MG Newsletter March 2020
Fraudulent activity is rising in the UK. This year millions of UK taxpayers have faced HMRC impersonating scams in the form of an Email, Phone call, SMS-based phishing attacks. According to official figures obtained by Griffin Law, over 254,000 phone scams were reported to HMRC. If you suspect that you are a target of fraudulent activity by people posing as HMRC, you can hang up the phone and call HMRC to ask for confirmation. We advise our clients to remain vigilant and never provide your personal data or passwords to links received. Also, look for spelling mistakes and grammatical errors in the text, or if it is sent from an obscure email address. To see examples of HMRC related phishing emails and bogus contact read THIS article. To report any HMRC related fraudulent activity email: email@example.com
Tax and NI rates
At present (2019-20) the National Insurance free limit is £8632 (£719 per month). In 2020-21 it will be raised to £9500 (£792 per month). We will write to you with further details about your salaries for 2020-21 in a separate email shortly. Below is a table with the 2020-21 rates and allowances.
For more information about tax and National Insurance rates, please visit: https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2020-to-2021 COVID-19 HMRC relief and support Small business rates relief is available to small businesses that have business premises. You will not pay business rates on a property with a rateable value of £12,000 or less. For properties with a rateable value of £12,001 to £15,000, the rate of relief will go down gradually from 100% to 0%. Also, there is “Small business grant” funding of £10,000 available for all business in receipt of small business rate relief. This grant is available ONLY for businesses that have business premises and qualify for Small business rates relief (see above). For more information on Small business rates relief, “Small business grant” funding of £10,000, please call HMRC or visit: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses HMRC has been asked to allow individuals and small businesses extra time to pay tax bills. If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559. Easier access to benefits. The requirement to physically attend a job centre may be removed – everything can be done on the phone and online.
IR35 2020 Changes
IR35 has been delayed by 1 year to start on 6 April 2021, instead of 6 April 2020. The current IR35 issue If you pay Sub-contractors who are self-employed, then it is your (the payer) responsibility to determine whether they are employed or not, regardless if they are registered with HMRC as self-employed. For example, if you pay them a fixed rate (per hour, day, week, month or year), and if they work under supervision, or they have to be at work every day, etc, then according to HMRC rules, they may be classed as employees. If your worker is self-employed, then it is the Contractor’s responsibility (you) to determine the correct status, based on the HMRC rules, and to pay any extra tax to HMRC if they discover that you have applied the rules incorrectly in a tax investigation. However, if your worker is a limited company (also called PSC) then it is your workers’ responsibility (the PSC’s) to assess their own status. You (the Contractor) do not have a responsibility for the worker’s tax status, if they are a limited company. That is why it is advisable for your sub-contractors to be limited companies, as then you (the payer) have almost no risk and responsibility for the Sub-contractor's tax status. The proposed change - that has been delayed to 5 April 2021 !!! The main change proposed after 6 April 2021 is a shift in the responsibility for determining the employment status of your sub-contractors. It will no longer be the responsibility of the worker (the director of the PSC) to determine their IR35 status. This will become the responsibility of the end client, but only where the end client is a large or medium sized business (MSB) - normally with turnover over £25m, or asserts over £12.5m, or with more than 250 employees. It is our understanding that if you are not within the above category, i.e. that you are a small business (SME), then the changes do not apply, and the current IR35 rules will remain. Conclusion: If you are the end client (you are paying the sub-contractors), and you are small business (see above), then the change does not apply. Therefore, most likely that change would not affect your business. Additional comment: The actual method by which status is assessed is not changing, so if a contractor is legitimately outside IR35 today, they should continue to be outside IR35 post April 2021. The end hirer will need to exercise “reasonable care” when determining the IR35 position of any contractors engaged via a PSC. Here is detailed info by HMRC on the subject: https://www.gov.uk/guidance/april-2020-changes-to-off-payroll-working-for-intermediaries
Employment Allowance reform
You may have received a letter regarding Employment Allowance reform. What is Employment Allowance (EA)? This is an advantage given by HMRC to employers (your company) which removes your Employers’ Class 1 National Insurance (from your monthly payroll) up to £3,000 per year. If the salaries (2019-20) that you pay are more than £719 per month, then there is an Employers’ NI charge of 13.8% on the amount above £719. That charge is covered by the employment allowance, and thus is not payable to HMRC (up to £3000). What is changing? The change affects only companies that have Employer’s NI liability of £100,000 or more per year. That does not affect you. What to do? Ignore this letter.
The Bank of England monetary policy committee voted unanimously to cut the bank base rate from 0.75 per cent to 0.25 per cent then again to 0.1 per cent, reducing borrowing costs to the lowest level in history
TFL Scrappage Scheme
With the introduction of the London Ultra Low Emission Zone ULEZ many micro and small businesses have been affected with daily Charges and penalties. In response, the mayor of London has introduced two schemes to help affected business change to ULEZ compliant cars and vans. You can apply for funds to scrap up to three older and more polluting vans and charity minibuses. If your company has been affected by the ULEZ you can read more HERE.