Business Tax | Simply Accounting Solutions

Tax free payment that could help with the extra costs of working from home

Employers who require their employees to work from home as a result of the temporary closure of their business premises due to the Coronavirus can provide a tax-free payment as a means of offsetting reasonable additional household expenses.

The payment, which was increased to £6 per week – or £26 per month – from 6 April, in the March Budget, can be paid to workers in addition to their salary, free from income tax and national insurance.

It is up to your employer to decide whether to make the payment. If they don’t, you may be able to claim tax relief from HMRC on the additional household costs of your home office, provided you keep records of these costs and can prove to HMRC that they were ‘wholly, exclusively and necessarily’ in the performance of your work.

While I expect this situation to be temporary, the extra £6 per week payable to employees in addition to their regular salary payments would be a welcome boost, particularly for those on lower incomes, to help them offset some of the additional costs associated with working from home.

If you are currently working from home due to the closure of your employer’s premises, why not ask them if they would be willing to pay you the additional £26 per month whilst working from home?

Coronavirus – what help is available to me?

If you are self-employed

See our article here about help under the Self-employed Income Support Scheme.

If you work in the gig economy

Unless it has been agreed as part of your contract, it is unlikely that you will be entitled to Statutory Sick Pay, sick leave or paid holiday leave.

Some employers have said they will offer sick pay if you have to self isolate because of coronavirus. Others have said they might offer some kind of compensation if you have been diagnosed with coronavirus.

If you’re working in the gig economy, check with the company to find out what your rights are.

You will be able to claim sickness benefits available to self-employed people if you’re eligible.

If you’re employed

The government has announced it will pay your wages through the coronavirus job retention scheme if your employer is forced to temporarily close because of coronavirus.

This will be available to anyone on the PAYE scheme and your employer will need to contact HMRC to apply. In order for you to qualify, your employer will have to re-assign your employment status as a 'furloughed worker’.

The scheme will pay 80 percent of retained workers’ salaries, up to £2,500 a month, plus the associated employer National Insurance Contributions and minimum automatic enrolment employer pension contributions on that wage. Your employer can top up your salary to more than this if they choose to.

Wages under the scheme can be backdated to 1 March, if you stopped working then, and the scheme will be open for at least three months. There is no limit on the amount of funding or the number of employees that can be furloughed.

The first of the grants are hoped to be paid before the end of April so it could take a few weeks to get your money.

If you have already been told your job is gone, you should contact your employer to see if they are now willing to take you back on and reassign you as a furloughed worker.

If you have already made a claim for benefits contact the relevant benefit helpline for advice on what to do before you cancel your claim.

Employment and Suppot Allowance (ESA)

You can apply for ESA if you are employed, unemployed or self employed.

Most new claims will be for the 'new style' ESA. To get this 'new style' ESA you need to have worked as an employee, been self employed and paid sufficient National Insurance in the previous 2 - 3 years. National Insurance credits also count, so if you have claimed Child Benefit or Tax Credits, you may be eligable.

Your partners income and savings will not affect how much 'new style' ESA you are paid.

ESA is taxable and counted as social security income for Tax Credits

You cannot get 'new style' ESA if you are getting Statutory Sick Pay (SSP) from your employer. You can apply for 'new style' EA for upto 3 months before your SSP ends and you will start to receive ESA payments when your SSP ends.

You can get Universal Credit (UC) at the same time or instead of ESA, but it ESA is counted in full as unearned income for UC purposes.

You can apply for ESA if you are below state pension age and have a disability or health conition that affects how much you can work. You can apply for ESA if you are working, unemployed or self empolyed. There are conditions to working whilst claiming ESA.

You cannot get ESA at the same time as claiming:-

Statutory Sick Pay (SSP)
Statutory Maternity Pay (SMP)
Jobseekers Allowance

For more information and to check eligability click here.

If you don’t want to go into work because of coronavirus

If you don’t want to travel or go into work because you are worried about catching coronavirus your rights are more limited. Employers are required to listen to your concerns and try and find a way to work around them. You might also be able to take the time off as holiday or unpaid leave. Your employer may also be able to set you up to work from home.

Am I entitled to sick pay?

Your rights to Statutory Sick Pay (SSP) depend on your employment status and earnings, see below for the various options.

If you’re an employee and earn more than £118 a week

If you’re an employee and earn at least £118 a week (£120 from 6 April 2020), you will be able to get £94.25 per week (£95.85 from 6 April 2020) for up to 28 weeks. The government has announced SSP will be paid from the first day you are off sick if it is related to coronavirus.

