Five reasons to set up a Personal Tax Account
Taxpayers are being urged to set up personal accounts to monitor their affairs.
Electric cars – should you buy or lease?
The days of the internal combustion engine seem to be numbered, with a huge emphasis being switched by Government and manufacturers towards electric technology.
What is IR35 and what does it mean for contractors, freelancers and sole traders?
Introduced in April this year, the new off-payroll working rules may significantly change the economic landscape for contractors, freelancers and sole traders.
If you’re concerned about IR35, here’s everything you need to know.
What are the new off-payroll working rules?
A contractor who works like an employee – but is paid through a limited company – should broadly pay the same Income Tax and National Insurance Contributions (NICs) as other employees.
The legislation that governs this practice is known as IR35, or more commonly, the off-payroll working rules.
What’s changed?
As of 06 April 2021, medium and large-sized private sector employers are now responsible for determining whether IR35 rules apply – as well as the liability for any underpaid tax.
It was previously the responsibility of the contractor to determine their employment status.
Who do the new rules apply to?
You may be affected by these rules if you are:
- a worker who provides their services through their intermediary
- a client who receives services from a worker through their intermediary
- an agency providing workers’ services through their intermediary.
What is the impact of IR35 on workers?
It is estimated that around 500,000 contractors will be impacted by the legislation.
If an employer has determined that IR35 rules apply, Income Tax and employee National Insurance contributions must be deducted from your fees and paid to HMRC, but you won’t be awarded holiday pay or statutory leave.
This could potentially reduce take-home pay by as much as 25 per cent. You can, however, dispute the determination given if you disagree with it.
More information on disputes and determination can be found here.
How do I know if my client (the employer) is affected by the legislation?
The employer is responsible for determining your employment status – but only if they are affected by the rules.
While all public sector authorities are responsible for deciding if the rules apply, the legislation does not apply to private sector employers who do not meet at least two of the following:
- a turnover of £10.2 million or more;
- a balance sheet total of £5.1 million or more; or
- 50 employees or more.
If a worker provides services to a client who is not required to apply IR35, the worker’s intermediary will remain responsible for deciding the worker’s employment status and if the rules apply.
Get expert help today
For help and advice with related matters, please get in touch with our expert team today.
Furlough fraud warning after arrests
Employers have been warned that businesses abusing the furlough scheme will face action from fraud investigators.
It comes after two people have been arrested by H M Revenue & Customs (HMRC) officials over a suspected £3.4m Coronavirus Job Retention Scheme (CJRS) fraud.
In March, the Government announced it would invest £100m in a Taxpayer Protection Taskforce to combat fraud linked to Covid-19 support measures.
The man, 35, and woman, 36, from Bradford, were also interviewed in relation to a suspected multi-million-pound tax fraud, officials said.
More than £6m held in bank accounts controlled by the pair has been frozen by HMRC.
Both were held on suspicion of cheating the public revenue, VAT evasion and money laundering. They have since been released under investigation.
The Coronavirus Job Retention Scheme (CJRS), commonly called the furlough scheme, was launched in March 2020, at the start of the coronavirus crisis, to minimise unemployment.
Furlough defines those who break the rules laid out under the CJRS in place since March 2020. The scheme was designed to help millions of people, but there are certain rules Britons will need to adhere to, such as not working for their company when on the scheme.
However, HMRC has now confirmed two people have been arrested on suspicion of breaking the rules.
The furlough scheme currently covers up to 80 per cent of an employee’s salary for the hours they cannot work, up to a maximum of £2,500 per month.
Janet Alexander, director of the HMRC’s Taxpayer Protection Taskforce, said most employers had used the scheme responsibly.
However, she said: “We will not hesitate to act on reports of abuse of the scheme or any HMRC-administered Covid-19 support packages.”
More than £61bn has been claimed through the CJRS, supporting 1.3 million employers and 11.5 million furloughed jobs.
Last year, a think tank warned that fraudsters could steal billions of pounds by targeting the Government’s Covid-19 financial rescue schemes.
The Policy Exchange think tank report said measures were rushed through to save people and businesses from economic ruin but were vulnerable to scams.
The Government said at the time it was using every tool to prevent and detect fraud, and would pursue those who commit it.
Former Home Secretaries Lord Blunkett and Sajid Javid backed the report.
Fraud and error could cost the Government between £1.3bn and £7.9bn, the report from the centre-right organisation said.
New tax surcharges for late payments
In the 2021 Spring Budget, the Government announced a new penalty and interest regime to replace the VAT default surcharge.
HMRC publish new guidance on delayed customs import declarations
New Government advice will help traders submit customs import declarations for non-controlled goods imported from the EU, it has been announced.
‘Historic opportunity’ to build a stronger economy
The UK should seize the chance to emerge from the pandemic with a stronger, fairer and more resilient economy.
