. An obvious tax planning point would be to maximise your ISA allowances for the 2020/21 tax year (currently £20,000 each). You might also want to consider increasing your pension savings before 5 April 2021 as the unused annual pension allowance is lost after three years. For those looking to do some inheritance tax planning, it would be a good time to review (or make) your Will.
New Year’s Resolutions to Save Tax: Pensions
For most taxpayers the maximum pension contribution is £40,000 each tax year, although this depends on their earnings. This limit covers both contributions by the individual and by their employer. Note that the unused allowance for a particular tax year may be carried forward for three years and can be added to the relief for the current, but then lapses if unused.
Hence the unused pension allowance for 2017/18 will lapse on 5 April 2021 if unused.
Reviewing your Will
Top of the to do list for many individuals is to make or update their will. Many think this is something to leave until later in life but it is important to get things in place once property is acquired or when children come along. In the absence of a will there are statutory rules which dictate how your assets are distributed on death. Those statutory intestacy rules may not be tax efficient and you might to want to make specific provision in your Will for your unmarried partner or for the guardianship of your children.
Passing on the Family Home
One recent change that should be taken into consideration when drafting your Will is the additional Inheritance Tax (IHT) nil rate band for passing on the family home to direct descendants on death. We can work with your solicitor to make sure your Will is tax efficient.
Help and Advice
Please talk to us about any of the above information or if you would like to discuss any tax matters.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
Is your business ready for Brexit?
Is your business ready for Brexit?
Is your business ready for Brexit? The UK left the European Union on 31 January 2020. The transition period ends on 31 December 2020.
Is your business ready for Brexit? The Covid-19 pandemic has dominated the news headlines this year but Brexit is still progressing. During the transition period, the UK remains in both the EU customs union and single market. Until the end of the transition period (31 December this year), most things stay pretty much the same. So, what do businesses need to think about in terms of UK-EU trade, supply chains, etc. from 1st January?
Is your business ready for Brexit?: Considerations
Brexit could affect your business in a number of ways. For example, businesses that import or export goods between the UK and the EU will need to consider what operational changes they will need to make in advance of January 1st. The UK Government has set up a helpful webpage which includes useful guides and checklists https://www.gov.uk/transition.
Customs Regime 2021
A new customs regime will come into force on 1 January 2021. Hopefully, a trade deal can be agreed by then, as the final arrangements are still not clear. UK businesses that trade with countries outside the European Union will already be familiar with an Economic Operation Registration Identification (EORI) number. From 1 January, British companies will not be able to trade with the EU without an EORI. In the absence of an EORI number, goods could be held up at ports.
Details
In addition, non-compliant businesses won’t be able to take advantage of any special measures such as deferred tariff payments that look set to be introduced to smooth the flow of trade. Another consideration for businesses is taxation. HMRC offers guidance on its website for the future treatment of payments between UK companies and EU member states. As ever, tax can be a complicated subject and it is often best to invest in some tax advice from an expert.
Help and Advice
Finally, businesses that trade with the EU may need to consider any additional regulatory obligations that come about as a result of Brexit. As things currently stand, there are a lot of unanswered questions as we still don’t know if a last-minute trade deal will be agreed between the UK and the EU. Either way, it’s worth keeping an eye on the gov.uk website for any additional guidance or updates. Please talk to us if you wish to discuss how you may need to adapt for Brexit or if you would like any other information.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
Business Planning for 2021
Business Planning for 2021: Reflections on our Situations
Business Planning for 2021: Resilience
Business Planning for 2021 – As we enter the fourth week of lockdown in England and reflect on improved testing, new vaccine trial results and a host of experts talking on the news about the timing of rollout and when Covid-19 will no longer be a threat to normality, it is worth remembering our lives are and will remain different for the remainder of 2020 and most of 2021. With that in mind we need to be resilient as individuals, families and businesses.