SSP covers you both if you’re ill and if you need to self isolate because you have been in direct contact with the virus. You will still need to provide a sick note or fit note. You no longer have to go to a doctor to get a sick note or fit note. You can get one by calling NHS 111.

Some employers have more generous contractual sick pay schemes, which menas that they will pay you either full pay or reduced pay for your period of illness. It is worth checking your contract, staff handbook or directly with your employer.

The government has said that it will bear the costs of SSP for small employers, so claiming it should not be a problem. If you do have a problem, contact the HM Revenue and Customs statutory payment dispute team:

Telephone: 03000 560 630
Monday to Thursday 8.30am to 5pm
Friday 8.30am to 4.30pm

Textphone: 0300 200 3212
Monday to Friday 8am to 5pm

If you’re an employee and earn less than £118 a week

If you’re employed but your earnings are too low to claim SSP, you may be able to claim Universal Credit. You can do this online here.

Don’t delay making a claim for benefits, even if you think you might have been affected by coronavirus.

However, if you are already getting any of these benefits, which are being replaced by Universal Credit:

Housing Benefit
Tax Credits
Income Support
Employment and Support Allowance

and need to make a new claim for Universal Credit because of coronavirus, check with the Citizens Advice Help to Claim service as soon as possible to find out how they might be affected and to get advice about your situation. Making a new claim for Universal Creit could mean that your existing benefits are reduced, so make sure you take advice first.

If you run your own business

The government has said they will fund the costs of Statutory Sick Pay (SSP) for employers with workforces of 250 people or fewer for up to 14 days.

You can also apply to HMRC for a grant to cover up to 80% your employees’ salaries, up to £2,500 a month, providing that you have designated them a 'furloughed worker'.

The government has announced grants and business rates support for small and medium sized business too.

Banks will also be offering loans to small and medium sized businesses under the governments Coronavirus Business Interruption Loan scheme.

If you’re registered for VAT, the government has announced VAT payments due between 20 March 2020 and the end of June 2020 have been deferred. They will need to be paid by the end of the financial year, however.

The government has announced the next Self Assessment tax return payment – due on 31July – has been deffered until January 2021 and you won’t be charged any penalties or interest for late payment during this period.

HMRC has expanded its Time to Pay Scheme if you are struggling financially because of anything to do with coronavirus and you owe outstanding tax.

If you already have missed a payment or are worried you will miss your next payment, call the HMRC Time to Pay helpline on 0800 0159.

If you’re business is struggling from the impact of coronavirus, then you can call Business Debtline on 0800 197 6026.

If you can’t work because you have to look after someone with coronavirus

You are entitled to time off work if you have to help a child or close relative who has coronavirus, has to self-isolate or needs to go into hospital. This person does not have to live with you.

This also applies if you need to take time off to look after children or arrange childcare because their school has been forced to close.

You have no statutory right to pay during this time, but employers might offer support depending on your contract and workplace policies. Talk to your employer to see what they can do to help.

The amounts of time you take off must be reasonable for the situation and you might have to use any unused paid holiday first.

If your partner or relative who lives with you gets coronavirus, or has symptoms, they might be able to claim Statutory Sick Pay (SSP).

If your child’s school has closed

Schools across the UK have closed to everyone apart from for the children of key workers. This might be a difficult time for parents, but there are options available to you.

You are entitled to take time off to care for a dependent child. There are no rules around how much time you can take off and you should talk to your employer about your options.

You might also be able to take time off as holiday leave.

If you’re worried about childcare costs

If your hours have been reduced, your income has gone down, you might be worried about how this will affect any help you get towards childcare costs.

With the lockdown in place and some childcare providers closing temporarily, you might also be concerned if you’ve paid in advance to retain your child’s place, or if your childcare needs have stopped completely.

If you claim through the tax-free childcare scheme, this is usually based on a three-month period, so support will depend on when you next need to report your income.

If you’re getting the childcare costs element of Universal Credit, or getting help through tax credits, the number of hours you’re now working and your income can affect how much help you get towards childcare costs.

If you’re getting free school meals

Schools are making provisions to provide meals and food parcels to everyone who is eligible for free school meals.

How this is happening depends on the school your child is attending and where in the country you live.

If you live in England visit the Gov.uk website.

In Wales visit the Gov.wales website.

In Scotland visit the Mygov.scot website.

In Northern Ireland visit the NI Direct website.

If you’re worried about losing your job

The government grants, which allow your employer to cover up to 80 percent of your salary up to £2,500 a month, should minimise the risk of losing your job. Ask your employer if they could place you on furlough instead of making you redundant, this would mean you could still get 80% of your salary.

