Accountancy News July 2021
Hayvenhursts Accountants have compiled the most relevant news stories relating to accounting and business that were published in July 2021 including how people working from home during the pandemic can claim tax relief from HMRC
Reopening Plans – The Government are urged to provide more clarity
The government confirmed the COVID-19 lockdown restrictions will end in England on 19th July 2021 and following the announcement they have been urged to provide more clarity and further guidance.
Prime Minister Boris Johnson has said he expects the final stage of England’s COVID-19 lockdown roadmap to go ahead on 19th July.
It will see the end of legal requirements regarding face masks and social distancing and also includes the working from home guidance for businesses.
Business groups have welcomed the announcement but said questions remain.
Business groups in the UK have said their members have welcomed the official reopening and it brings around much relief alongside some uncertainty and they asked the government to do more.
Claire Walker, Co-Executive Director of the British Chambers of Commerce, said: ‘Business leaders aren’t public health experts and cannot be expected to know how best to operate when confusing and sometimes contradictory advice is coming from official sources.
‘Without clear guidance, there could be real uncertainty on how companies should operate from 19th July and what they should be doing to keep staff and customers safe.’
Mike Cherry, National Chair of the Federation of Small Businesses (FSB), said: ‘We want all small businesses and their customers to feel safe in how they shop and operate, and this includes allowing small businesses the space to make the right decisions about their premises.
‘I cannot allow removing legal guidance to create a free for all, with any voluntary guidance ignored, which is why it is vital that clarity around the new state of play is given immediately.’
Matthew Fell, Chief UK Policy Director at the Confederation of British Industry, said: ‘The government can play a pivotal role in setting new norms, starting with fresh workplace guidance, encouraging the use of public transport and continuing support for workplace testing.’
Shevaun Haviland, Director General of the British Chambers of Commerce (BCC), said: ‘Businesses in England still do not have the full picture they desperately need to plan for unlocking.
‘Without clear guidance for businesses around the new proposals, there could be real uncertainty on how they should operate going forward and what they should be doing to keep staff and their customers safe.’
Tony Danker, Director General of the Confederation of British Industry (CBI), said: ‘Critical now will be to build both customer and employee confidence in living with the virus. This will require businesses to continue putting safety at the heart of their approach as they have since the start of the COVID crisis and government providing a vital role in supporting employers through guidance and advice.’
Derek Cribb, CEO of the Association of Independent Professionals and the Self-Employed (IPSE), said: ‘The full reopening of the economy is very welcome, but because of the gaps in support and sheer damage to self-employment, this must not be the end of government’s involvement.’
Home Workers Claim Tax Relief
HMRC has confirmed that around 800,000 employees in the UK who have been working from home during the COVID-19 pandemic have claimed tax relief on their household related costs.
The tax relief saving gives £125 for an employee each year. Eligible workers are able to claim the full year’s tax entitlement if they have had to work from home and been told by their employer to do so even if it has been for just one day.
If an employee has either returned to working in an office since April or is about to return they can still claim the working from home tax relief benefit for the tax year 2021/22.
Employees apply to HMRC directly and will then receive the full tax relief that is due. When their application has been checked and approved their tax code will be changed for the 2021/22 tax year and they will receive the tax relief through their PAYE salary.
Myrtle Lloyd, HMRC’s Director General for Customer Services, said: ‘More people are getting back to office working now, but it’s not too late to apply for tax relief on household expenses if they’ve been working from home during the pandemic.’
You can check your eligibility and apply here. https://www.gov.uk/tax-relief-for-employees/working-at-home
Significant Rises in Costs for Businesses Following the Pandemic and Brexit
The aftermath of the COVID-19 pandemic and Brexit has caused a huge rise in costs for businesses.
The survey was carried out by the Institute of Chartered Accountants in England and Wales (ICAEW) and revealed the aftermaths of the coronavirus pandemic and Brexit have caused a significant cost rise for UK businesses.
70% of the businesses surveyed are considering the increased prices over the coming year and 62% reported a positive increase in customer demand in the last 3 months.
The survey found that 92% of manufacturing businesses are paying increased and increasing prices for the supplies they need.
90% of the businesses that import the majority of their supplies outside of the UK said they are being charged more.
Iain Wright, Managing Director of Reputation and Influence (ICAEW) said: ‘Our members – who work in businesses in every UK region and economic sector – are reporting long lead times for raw materials and components, disruptions to supply chains because transport companies are unable to recruit drivers, plus delays at the border as our trading arrangements with Europe have changed.
‘Many businesses who have experienced cost increases are now planning to increase their prices as their ability to meet the post-lockdown surge in demand is constrained by supply hold-ups and associated cost pressures.’
£79 Billion in the Government’s COVID-19 Support Loans
Official government figures have shown that UK businesses have borrowed a total of £79.3 billion from the government’s coronavirus (COVID-19) support loan schemes.
Over 1.6 million loans were taken out using the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
All 3 scheme applications closed on 31st March 2021 and the final figures have been published.
£47.4 billion was borrowed through the BBLS
£26.4 billion through the CBILS
£5.6 billion through the CLBILS
The figures show that the loans were evenly distributed to businesses across the UK.
Catherine Lewis La Torre, Chief Executive Officer of the British Business Bank, said: ‘The COVID-19 loan schemes have been an important part of the government’s response to the pandemic, providing businesses with much-needed breathing space and reducing cashflow concerns for many.
‘We’re pleased to see evidence that they have helped smaller businesses right across the UK and look forward to helping more businesses to prosper and grow as we look towards economic recovery.’
