May 2021: Updated HMRC guidance on COVID support
Agent Update: Issue 84 provided useful insight into the latest guidance and changes HMRC have implemented over the recent months to help mitigate the financial damage caused by the pandemic to businesses. Below is a summary of the points which caught our eye and may have usefulness to agents and advisors.
Currently, the UK Government is paying 80% of furlough employees wages for unworked hours, capped at £2,500 per month. However, by July 2021 this rate will decrease to 70% to a cap of £2,187.50. This rate will again fall to 60% in August and September 2021 to a cap of £1,875.
Please note that with the introduction of the 70% rate, employers will have to pay the difference of at least 80% on unworked hours, capped at £2,500.
The deadline for CJRS claims for May is 14 June 2021, and can be claimed before, during or after a client’s payroll had been processed. Knowing the exact number of hours the employees work is important to avoid further processing and amendments. Clients should also ensure to pay employee tax and NIC, else they will have to repay the entirety of the CJRS grant they claimed back to HMRC.
HMRC also have a handy tool to help calculate how much you can claim from the CJRS, which can be found here.
The Statutory Sick Pay Rebate scheme is continuing to provide financial support to SMEs. Businesses (with employee numbers less than 250) who have paid SSP to employees for COVID-19 related sickness may be entitled to support. The rebate covers a maximum of 2 weeks of the appropriate SSP rate.
VAT deferral payment scheme
A new VAT deferral payment scheme is now available to all businesses that deferred VAT from 20 March 2020 to 30 June 2020, they must also have not been able to pay in full by 31 March 2021. Luckily, these payments can be made in instalments. Note that the later a business signs up to this scheme, the fewer instalments they can make:
- Join by 19 May 2021 – 9 instalments
- Join by 21 June 2021 – 8 instalments
Businesses must also have a VAT registration number, a Government Gateway account, submitted outstanding VAT returns in the last 4 years, be aware of what is exactly owed and correct errors on VAT returns (if any).
A 5% penalty and interest will be imposed on businesses that fail to pay or sign up by 21 June 2021, so encouraging your client to sign up is highly recommended.
WFH Tax Relief
The golden rule when claiming expenditure set by HMRC is that the expense must have been incurred “wholly, exclusively and necessarily”, and for those working from home expenses claimed are not exempt from this rule. Employees working from home can claim tax relief on additional costs, such as metered water, heating bills or business calls but the employee must prove that this expenditure satisfies the aforementioned rule. Note that costs that would remain the same had the employee worked in the office are not eligible. Relief for these claims is open until the end of the current tax year, 5 April 2022.