Lay-offs and reduced hours

If you’ve been asked to take unpaid leave, and your contract allows you to be unpaid during this period, you might be able to claim Guarantee Pay.

You might also be able to claim new-style Jobseekers Allowance and, if you need help with other costs, Universal Credit.

Benefit changes because of coronavirus

The Universal Credit standard allowance and working tax credit basic element will both be increased by up to £1,040 a year for 12 months.

This will be available to new and existing claimants regardless of whether you’re employed, self-employed or a job seeker.

The amount you will get depends on your circumstances including household income and savings. You will not beable to claim Universal credit if you have more than £16,000 in capital.

If you’re self-employed, the minimum income floor for Universal Credit will be temporarily abolished from 6 April 2020, meaning that most self employed people should be able to claim.

The Local Housing Allowance will increase and some people may get more money to cover their housing costs to cover the costs of the bottom 30 percent of rental properties in your area.

If you’re claiming Universal Credit and are not able to work or attend interviews at the jobcentre because of coronavirus, it’s important you contact your work coach by phone or through your online journal as soon as possible.

Covid-19 support for the self-employed

Being self-employed means that you are not entitled to Statutory Sick Pay (SSP).

In last weeks budget the Chancellor of the Exchequer announced that any self-employed person who is affected by Covid-19 or self isolating will be eligable for Employment and Support Allowance (ESA) from day one of sickeness, rather than waiting until day 8.

If you are over 25 and eligable ESA is payable at a rate of £73.10 per week.

More details and how to claim can be found here https://www.gov.uk/employment-support-allowance

Chancellor announces support for businesses during Covid-19 outbreak

The Chancellor, Rishi Sunak, has announced a package of measures to support business and workers affected by the coronavirus.

The measures include:

•giving all retail, hospitality and leisure businesses in England a business rates holiday for the next 12 months;

•making grants available to small businesses eligible for Small Business Rate Relief from £3,000 to £10,000; and

•providing additional grants of £25,000 to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000.

Further details on the support measures can be found here

Have you completed your P11ds yet?

If you were providing employees with taxable benefits and expenses in 2018/19 (cars, vans, private medical etc) these must be notified to HM Revenue & Customs (HMRC) on a form called a P11d

The reporting requirements depend on whether the benefits were put through the payroll or not. Payrolled benefits should not be included on the P11D but must be taken into account in calculating the Class 1A National Insurance liability on form P11D(b).

Form P11D(b) must be filed regardless of whether benefits are payrolled or notified to HMRC on form P11D. The P11D(b) is the Class 1A return, as well as the employer’s declaration that all required P11Ds have been submitted.

There are various ways in which forms P11D and P11D(b) can be filed. The simplest is to use HMRC’s online end of year expenses and benefits service or HMRC’s PAYE Online for employer’s service. Forms can also be filed using commercial software packages.

There is no requirement to file P11Ds and P11D(b)s online – paper forms can still be filed if you prefer.

Deadline

Regardless of the submission methods, forms P11D and P11D(b) for 2018/19 must reach HMRC by 6 July 2019 at the latest, or there will be a fine. Employees must be given a copy of their P11D (or details of the information contained therein) by the same date, so they can include it on their self-assessment tax returns. Details of payrolled benefits should have been notified to employees by the earlier date of 31 May 2019.

The Class 1A National Insurance due on the benefits must be paid by 22 July where paid electronically, or by 19 July where payment is made by cheque.

If you are providing your employees with benefits and are unsure on what you need to do, please get in touch.

Tax considerations on separation and divorce

Official figures show that 2017 saw a decrease in divorces of opposite-sex couple in England and Wales, it was the lowest divorce rate since 1973. Taxation is probably the last thing on your mind when a long term relationship or marriage breaks down. However tax can bring its own problems to an already frustrating set of economic circumstances and is worth considering early in the separation process to make sure that both parties get the best.

The family home

Capital Gains Tax (CGT) is a tax which arises when you make a profit, or gain, on assets that are sold or given away. The rate of tax depends on the level of your other taxable income in the tax year and whether the asset sold or given away is residential property.

If you are married or in a civil partnership, transfers between spouses is on a 'no gain, no loss' basis for CGT, ie. CGT does not usually apply. The CGT exemption for transferring assets between partners ends on the 5^th April of the tax year of separation. So for example, if you have a 'trial' separation on the 1 January which leads to a permanent separation, you have until the 5^th April to complete any asset transfers before you need to consider CGT. This may not always be possible and CGT may therefore become a consideration.

