Weekly Round-Up of Latest Tax Updates 16/11/20

Coronavirus Job Support Extended by Chancellor

On 5th November 2020, the Chancellor announced in the House of Commons that he would be extending the Furlough Scheme and the Self-Employed Income Support Scheme, following the news of a second national lockdown for England.

The Furlough Scheme was set to end in December 2020 however, it has now been extended until the end of March 2021. Employees will be paid 80% of wages for hours not worked up to £2500, with employers only having to contribute to pensions and National Insurance. The scheme will be reviewed in January 2021 after assessing the economy, to see if employers can make a larger contribution. For employees to be eligible they must have been employed on or before 30th October 2020.

Along with the extension of the Furlough Scheme, Rishi Sunak announced further support for self-employed workers under the Self-Employed Income Support Scheme. The grant offered to self-employed workers has increased to 80% of average profits up to £7500, covering November 2020 to January 2021. The scheme will be reviewed in January 2021 to see what support is needed for the next months. Our article on the Furlough Scheme has further information.


Brexit Updates

With the Brexit transitional period set to end in January 2021, the government has published a letter to VAT-registered traders to prepare them with what they need to do after Brexit and where they can find support. They have also stated that ‘Transitional Simplified Procedures’ which were established anticipating a no deal in 2019, are no longer available and traders should use the simplified declaration procedure instead.

The EU Exit Regulations are made to the Taxation Act 2018 ensuring that the UK’s customs regime is functioning at the end of the Brexit transition period. These regulations introduce a number of changes to ensure that the movement of goods between the UK and the EU are facilitated. Staged border controls will be introduced in three stages in July 2021.


HMRC Tackling Alleged Fraud in Relation to the Chancellor’s Eat Out to Help Out Scheme

HMRC have been tackling alleged fraud linked to the Eat Out to Help Out scheme, which was announced in the summer during the coronavirus pandemic. The scheme offered 50% discount of up to £10 per person. The aim of the scheme was to boost the economy after the first national lockdown by allowing businesses in the hospitality sector to offer discounted meals on Mondays, Tuesdays and Wednesdays. There have been reports of fraudsters exploiting the scheme leading to HMRC arresting a small number of people on suspicion of cheating the public revenue and fraud. Our article ‘HMRC are tackling alleged fraud linked to Eat Out to Help Out scheme during coronavirus pandemic’ has further information.


Potential Increase in Capital Gains Tax

The UK’s economy has been hit hard during the coronavirus pandemic and now the government are looking at ways to gain back funds. After a government review one of the areas where taxes could increase is capital gains tax.

Capital gains tax currently stands at 10% for basic rate taxpayers and 20% for higher rate taxpayers. This could however, be doubled and brought in line with income tax rates. Income tax rates are currently 20% for basic taxpayers and 40% for higher rate taxpayers. Visit our article on capital gains tax for further information.


The Disguised Remuneration Repayment Scheme 2020

Terms of the Disguised Remuneration Repayment Scheme have been updated to the following:

  • An applicant withdrawing an application can withdraw at anytime
  • New information on waiver and repayment entitlements
  • Provisions on legal documents and other conditions updated
  • HMRC have added an ‘Apply for a refund or wavier from the Disguised Remuneration Repayment Scheme 2020’ section to its guidance on who is eligible for a refund and making repayments


The Social Security Contributions Regulations 2020

These regulations have introduced changes to the National Insurance legislation upon the revisions of the IR35 rules for medium and large businesses outside the public sector. From 6th April 2021 the legislation will mirror the equivalent income tax changes to the off-payroll working rules, the key changes are:

  • A worker’s services are provided to a medium or large client outside the public sector, through an intermediary. The responsibility is moved from the intermediary to the client or third party who is paying the intermediary
  • A deemed employer has failed to make National Insurance contribution deductions under PAYE from payments made to a worker’s intermediary with no prospect to recover the outstanding National Insurance contribution. HMRC are able to recover unpaid National Insurance contributions from parties within the labor supply chain.