Business Planning for 2021: Economy
The latest indicators for the UK economy found nearly half (49%) of currently trading UK businesses reported a decrease in their turnover below what is normally expected for this time of year. On 8 November, overall UK footfall dropped to 33% of the level seen on the equivalent day last year as national restrictions were introduced in England.
Support Schemes
Clearly we are living in tough times and it makes sense to take advantage of Government supports both directly such as the extended job retention and self-employed support schemes, deferring tax and using bounce back loans. There are also grants available to help firms with Brexit changes for import and export administration.
Business Planning: Practical Steps
1. Review your budgets and set realistic and achievable targets for the remainder of 2020 and for 2021.
2. Get your employees involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues.
3. Use ‘bottom up’ budgeting where everyone in the business gives input on areas over which they have control – target a 10% cost saving.
4. Review and flowchart the main processes in your business (e.g. sales processing, order fulfilment, shipping etc.) and challenge the need for each step.
5. Encourage team members to suggest ways to streamline and simplify processes (e.g. sit down and brainstorm about efficiencies and cost reduction).
6. Put extra effort into making sure your relationships with your customers are solid.
7. Review your list of products and services and eliminate those that are unprofitable or not core products/services.
8. Review efficiency of business processes and consider alternatives such as outsourcing certain activities locally or overseas.
9. Agree extended payment terms with all suppliers in advance.
10. Pull everyone together and explain the business strategy and get their buy-in.
Help and Advice
Please talk to us about cashflow planning for the next six months. We can help with a template so you can do this yourself or we can work together to produce estimates for a variety of scenarios.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
FURLOUGH: UPDATES TO THE CJRS
FURLOUGH: UPDATES TO THE CORONAVIRUS JOB RETENTION SCHEME (CJRS)
FURLOUGH: UPDATES TO THE CJRS
Furlough: Updates to the CJRS – The scheme has been extended. Government guidance has been updated with details of how to claim for periods after 1 November 2020. The CJRS will remain open until 31 March 2021. From 1 November 2020 employers can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month.
THE CORONAVIRUS JOB RETENTION SCHEME DETAILS
Furlough: Updates to the CJRS – Employers can claim for employees who were employed on 30 October 2020, as long as they have made a PAYE RTI submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. This may differ where they have re-employed an employee after 23 September 2020. All employers with a UK bank account and UK PAYE schemes can claim the grant. They do not need to have previously claimed for an employee before the 30 October 2020 to claim for periods from 1 November 2020.
ELIGIBILITY
Employers can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked. Employers might need to contribute towards the cost of their furloughed employees’ wages for these periods. For periods from 1 November 2020, they will need to pay for the cost of employer NICs and pension costs.
CLAIMS FOR NOVEMBER 2020
Claims for furlough days in November 2020 must be submitted by 14 December 2020. This is a tight deadline, so it is important we work together to get any claims submitted promptly. We can also guide you through the information you need to gather, ensure you follow the rules and record any changes of employment terms with your employees.
GOVERNMENT SITE
See details on the Government site here. Please feel free to contact us here.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Furlough Scheme Extended until December
Furlough Scheme Extension at 80% Pay
The Coronavirus Job Retention Scheme (CJRS) Furlough Extension
Furlough scheme extended until December: On 22 October the Chancellor announced that the CJRS furlough scheme would end on 31 October 2020, to be replaced by a new Job Support Scheme (JSS). However, at 6.45 pm on 31 October 2020 when the Prime Minister announced a month long lockdown for England, he announced that the CJRS furlough scheme would be extended for one further month. This means the CJRS has now been extended until December.
Furlough Scheme Extended until December
Furlough Scheme extended until December: The grant will allow employers to be able to claim 80% of employees’ usual pay for hours that they are unable to work. Businesses will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time. Employers will be asked to cover National Insurance and employer pension contributions. As with the existing CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
More Information on the CJRS Scheme
Further details can be found here. Please also feel free to contact us.
