Weekly Review – Personal Tax Announcements 15/05/20

Keep up to date with the key announcements made this past week.

In the ever-fast-moving world of tax announcements and developments, here we have pulled together some of the key changes announced this week.

Coronavirus (COVID-19): job retention scheme extended until 31 October

As at the 12 May, 7.5m employees had been furloughed under the coronavirus job retention scheme (CJRS). On Tuesday, a further extension was announced to the scheme until 31 October 2020. The aim is to provide certainty for UK businesses as we phase out of the current lock down.

Changes will occur from 1 August, with the scheme remaining in its current format until then. The changes will enable businesses to bring employees back to work part-time, with the possibility of taking on additional training. Employers will be asked to pay a percentage towards the salaries of their furloughed staff. More details on the new announcement are expected by the end of May.

HMRC has updated its guidance to reflect this announcement.

Coronavirus: self-employment income support scheme (SEISS)

The online claims service for the SEISS is now available for use. Eligibility for the SEISS has been calculated using information provided on an individual’s self-assessment tax return. The updated guidance can be found here.

Taxpayers who have submitted their return between 26 March 2020 and 23 April 2020 have previously been informed that they are not eligible to make a claim under this scheme. HMRC has asked these individuals to recheck their eligibility with the online service, since recently having been updated.

HMRC have actively been contacting people to check their eligibility for the scheme and has encouraged people to ensure their contact details are up-to-date. This includes people who have moved to a family address during the lock down.

Further HMRC guidance can be found here.

Coronavirus: HMRC guidance on expenses and benefits provided to employees

HMRC has published guidance on how to treat certain expenses and benefits provided to employees during the coronavirus outbreak. It covers topics on living accommodation, volunteer fuel and mileage costs, paying or refunding transport costs, free or subsidised meals, company car ‘availability’, salary sacrifice, employer-provided loans, employees working from home, and how to report such expenses and benefits to HMRC.

Coronavirus: HMRC guidance on tax-free childcare and 30 hours free childcare

Temporary changes have been made to the eligibility criteria for tax-free childcare and the 30 hours of free childcare.

These changes may affect you if you, or someone you live with, are:

  • on furlough
  • not able to work or you’re working less
  • self-employed
  • a critical worker

HMRC’s published guidance can be found here.

New exemption for coronavirus related reimbursed home office expenses

Home office expenses will receive a temporary exemption form tax and NIC. The announcement stated that, from 16 March, no tax liability arises where employers reimburse employees’ personal expenditure on home office equipment arising from arrangements to work from home during the coronavirus outbreak.

Official guidance on the new exemption will be published next week and will be in place until the end of the 2020/21 tax year.

HMRC guidance: lifetime ISA withdrawal charge reduced to 20%

The withdrawal charge on funds withdrawn from a Lifetime ISA has temporarily been reduced from 25% to 20%.This is to help investors withdraw funds from their Lifetime ISA (LISA) during the coronavirus (COVID-19).

As a result, HMRC has updated its guidance to add more information on what LISA managers can do, when investors make an unauthorised withdrawal. This includes applying the reduced charge immediately. Information has also been added on how to report superseded withdrawal charges to HMRC.

Coronavirus: reasonable excuse and more time to appeal

Appeals for late payments and filings will be able to use reasonable excuse, where a taxpayer is unable to meet an obligation  (such as a payment or filing deadline) due to coronavirus. This is on the provision they manage to remedy the failure as soon as they are able to do so.

Further time to seek a review of, or appeal against, an HMRC decision has also been provided to taxpayers affected by coronavirus. HMRC will not object, provided that the review decision is dated February 2020 or later, if an application is made to the tribunal to hear a late appeal due to the coronavirus pandemic, and the application is made within three months of the normal deadline.

GAAR Advisory Panel opinion: reducing an estate’s value for IHT

The GAAR Panel have stated that reducing an estate’s value via subscription for shares in a new company and gifting shares to an employee succession trust is not acceptable. Their opinion is that the entering into of the tax arrangements is not a reasonable course of action in relation to the relevant tax provisions, nor is the carrying out of the tax arrangements.

IHT Operational Issues update

The ATT has shared an update from the HMRC Inheritance Tax (IHT) Department  that it will no longer print and stamp the IHT421 (inheritance tax probate summary form) and return it to customers. Instead, it will email the IHT421 directly to the HM Courts and Tribunals Service. It will let the agent or taxpayer know when it has done this either by writing, or by adding a note to the IHT calculation. This comes after the recent launch of its’ webchat service to get help to complete the form IHT400 and schedules, and to answer other inheritance tax questions. Following earlier confirmation from HMRC that it will no longer be accepting cheque payments for IHT or making IHT repayments by cheque, it has started to amend the forms to include bank details.