If you have
at least one year’s self-assessment history and have filed your 2018-19 tax
return, you are eligible as long as you have trading profits of under £50,000
You will receive a taxable grant of 80% of your average profits. You do not need to apply, you should receive details in the post and the grant in June.
In general, the reimbursement by an employer of employee expenses is
treated for tax purposes as earnings from the employment for the tax year in
which they are paid (ITEPA 2003 ss 70 and 72) and will be taxed in the normal
way. There is, however, an exemption for ‘homeworking arrangements’ which
covers payments made by an employer to an employee in respect of reasonable
additional household expenses incurred in carrying out duties of their
employment at home (ITEPA s 316A). This is currently up to £4 a week (or £18 a
month) but, as announced in the Budget, will be increased to £6 a week from 6
April 2020. An exempt homeworking payment under s 316A can be made to employees
who work at home under a voluntary homeworking scheme (which is a crucial
difference to other expenses claimed by employees outside of these
Costs that may be covered by such homeworking payments include
additional costs of heating and lighting the work area or the metered cost of
increased water use, provided that the additional household costs are
reasonable and incurred in carrying out the employee’s duties. There might also
be increased charges for internet access, home contents insurance, business
telephone calls or the additional cost incurred as a result of business rates
liability (EIM01474). Broadband costs will only be tax exempt if the employee
is not already paying for a broadband connection (EIM01475). Payments for costs
that would be incurred whether or not the employee worked at home – for
example, mortgage interest, rent, council tax or water rates – will not be tax
The chancellor has announced that payments under income tax
self-assessment, normally due on 31 July 2020, will be deferred until 31
During this period, individuals will not be charged any penalties or
interest for late payment.
The deferral will apply automatically to all. Taxpayers who believe that
their 2019/20 income will be lower than their 2018/19 income can make a claim
to reduce their payments on account.
Deferment of VAT payments is effective immediately. Businesses should
cancel their VAT direct debits to HMRC now; otherwise payments will still be
These VAT direct debits should be restarted after 30 June 2020. The
deferment applies to VAT payments due to be made to HMRC between 20 March 2020
and 30 June 2020. HMRC says that
interest will not be applied to the deferred VAT payments.
However, VAT returns must still be submitted on time: it is only the
payment which is deferred.
summarised Mr Sunak the new Chancellor’s 2020 budget for you.
Insurance (NI) threshold raised to £9,500 up from £8,632
taper increased to £200,000 from £110,000 – this helps pension funding
ISA annual limits increased to £9,000 from £4,368. Adult limit remains at
the UK the income tax rates and allowances remain at £12,500 for the personal
allowance and £50,000 the higher rate threshold
Capital Gains Tax (CGT) allowance has increased to £12,300 for individuals
Inheritance Tax (IHT) residence nil rate band increases to £175,000
taking the overall IHT allowance up to potentially £500,000 per person
Relief lifetime allowance reduced to £1million
working rules (IR35) reform still scheduled for April 2020
tax rate to remain at 19%
This only affects companies with more than 50 employees. If affected any
Personal Service Company should review their current engagements.
As the government
is busy at the moment the Chancellor did not introduce many initiatives. The
key changes were:
is a new capital allowance for new non-residential structures and buildings.
apprenticeship levy would be halved to 5% from 10%
forget making tax digital for VAT returns comes into force on the 1st
Business owners across Britain from the start of April must file
VAT returns online using government-approved software. It is the first phase in
the flagship Making Tax Digital policy — and has been beset by delays and
business bosses say the new requirements, which apply (with some
exceptions) to those with a turnover above £85,000, coincide with an
unprecedented cocktail of cost pressures. A hike in the national living wage
and an increase in employer contributions to auto-enrolment pensions also start
in the first week of April.
The measures all come into force days after
Britain is due to leave the EU — and Brexit heaps further uncertainty on the
future of companies, forcing entrepreneurs to change how they keep tax records
feels to many like another unnecessary obstacle put in their way by the
“It was not supposed to
be like this. Making Tax Digital was hailed as a revolution in the tax system
when it was unveiled four years ago by George Osborne, then chancellor, but the
programme has struggled to live up to its billing. Plans to have all individual
and business tax returns submitted digitally by 2020 were scrapped last year,
with officials admitting their targets had been too ambitious.
The 2018 Budget has caused significant concerns for shareholders
in companies that have multiple share classes carrying different rights and
entitlements (also known as alphabet shares).
The new proposed rules change the definition of ‘personal company’
in the ER legislation in such a way as to prevent shareholders in a company
with alphabet shares from claiming ER.
On 21 December 2018, the Government proposed a significant
amendment to the Finance Bill rules defining what constitutes a ‘personal
company’ for ER purposes.
legislation retains the old qualifying criteria (that the shareholder must have
at least 5% of the ordinary share capital of the company and 5% of the
voting rights) but adds in two new conditions, at least one of which will need
to be met:
- The shareholder must
be entitled to 5% of the profits available for distribution to equity holders and
5% of the assets available for distribution on a winding up (these were the
changes originally announced in the 2018 Budget);
- In the event of a disposal
of the ordinary share capital of the company the shareholder would be entitled
to 5% of the disposal proceeds.
Additional provisions set out the process for determining whether
the second test is met at any one time. The legislation does not define
the term ‘proceeds’, which implies that it may extend to some payments made to
debt-holders on a sale of a company.
In its rationale for making the changes, the Treasury has stated that it has laid these amendments to ensure that the conditions for benefitting from the relief operate as intended and to continue ‘supporting enterprise creation and growth in the UK.’
The Government announced plans to reform the off-payroll working rules – known as IR35 – in the private sector from April 2020. Responsibility for operating the off-payroll working rules will move to the firm engaging the worker. Small organisations will be exempt to ease the administrative burden for the vast majority of engagers, while medium and large organisations will be given support and guidance by HMRC.
In order to provide support to the high street, the Government is to reduce business rates by one-third for many retail properties with a rateable value below £51,000 for two years from April 2019, subject to state aid limits. The move is expected to save these struggling businesses £900m. Support for British high street will be supported by a £675m Future High Streets Fund to redevelop empty shops as homes and offices. There will be a new mandatory 100% business rates relief for public lavatories.