The tax consequences of separation differ when it comes to the family home. Where the family home is your only or main residence throughout your period of ownership, no CGT is usually payable. The marital home is likely to be the main residence of both parties, however, this may change when one party moves out and acquires a new property. CGT relief will continue to be available for 18 months after vacating the property, if the property is later sold. The period of relief can be extended where the house is transferred to one party who continues to occupy the former marital home as part of the separation agreement. This additional period is only available if the transferring spouse has not made an election for any new property to be their main residence during this time. There is also an exemption from Stamp Duty Land Tax (SDLT) on transfers of property in connection with a divorce.

If there are young children involved you, or a court order may, agree to postpone any sale of the family home until the children reach 18. This is sometimes called a Mesher Order. These orders were more common 30 or more years ago and originated to permit a spouse to remain in the family home with the children until maturity, or a further order of the court.

If you enter into such an agreement, the family home is transferred to a trust as the date of the order or agreement. This is a disposal for CGT purposes, but if the property meets the conditions for Principal Private Residence Relief (PPR), the gain should be exempt at the time the settlement is created.

The deferred period ends when the children reach 18 and at that time the spouse living in the property usually becomes the outright owner. There is a deemed disposal at this time, however, providing the occupier used the property as their main residence for the whole time, the gain should be exempt from tax.

The family business

Where separating couples run a business together, this can bring its own difficulties. Spouses will often own shares, or assets of the business and arranging how these are transferred, and their values can be challenging. If an agreement can be reached before the 5^th of April in the tax year of separation, then business assets can be transferred between separating spouses free of CGT. However, this is often an unrealistic timescale, so CGT will be a consideration. It may be possible to 'defer' any gain on business asset transfers, if certain conditions are met and both parties to the transaction agree. However, this may leave the partner receiving the business assets or shares with a larger CGT bill in the future should the business be sold and will need to be considered in the overall agreement.

Income tax and tax credits

Separating partners have a duty to support one another financially by paying maintenance until they are formally divorced. These payments may continue after divorce where it is ordered by the court as part of the financial settlement. The spouse making the payment will be taxed on their gross income and will need to pay the maintenance out of net (after tax) income. There is not usually any tax relief given for maintenance payments and the payments are not usually taxable in the hands of the recipient.

Tax credits for children can continue to be claimed by the partner with whom the children live. Tax credit payments cannot be split, so it is important to decide who will have the 'main caring responsibility' so they can continue to claim any tax credits due. It is important to inform HMRC of any change to your domestic arrangements quickly, in particular if a new partner moves in, as this can affect your tax credits claim. Late notification may result in a large overpayment, which will need to be repaid to HMRC.

Child benefit can also continue to be paid to the partner who has the main caring responsibility. However, if you have a new partner whose income is over £50,000, they may end up having to pay back part of the child benefit, under the new Higher Income Child. This can bring its own set of challenges to a new relationship and is worth considering at an early stage to avoid unnecessary tax bills.

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Jun, 2019

Do you struggle to know what to budget for your self employed tax?

If you struggle to know how much to save regularly to cover your year end tax bill, try this handy HMRC tool.

Just enter your net weekly or monthly profit (i.e income after taking off your expenses) and the tool will calculate how much you should put away in a savings account to budget for your tax and NIC.

It will not be a perfect solution as profits may vary week by week or month by month. However you will be surprised just how much you can save by putting a little money aside, in a separate savings account, each week or month. The year end tax bill will not seem so daunting and who knows you may even have some left over to reward yourself!

HMRC advisory fuel rates

HMRC have published company car advisory fuel rates for use from 1 June 2019.

The rates apply when employers reimburse employees for the cost of fuel for business travel in their company cars or require employees to repay the cost of fuel used for private travel. HMRC review rates quarterly on 1 March, 1 June, 1 September and 1 December.

The current rates are:

Advisory Fuel Rates from 1 June 2019

These rates apply from 1 June 2019. You can use the previous rates for up to 1 month from the date the new rates apply.

Engine size	Petrol - amount per mile	LPG - amount per mile
1400cc or less	12 pence	8 pence
1401cc to 2000cc	15 pence	9 pence
Over 2000cc	22 pence	14 pence

Engine size	Diesel - amount per mile
1600cc or less	10 pence
1601cc to 2000cc	12 pence
Over 2000cc	14 pence

Hybrid cars are treated as either petrol or diesel cars for this purpose.

Advisory Electricity Rate

The Advisory Electricity Rate for fully electric cars is 4 pence per mile.

Electricity is not a fuel for car fuel benefit purposes.

Category Archives: Business Tax