Job Support Scheme (JSS)
The JSS scheme that replaces CJRS was originally announced in September. The scheme was originally scheduled to commence on 1 November 2020 but will now commence when the extended CJRS scheme ends and will run until the end of April 2021.
Details of JSS
It has been made more generous than in the original announcement to support businesses that are legally forced to close their premises as a direct result of Coronavirus. This is referred to as JSS Closed. For those employers that are able to operate safely but continue to face reduced demand such that they may need extra support over the winter to help keep their employees attached to their workforce, there is JSS Open.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
The Coronavirus Job Support Scheme
The Coronavirus Job Support Scheme
The Job Support Scheme starts on 1 November
The Coronavirus Job Support Scheme: The Chancellor has announced a new 6 month Job Support Scheme to help businesses and employees survive the winter months. We are still awaiting full details of the scheme that will replace the current “flexible furlough” scheme but the main features are highlighted below. Please get in touch with us if you would like to discuss this further.
Employer Eligibility
The Coronavirus Job Support Scheme: Employers of all sizes will be eligible for the new scheme but large organisations will need to demonstrate that their turnover is reduced as a result of COVID-19.
Employee Eligibility
Eligible employees will be those on the PAYE payroll at 23 September 2020 that are working for at least 33% of their usual hours. For example an employee whose usual pay is £450 a week who works 2 days a week would be paid £180 for the 2 days worked and £180 for the other 3 days. The employer could claim a grant of £90 from the Government.
Other Measures
In addition to the Job Support Scheme the Chancellor announced that the Self-Employed Income Scheme would also be extended for a further 3 months but the grant will be 20% of average monthly profits capped at £1,875.
VAT
The temporary 5% rate of VAT for the hospitality sector, accommodation and attractions will be extended to 31 March 2021. Businesses that have deferred their VAT payments will be able to pay back the deferred amount over 11 months.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
The Coronavirus Job Retention Scheme: The Final Phase
The Coronavirus Job Retention Scheme
The Final Phase
The Chancellor, Rishi Sunak, presented A Plan for Jobs at the time of the Summer Economic Update on 8 July 2020. This included incentives for employers who retain furloughed staff and who offer training and apprenticeships.
The Job Retention Bonus
The Coronavirus Job Retention Scheme (CJRS) is now in its final phase. Government support under the scheme is withdrawn gradually from August and the scheme comes to an end on 31 October 2020. Where staff are still furloughed in October, employers will need to decide whether they can bring their furloughed employees back to work.
The Coronavirus Job Retention Scheme: What is the Bonus?
To encourage employers to retain furloughed staff, a bonus – the Job Retention Bonus – of £1,000 will be paid to the employer for each furloughed employee who is employed continuously from the end of the CJRS until 31 January 2021. However, to qualify for the bonus, the employer must pay the employee, on average, earnings that are at least equal to the lower earnings limit for Class 1 National Insurance purposes, set at £120 per week (£520 per month) for 2020/21.
The Coronavirus Job Retention Scheme: Timeline
The Government will pay the bonuses from February 2021.
The Scheme: Details
The scheme is not without its critics, with Jim Harra, Chief Executive of HMRC, questioning whether it offers value for money. Some employers, including Primark and Rightmove, have stated that they will not claim the bonus. Please contact us to find out how you may be able to benefit from the incentives on offer.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
HOSPITALITY VAT REDUCTION
DETAILS ON HOSPITALITY VAT REDUCTION
HOSPITALITY VAT REDUCTION: WHAT IS IT ALL ABOUT?
When the Chancellor announced a temporary cut in the rate of VAT for the hospitality sector and attractions in his Summer Statement on 8 July there were a number of areas that needed clarification. The reduction applies to supplies made between 15 July 2020 and 12 January 2021. HMRC have now set out more details of which supplies will attract the 5% temporary rate as well as the impact on invoicing, deposits and the flat rate scheme.