The Government has “a historic opportunity for a reset” in the post-pandemic economy, according to a member of the Covid Recovery Commission upon the release of its final paper.
Titled Ambition 2030: A Partnership for Growth, the independent commission’s third report urges greater cooperation on policies from Government, businesses, universities, and communities. Rapid development of the AstraZeneca Covid-19 vaccine is cited as an example of what can be achieved through such collaboration.
The authors propose a National Prosperity Plan capable of delivering economic growth and boosting UK living standards.
“The benefits are multiple, but most importantly you get the parts of the economy doing what they are best equipped to do. Look at the vaccine – university innovation, combined with big business investment and scaling, combined with supportive Government procurement and regulation,” says Covid Recovery Commission member Manoj Badale, co-founder of UK-based digital venture builder Blenheim Chalcot.
“We have a historic opportunity for a reset, and the post-pandemic growth challenges are immense.”
The report identifies five immediate national imperatives:
- Creating the conditions for innovation and value-added growth
- Investing in the skills of the future
- Investing in and delivering world-class infrastructure
- Decarbonising energy demand to deliver net-zero
- Building personal and community resilience
From the wide range of recommendations, Badale identifies innovation as being the key driver of future economic growth.
Large sections of the report are dedicated to ‘levelling up’ regions of the UK. The recommended creation of catapult quarters involves dedicated regions focusing on innovations in specific industry areas. Despite the existing presence of community-based investment zones such as freeports and university-led innovation areas, Badale believes these need to go further.
The report examines the wider role of businesses in local communities. The authors suggest that companies should have their contribution to the area they operate in measured and graded. Badale says that businesses should also look to value people instead of just profits.
“We need businesses to be more purpose-led, with clear scorecards of their local contribution, and the ability to start measuring the human balance sheet – not just the financial balance sheet,” he adds.
Implementing recommendations from the report will take significant Government investment, which will increase public debt further after the billions already spent on responding to the pandemic. This follows a decade of austerity in the UK after the 2008 global banking crisis.
The post-Brexit trade arrangements create further uncertainty. Alongside this are the challenges in meeting carbon emission reduction targets in line with net-zero commitments.
To make the UK more competitive globally, the report recommends addressing national skills shortages. By 2030, this gap is predicted in areas such as digital services, management, science, technology, engineering, and mathematics (STEM).
On top of this are fears that the unemployment rate could surge once furlough ends in September, with as many as 2.2 million people potentially unemployed by the end of 2021.
The commission proposes introducing lifelong learning and a ‘Help to Train’ policy to halve the 2030 skills gap. Everyone aged over 25 would have an individual learner account, providing them with the option to retrain and gain new skills for future jobs.
Badale suggests a focus on digital and data skills “not just for young people – but retraining large parts of the workforce.”
New guide to “help tackle the toxic issue of late payments”
Major business bodies have this week launched a new supply chain guide in an attempt to address the worsening late payment crisis.
The Federation of Small Businesses (FSB) and British Services Association (BSA) said the guide will “highlight challenges faced by smaller firms” and “identify routes to collaborative working”.
Recent research revealed that small businesses were owed more than £23 billion in outstanding invoices in 2020, while late payments were directly attributed to the collapse of some 50,000 small businesses every year.
The BSA said the new guide, found here, will help the smallest and largest organisations come together to benefit from a “healthy and more diverse supply chain” through “partnership working”.
It also highlights the significance of the Prompt Payment Code, aligning objectives, social values, and building relationships.
“Everyone needs to contribute in full if the UK is to recover quickly, sustainably and equitably,” said Mark Fox, Chief Executive of the BSA.
“That means the public sector, and private sector and VCSE organisations large and small, together in harness, working towards the same common goals.
“This Statement sets out some examples of what has been achieved. But we are all on a journey, and we recognise that much more needs to be done. We hope this Statement will highlight examples which all larger businesses can learn from and adopt.”
Welcoming the guide, Small Business Minister Paul Scully added: “This welcome statement from the BSA highlights the importance of businesses working together and paying their partners on time, and builds on the government’s work with the Small Business Commissioner to tackle the toxic issue of late payments.”
Earlier this year, it was revealed that the Prompt Payment Code payment period would be slashed in half, from 60 to 30 days, to protect small businesses.
For help and advice with related matters, please get in touch with our expert team today.
Supporting hospitality clients post-pandemic
The coronavirus pandemic hit the hospitality industry particularly hard, with no remote or home-working options viable for these employees and many still on furlough.
Furlough scheme – The latest guidance
HM Revenue & Customs (HMRC) has published a series of updates to its guidance on the Coronavirus Job Retention Scheme (CJRS), more commonly known as the ‘furlough scheme’.