HMRC Urges Summer Workers to Check they are being Paid Check National Minimum Wage
HM Revenue and Customs (HMRC) are reminding students and seasonal staff to check that they are being paid and for employers to check they are paying the UK national minimum wage.
All workers, whether temporary or on a short term contract are entitled to it. The minimum wage depends on your age at the time you are working.
HMRC supported 155,000 workers across the UK to recover more than £16 million in total pay which was owed to them in 2020.
The National Minimum Wage Hourly Rates as of July 2021:
£8.91 – Age 23 or over (National Living Wage)
£8.36 – Age 21 to 22
£6.56 – Age 18 to 20
£4.62 – Age under 18
£4.30 – Apprentice.
Steve Timewell, director of Individuals and Small Business Compliance, HMRC, said: “We want to ensure that the South East’s seasonal workers and students are being paid what they are entitled to and, as the economy reopens, help employers if they are unsure of the rules.
“Workers should check their hourly rate and look out for any deductions or unpaid working time which would reduce their pay.
“HMRC investigates every complaint made about the minimum wage, so whether you are selling sun cream, giving a hotel room a clean, or serving a strawberry smoothie, if you think you are being short-changed you should get in touch.”
You can find out more here: www.gov.uk/minimum-wage-complaint
Employers should contact the Acas Helpline for free advice or visit GOV.UK to find out more.
Mortgage Deals of 5% Deposit at Pre-pandemic Levels
Mortgage deal 5% deposit deals rise as banks and building societies are battling due to rates falling and the number of deals available to UK borrowers being at its highest level since March 2020.
Data from Moneyfacts state there are now more than 4,500 mortgage deals on offer which is 700 fewer mortgage options available compared to before the pandemic, with 269 mortgage deals launched in the last month alone.
Pensions Scam Losses Now Over £50,000
The latest figures from Action Fraud have shown the average loss from pension scams in the UK has reached £50,949 in 2021 so far. That has more than doubled the £23, 689 reported in 2020.
Action Fraud has stated that the losses in each case ranged from less than £1,000 to as much as £500,000, and the real figures could be higher as many scams are not reported as the people involved feel embarrassed and ashamed.
Mark Steward, the Executive Director of Enforcement and Market Oversight at the Financial Conduct Authority (FCA), said: ‘Fraudsters will seek out every opportunity to exploit innocent people, no matter how much they have saved.
‘Check the status of a firm before making a financial decision about your pension by visiting the FCA register. Make sure you only get advice from a firm authorised by the FCA to provide advice, before making any changes to your pension arrangements
The FCA has highlighted 5 common warning signals when it comes to your pension or investments:
- Being offered a free pension review out of the blue
- Being offered guaranteed higher returns
- Being offered help to release cash from your pension, even though you are under 55
- High-pressure sales tactics – scammers may try to pressure you with ‘time-limited offers’ or send a courier to your door to wait while you sign documents
- Unusual investments which tend to be unregulated and high-risk.
- More information on pension scams is available from the FCA here: https://www.fca.org.uk/scamsmart/how-avoid-pension-scams
Guidance Issued from HMRC on the fifth SEISS grant
The fifth Self-employment Income Support Scheme (SEISS) grant which includes a new turnover test to determine the level of the grant you are entitled to have now been published by HMRC.
Key Change:
The most significant change from the previous SEISS grant is:
The level of the grant depends on whether turnover has dropped by more or less than 30%
Calculation:
The fifth grant is 80% of three months average trading profits, capped at £7,500 for those whose turnover has reduced by 30% or more. Those with a turnover reduction of less than 30% will receive a grant based on 30% of three months average trading profits, capped at £2,850.
Eligibility:
An individual must be self-employed or a member of a partnership to be eligible for the grant. You must have traded in the tax year 2019/2020 and have completed a tax return on, or before 2 March 2021, as well as also traded in the tax year 2020/21.
You must be currently trading but be impacted by reduced demand due to coronavirus (COVID-19), or have been trading but are temporarily unable to do so due to COVID-19 to be eligible.
Claimants need to provide two turnover figures during the claims process including one from the pandemic period and an earlier reference period.
For further details, you can see HMRC’s guidance here: https://www.gov.uk/guidance/work-out-your-turnover-so-you-can-claim-the-fifth-seiss-grant
130 Countries Back an International Tax Reform
The Organisation for Economic Co-operation and Development (OECD) has announced,
a deal for a global corporate tax rate of at least 15% has historically been agreed by 130 countries. According to the OECD, the agreement ensures an extra $150 billion in taxes is paid annually by large corporations.
It means that $100 billion of profits will be reallocated every year to countries in which the corporations earn profits, but where they do not currently pay tax.
The OECD is planning to have the rules in place for 2022 and they are to be fully implemented in 2023.
They have spent over 10 years negotiating the two-pillar deal, pushing for multinational enterprises to pay tax where they operate and earn profits.
The OECD has said it would add ‘much-needed certainty and stability to the international tax system’.
Mathias Cormann, Secretary-General of the OECD, said: ‘After years of intense work and negotiations, this historic package will ensure that large multinational companies pay their fair share of tax everywhere.
‘This package does not eliminate tax competition, as it should not, but it does set multilaterally agreed limitations on it. It also accommodates the various interests across the negotiating table, including those of small economies and developing jurisdictions.’
Hayvenhursts: For the latest guidance and advice for your business, self-employed, personal or pension-related finances, please contact a member of our friendly and approachable team on 02920 777 756