WHAT DOES THE 5% TEMPORARY VAT RATE APPLY TO?
Hospitality VAT: The temporary 5% rate applies to supplies such as catering, including hot takeaway food, accommodation in hotels, guest house and similar places and tourist attractions such as theme parks, zoos, theatres and cinemas. Please note this is not an exhaustive list.
HOSPITALITY VAT REDUCTION: WHAT ABOUT ALCOHOLIC DRINKS?
Hospitality VAT: Note that as far as catering is concerned, the 5% rate only applies to food and non-alcoholic drinks. The 20% rate continues to apply to alcoholic drinks.
HOSPITALITY VAT REDUCTION: HAVE YOU PAID A DEPOSIT?
It is fairly common, particularly in the summer holidays, to pay a deposit when booking a hotel or self-catering accommodation but how should the deposit be accounted for? HMRC have confirmed that the hotel has the option of charging VAT according to the ‘basic tax point’ (dates of the stay) rather than the ‘actual tax point’ (invoice/payment dates).
DEPOSITS: DO YOU HAVE AN EXAMPLE?
For example where the customer paid a non-refundable £300 deposit in February 2020 for a £1000 holiday in Cornwall in August, using the actual tax point, the hotel would account for 20% VAT on the deposit received in February 2020 and 5% on the balance payable after 15 July 2020. The hotel could choose to use the basic tax point rule which would mean that the 5% rate would apply to the entire cost of the stay and make an adjustment for the VAT already accounted for.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
Domestic VAT Reverse Charge 2021
Domestic VAT Reverse Charge 2021 for Building and Construction Services
Domestic VAT Reverse Charge 2021
The domestic VAT reverse charge for building and construction services finally comes into effect on 1 March 2021. The start date was originally 1 October 2019, but it was postponed by one year until 1 October 2020 to allow those affected more time to prepare. The start date was further delayed – until 1 March 2021 — as a result of the COVID-19 pandemic. Detailed guidance on the charge can be found on the Gov.uk website.
Nature of the Charge
Under the domestic VAT reverse charge, the customer receiving the service must pay the associated VAT to HMRC rather than paying it to the supplier. The charge will be relevant to you if you are an individual or a business that is registered for VAT in the UK, and you supply or receive specified services that are reported under the Construction Industry Scheme (CIS). If you are a customer, you will pay the supplier the amount net of VAT and pay the VAT to HMRC. If you are a supplier, you will receive payment net of VAT and will no longer need to pay the VAT to HMRC.
Preparing for the Charge
If you are an individual or business that falls within the scope of the charge, you will need to ensure that you are ready to apply it from 1 March 2021. In preparation, you will need to check that your accounting systems and software can cope with the reverse VAT charge, and upgrade them if necessary. You should also ensure that any staff who deal with VAT understand the changes and what they need to do to comply. It is also prudent to assess how the charge will impact on your cash flow, particular if you supply services that fall within the scope of the charge as you will no longer receive the associated VAT.
Completing the VAT Return
If you are a supplier, you must not enter any output tax on any sales that fall within the domestic VAT reverse charge on building and construction services on your VAT return. Instead, you only need to enter the net sales value. If you are a customer purchasing services within the scope of the charge, you must account for the associated VAT to HMRC by including it as output tax on your VAT return. You should not enter the net value of the purchase as a net sale. You can reclaim the input tax on your reverse charge purchases in accordance with normal VAT rules.
Help and Advice
We can help you to prepare for the introduction of the charge, and comply with your obligations in relation to it.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
Building your 2021 Flexible Business Strategy
New Year, New Strategy: Building your 2021 Flexible Business Strategy
Building your 2021 Flexible Business Strategy in Uncertain Times
Building your 2021 flexible business strategy – We live in uncertain times and planning for the future is challenging. Rather than paying attention to what you can’t do, focus on what you can do. For example, when restaurants couldn’t serve customers indoors, they transitioned to delivery, take-away and outdoor dining. Regardless of the type of business that you manage, this is the mindset to develop and use for your 2021 business strategy.
