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Paying back VAT deferred due to coronavirus

Information has been added on penalties or interest that may be charged if you do not pay in full, or make an arrangement to pay, and how you may still be able to avoid these charges.

If you deferred VAT payments due between 20 March 2020 and 30 June 2020 you can:

  • pay the deferred VAT in full now
  • join the VAT deferral new payment scheme – the online service is open between 23 February 2021 and 21 June 2021
  • contact HMRC on 0800 024 1222 by 30 June 2021 if you need extra help to pay

You may be charged a 5% penalty or interest if you do not pay in full or make an arrangement to pay by 30 June 2021.

Pay your deferred VAT in full

If you were unable to pay in full by 31 March 2021, you may still be able to avoid being charged penalties or interest by either:

  • joining the new payment scheme by 21 June 2021
  • paying your deferred VAT in full by 30 June 2021

Join the VAT deferral new payment scheme

The VAT deferral new payment scheme is open from 23 February 2021 up to and including 21 June 2021.

The new scheme lets you:

  • pay your deferred VAT in equal instalments, interest free
  • choose the number of instalments, from 2 to 11 (depending on when you join)

Instalment options available to you

When you decide to join the scheme will determine the maximum number of instalments that are available to you.

The following table sets out the monthly joining deadlines (to allow for Direct Debit processing) and the corresponding number of maximum instalments (including the first payment):

If you join by Number of instalments available to you
19 March 2021 11
21 April 2021 10
19 May 2021 9
21 June 2021 8

 

How to join

Before joining, you must:

  • have your VAT registration number
  • create your own Government Gateway account (if you do not already have one)
  • submit any outstanding VAT returns from the last 4 years – otherwise you’ll not be able to join the scheme
  • correct errors on your VAT returns as soon as possible
  • make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid

To use the online service, you must:

  • join the scheme yourself, your agent cannot do this for you
  • still have deferred VAT to pay
  • be up to date with your VAT returns
  • join by 21 June 2021
  • pay the first instalment when you join
  • pay your instalments by Direct Debit (if you want to use the scheme but cannot pay by Direct Debit, there’s an alternative entry route for you)

Join the scheme now

See: Pay VAT deferred due to coronavirus (COVID-19) – GOV.UK (www.gov.uk)

Budget 2021 update

Great news in today’s budget that the SEISS scheme has now been extended to September 2021.

A 5th grant has been added to the scheme and the facility to submit claims will be open from July 2021.  There is a requirement that your turnover has been impacted, reductions in excess of 30% will receive an 80% grant, reductions less than this will qualify for a 30% grant.

The newly self-employed will qualify for the extended scheme providing that a 2019 / 20 tax return was submitted by 2nd March 2021.

 

The furlough scheme is being extended to September 2021 and employees will continue to receive 80% of their wages throughout this period.

With effect from July 2021 employers will need to contribute 10% of the cost with the government contributing the remaining 70%.  For August and September 2021 the employer’s contribution will be 20% and the government will contribute 60%.

 

Personal income tax thresholds will remain frozen at the 2021 / 21 levels of £12,570 for the tax free personal allowance and £50,270 for the higher rate (40%) threshold until April 2026.

 

The rate of corporation tax will increase to 25% with effect from April 2023.

Coronavirus Job Retention Scheme (CJRS)

The CJRS scheme has been extended until the end of March 2021.

For periods up to 31st January 2021 HMRC will pay 80% of your employees wages up to a cap of £2,500 per month for the hours furloughed employees do not work.

Employers will not have to contribute for hours not worked but will continue to pay their furloughed employees’ NI and pension contributions.

Employees who have been on an employers payroll and RTI submission notifying payment between 20th March 2020 – 30th October 2020 are eligible for the extended scheme.

Employees who have been made redundant after 23rd September 2020 can be re-employed and eligible for a CJRS claim.

The current scheme will be reviewed in January 2021 to decide whether it will continue at the current rates or if employers are able to contribute more as the economy has improved.

Employers will need to make any claims relating to periods up to 31st October 2020 on or before 30th November 2020.  They will not be able to submit or add any claims after this date. Furlough claims after October 2020 will need to be submitted within 14 days of the month end.  Ie. claims for furlough days in November 2020 must be submitted by 14th December 2020

Job Retention Bonus

The Job Retention Bonus scheme has been postponed.

It is expected that an alternative retention scheme will be put in place once the current CJRS ends in March 2021.

 

 

Self-Employed Income Support Scheme (SEISS)

This scheme has been extended for 6mths covering the period November 2020 to April 2021.  Grants will be paid in two lump sums, each covering a 3 month period.

The third grant will cover the period 1 November 2020 – 31st January 2021.

The grant will be 80% of 3mths average monthly trading profits capped at £7,500.

The fourth grant covering the period February – April 2021 has been announced and further details will follow in due course.

The grants are treated as income and are subject to tax and NI.

The online service for the next grant will be available from 30th November 2020.  HMRC will provide full details of how to claim in due course.