Building your 2021 Flexible Business Strategy: Can-Do
Your “can-do” business strategy should start with a list of what is possible. Perhaps you can transition to doing business online, research new markets, or utilise the shift to video conferencing to create a new and more personal experience for your customers while they are in the comfort of their home. Once you have considered what you can do, you can then create some strategic objectives for the year ahead.
Consumer Centricity
Consider how you can shift your business strategy to one that is more customer centric. The best businesses are those that deliver added value to their customers. For example, you could provide new payment options to customers in order to encourage them to make a purchasing decision. Your customers will be more focused on cash flow due to the prevailing economic uncertainty, so offering structured payment plans, 12 months interest free credit and so on, could make your firm more attractive than your competitors.
Business Planning: Practical Steps
If you are considering launching new products or services in 2021, you may need to extend the timeline. The world is not back to normal (whatever the “new normal” will be) and supply chains are struggling with issues related to transportation, production backlogs, availability of materials, etc. As such, it would be prudent to allow some extra lead time in your plan for any new product or service launch. With an uncertain operating environment anticipated to continue for some time yet, it makes sense to have a backup plan. As you develop your strategy, take some time to consider what potential contingencies you can put in place in order to be ready to move in a different direction, should you run into some headwinds. If you are unsure where to start, it can be helpful to research some of the tactics that worked for other businesses, even those that may be operating in a completely different sector. You can then apply the best bits of those tactics to your own strategic plan.
Help and Advice
Please talk to us about your business strategy for this year. As you develop your 2021 business strategy, you will most likely identify some actions that you can undertake with certainty, which will help you to manage some of the risks that are inherent in operating in uncertain economic times. Perhaps you can bolster your firm’s cash reserves, reduce fixed costs, or negotiate better terms with suppliers. By proactively focusing on delivering against these actions, you will keep moving your business forward, which will help to make your firm more resilient in the medium to long term.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
New Year’s Resolutions to Save Tax
New Year’s Resolutions to Save Tax
New Year’s Resolutions to Save Tax: Planning
New Year’s Resolutions to Save Tax – At this time of year we think about New Year’s resolutions. It is also a good time to start planning your tax affairs before the end of the tax year on 5th April. An obvious tax planning point would be to maximise your ISA allowances for the 2020/21 tax year (currently £20,000 each). You might also want to consider increasing your pension savings before 5 April 2021 as the unused annual pension allowance is lost after three years. For those looking to do some inheritance tax planning, it would be a good time to review (or make) your Will.
New Year’s Resolutions to Save Tax: Pensions
For most taxpayers the maximum pension contribution is £40,000 each tax year, although this depends on their earnings. This limit covers both contributions by the individual and by their employer. Note that the unused allowance for a particular tax year may be carried forward for three years and can be added to the relief for the current, but then lapses if unused.
Hence the unused pension allowance for 2017/18 will lapse on 5 April 2021 if unused.
Reviewing your Will
Top of the to do list for many individuals is to make or update their will. Many think this is something to leave until later in life but it is important to get things in place once property is acquired or when children come along. In the absence of a will there are statutory rules which dictate how your assets are distributed on death. Those statutory intestacy rules may not be tax efficient and you might to want to make specific provision in your Will for your unmarried partner or for the guardianship of your children.
Passing on the Family Home
One recent change that should be taken into consideration when drafting your Will is the additional Inheritance Tax (IHT) nil rate band for passing on the family home to direct descendants on death. We can work with your solicitor to make sure your Will is tax efficient.
Help and Advice
Please talk to us about any of the above information or if you would like to discuss any tax matters.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
Is your business ready for Brexit?
Is your business ready for Brexit?
Is your business ready for Brexit? The UK left the European Union on 31 January 2020. The transition period ends on 31 December 2020.
Is your business ready for Brexit? The Covid-19 pandemic has dominated the news headlines this year but Brexit is still progressing. During the transition period, the UK remains in both the EU customs union and single market. Until the end of the transition period (31 December this year), most things stay pretty much the same. So, what do businesses need to think about in terms of UK-EU trade, supply chains, etc. from 1st January?
Is your business ready for Brexit?: Considerations
Brexit could affect your business in a number of ways. For example, businesses that import or export goods between the UK and the EU will need to consider what operational changes they will need to make in advance of January 1st. The UK Government has set up a helpful webpage which includes useful guides and checklists https://www.gov.uk/transition.
Customs Regime 2021
A new customs regime will come into force on 1 January 2021. Hopefully, a trade deal can be agreed by then, as the final arrangements are still not clear. UK businesses that trade with countries outside the European Union will already be familiar with an Economic Operation Registration Identification (EORI) number. From 1 January, British companies will not be able to trade with the EU without an EORI. In the absence of an EORI number, goods could be held up at ports.
Details
In addition, non-compliant businesses won’t be able to take advantage of any special measures such as deferred tariff payments that look set to be introduced to smooth the flow of trade. Another consideration for businesses is taxation. HMRC offers guidance on its website for the future treatment of payments between UK companies and EU member states. As ever, tax can be a complicated subject and it is often best to invest in some tax advice from an expert.
Help and Advice
Finally, businesses that trade with the EU may need to consider any additional regulatory obligations that come about as a result of Brexit. As things currently stand, there are a lot of unanswered questions as we still don’t know if a last-minute trade deal will be agreed between the UK and the EU. Either way, it’s worth keeping an eye on the gov.uk website for any additional guidance or updates. Please talk to us if you wish to discuss how you may need to adapt for Brexit or if you would like any other information.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
Business Planning for 2021
Business Planning for 2021: Reflections on our Situations
Business Planning for 2021: Resilience
Business Planning for 2021 – As we enter the fourth week of lockdown in England and reflect on improved testing, new vaccine trial results and a host of experts talking on the news about the timing of rollout and when Covid-19 will no longer be a threat to normality, it is worth remembering our lives are and will remain different for the remainder of 2020 and most of 2021. With that in mind we need to be resilient as individuals, families and businesses.
Business Planning for 2021: Economy
The latest indicators for the UK economy found nearly half (49%) of currently trading UK businesses reported a decrease in their turnover below what is normally expected for this time of year. On 8 November, overall UK footfall dropped to 33% of the level seen on the equivalent day last year as national restrictions were introduced in England.
Support Schemes
Clearly we are living in tough times and it makes sense to take advantage of Government supports both directly such as the extended job retention and self-employed support schemes, deferring tax and using bounce back loans. There are also grants available to help firms with Brexit changes for import and export administration.
Business Planning: Practical Steps
1. Review your budgets and set realistic and achievable targets for the remainder of 2020 and for 2021.
2. Get your employees involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues.
3. Use ‘bottom up’ budgeting where everyone in the business gives input on areas over which they have control – target a 10% cost saving.
4. Review and flowchart the main processes in your business (e.g. sales processing, order fulfilment, shipping etc.) and challenge the need for each step.
5. Encourage team members to suggest ways to streamline and simplify processes (e.g. sit down and brainstorm about efficiencies and cost reduction).
6. Put extra effort into making sure your relationships with your customers are solid.
7. Review your list of products and services and eliminate those that are unprofitable or not core products/services.
8. Review efficiency of business processes and consider alternatives such as outsourcing certain activities locally or overseas.
9. Agree extended payment terms with all suppliers in advance.
10. Pull everyone together and explain the business strategy and get their buy-in.
Help and Advice
Please talk to us about cashflow planning for the next six months. We can help with a template so you can do this yourself or we can work together to produce estimates for a variety of scenarios.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
FURLOUGH: UPDATES TO THE CJRS
FURLOUGH: UPDATES TO THE CORONAVIRUS JOB RETENTION SCHEME (CJRS)
FURLOUGH: UPDATES TO THE CJRS
Furlough: Updates to the CJRS – The scheme has been extended. Government guidance has been updated with details of how to claim for periods after 1 November 2020. The CJRS will remain open until 31 March 2021. From 1 November 2020 employers can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month.
THE CORONAVIRUS JOB RETENTION SCHEME DETAILS
Furlough: Updates to the CJRS – Employers can claim for employees who were employed on 30 October 2020, as long as they have made a PAYE RTI submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. This may differ where they have re-employed an employee after 23 September 2020. All employers with a UK bank account and UK PAYE schemes can claim the grant. They do not need to have previously claimed for an employee before the 30 October 2020 to claim for periods from 1 November 2020.
ELIGIBILITY
Employers can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked. Employers might need to contribute towards the cost of their furloughed employees’ wages for these periods. For periods from 1 November 2020, they will need to pay for the cost of employer NICs and pension costs.
CLAIMS FOR NOVEMBER 2020
Claims for furlough days in November 2020 must be submitted by 14 December 2020. This is a tight deadline, so it is important we work together to get any claims submitted promptly. We can also guide you through the information you need to gather, ensure you follow the rules and record any changes of employment terms with your employees.
GOVERNMENT SITE
See details on the Government site here. Please feel free to contact us here.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Furlough Scheme Extended until December
Furlough Scheme Extension at 80% Pay
The Coronavirus Job Retention Scheme (CJRS) Furlough Extension
Furlough scheme extended until December: On 22 October the Chancellor announced that the CJRS furlough scheme would end on 31 October 2020, to be replaced by a new Job Support Scheme (JSS). However, at 6.45 pm on 31 October 2020 when the Prime Minister announced a month long lockdown for England, he announced that the CJRS furlough scheme would be extended for one further month. This means the CJRS has now been extended until December.
Furlough Scheme Extended until December
Furlough Scheme extended until December: The grant will allow employers to be able to claim 80% of employees’ usual pay for hours that they are unable to work. Businesses will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time. Employers will be asked to cover National Insurance and employer pension contributions. As with the existing CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
More Information on the CJRS Scheme
Further details can be found here. Please also feel free to contact us.
Job Support Scheme (JSS)
The JSS scheme that replaces CJRS was originally announced in September. The scheme was originally scheduled to commence on 1 November 2020 but will now commence when the extended CJRS scheme ends and will run until the end of April 2021.
Details of JSS
It has been made more generous than in the original announcement to support businesses that are legally forced to close their premises as a direct result of Coronavirus. This is referred to as JSS Closed. For those employers that are able to operate safely but continue to face reduced demand such that they may need extra support over the winter to help keep their employees attached to their workforce, there is JSS Open.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
The Coronavirus Job Support Scheme
The Coronavirus Job Support Scheme
The Job Support Scheme starts on 1 November
The Coronavirus Job Support Scheme: The Chancellor has announced a new 6 month Job Support Scheme to help businesses and employees survive the winter months. We are still awaiting full details of the scheme that will replace the current “flexible furlough” scheme but the main features are highlighted below. Please get in touch with us if you would like to discuss this further.
Employer Eligibility
The Coronavirus Job Support Scheme: Employers of all sizes will be eligible for the new scheme but large organisations will need to demonstrate that their turnover is reduced as a result of COVID-19.
Employee Eligibility
Eligible employees will be those on the PAYE payroll at 23 September 2020 that are working for at least 33% of their usual hours. For example an employee whose usual pay is £450 a week who works 2 days a week would be paid £180 for the 2 days worked and £180 for the other 3 days. The employer could claim a grant of £90 from the Government.
Other Measures
In addition to the Job Support Scheme the Chancellor announced that the Self-Employed Income Scheme would also be extended for a further 3 months but the grant will be 20% of average monthly profits capped at £1,875.
VAT
The temporary 5% rate of VAT for the hospitality sector, accommodation and attractions will be extended to 31 March 2021. Businesses that have deferred their VAT payments will be able to pay back the deferred amount over 11 months.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
The Coronavirus Job Retention Scheme: The Final Phase
The Coronavirus Job Retention Scheme
The Final Phase
The Chancellor, Rishi Sunak, presented A Plan for Jobs at the time of the Summer Economic Update on 8 July 2020. This included incentives for employers who retain furloughed staff and who offer training and apprenticeships.
The Job Retention Bonus
The Coronavirus Job Retention Scheme (CJRS) is now in its final phase. Government support under the scheme is withdrawn gradually from August and the scheme comes to an end on 31 October 2020. Where staff are still furloughed in October, employers will need to decide whether they can bring their furloughed employees back to work.
The Coronavirus Job Retention Scheme: What is the Bonus?
To encourage employers to retain furloughed staff, a bonus – the Job Retention Bonus – of £1,000 will be paid to the employer for each furloughed employee who is employed continuously from the end of the CJRS until 31 January 2021. However, to qualify for the bonus, the employer must pay the employee, on average, earnings that are at least equal to the lower earnings limit for Class 1 National Insurance purposes, set at £120 per week (£520 per month) for 2020/21.
The Coronavirus Job Retention Scheme: Timeline
The Government will pay the bonuses from February 2021.
The Scheme: Details
The scheme is not without its critics, with Jim Harra, Chief Executive of HMRC, questioning whether it offers value for money. Some employers, including Primark and Rightmove, have stated that they will not claim the bonus. Please contact us to find out how you may be able to benefit from the incentives on offer.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.
HOSPITALITY VAT REDUCTION
DETAILS ON HOSPITALITY VAT REDUCTION
HOSPITALITY VAT REDUCTION: WHAT IS IT ALL ABOUT?
When the Chancellor announced a temporary cut in the rate of VAT for the hospitality sector and attractions in his Summer Statement on 8 July there were a number of areas that needed clarification. The reduction applies to supplies made between 15 July 2020 and 12 January 2021. HMRC have now set out more details of which supplies will attract the 5% temporary rate as well as the impact on invoicing, deposits and the flat rate scheme.
WHAT DOES THE 5% TEMPORARY VAT RATE APPLY TO?
Hospitality VAT: The temporary 5% rate applies to supplies such as catering, including hot takeaway food, accommodation in hotels, guest house and similar places and tourist attractions such as theme parks, zoos, theatres and cinemas. Please note this is not an exhaustive list.
HOSPITALITY VAT REDUCTION: WHAT ABOUT ALCOHOLIC DRINKS?
Hospitality VAT: Note that as far as catering is concerned, the 5% rate only applies to food and non-alcoholic drinks. The 20% rate continues to apply to alcoholic drinks.
HOSPITALITY VAT REDUCTION: HAVE YOU PAID A DEPOSIT?
It is fairly common, particularly in the summer holidays, to pay a deposit when booking a hotel or self-catering accommodation but how should the deposit be accounted for? HMRC have confirmed that the hotel has the option of charging VAT according to the ‘basic tax point’ (dates of the stay) rather than the ‘actual tax point’ (invoice/payment dates).
DEPOSITS: DO YOU HAVE AN EXAMPLE?
For example where the customer paid a non-refundable £300 deposit in February 2020 for a £1000 holiday in Cornwall in August, using the actual tax point, the hotel would account for 20% VAT on the deposit received in February 2020 and 5% on the balance payable after 15 July 2020. The hotel could choose to use the basic tax point rule which would mean that the 5% rate would apply to the entire cost of the stay and make an adjustment for the VAT already accounted for.
Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.
Watch the video here.