6th October 2020
The Autumn 2020 Budget, expected in November, has been cancelled, with a statement from the Treasury stating that “now is not the right time to outline long-term plans – people want to see us focused on the here and now.” Assuming there will now not be a Budget until spring next year, we assume that any tax increases have been deferred until then: the Chancellor’s focus remains, for now, on providing support to individuals and businesses through the continuing COVID-19 uncertainty.
The Chancellor did, however, deliver his Winter Economic Statement on 24 September, announcing further support as COVID-19 restrictions remain in place and the outlook for the economy and jobs are challenging. The following announcements are of most interest to individuals and partnerships. Further details and regular updates of all COVID-19 support measures are available on our website.
Job Support Scheme (JSS)
The Job Support Scheme (JSS) will replace the Coronavirus Job Retention Scheme (CJRS) with effect from 1 November 2020. Under the JSS, the employer will continue to pay its employees for the time worked, and the Government and the employer will each pay a third of the hours not worked. The Government’s contribution will be capped at £697.92 per month. Large businesses will be required to meet a financial assessment test. The JSS will run for six months, until April 2021.
Self-Employment Income Support Scheme (SEISS)
The second Self-Employment Income Support Scheme (SEISS) grant, which closes to applications on 19 October, has previously been announced as the final assistance grant for the self-employed. However, the Chancellor announced that a third SEISS grant will be available to cover 20% of average monthly profits for three months, for those who were eligible for the first and second SEISS grants. This will be capped at £1,875 per taxpayer. We await details of the opening date and process for applications.
A fourth SIESS grant will also be made available for three months to cover February to April 2021.
Time to Pay arrangements
It was previously announced that Self-Assessment Income Tax payments due on 31 July 2020 are deferred until 31 January 2021. This meant that both the 31 July 2020 and 31 January 2021 payments would become due on 31 January 2021, the deferral being automatic, with no application required. No interest will be charged during the deferral period.
Time to Pay has been further extended as a result of the Winter Economic Statement. Applications for Time to Pay all Income Tax and Capital Gains Tax (CGT) due on 31 January 2021, over 12 months to 31 January 2022, will be accepted online by HMRC where the tax due is less than £30,000. Bespoke arrangements where the tax is greater than £30,000 can be agreed through HMRC’s telephone service.
For those who are VAT registered, the Government announced on 20 March that no VAT liabilities need be paid between 20 March 2020 and 30 June 2020 and that taxpayers would have until 31 March 2021 to pay off any accumulated liabilities. In his Winter Economic Statement, the Chancellor announced that rather than paying a lump sum in full at the end March, organisations will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
We hosted a webinar on 2 September with Brewin Dolphin, highlighting our predictions for the Autumn Budget, and some tax planning opportunities in light of potential tax increases. Whilst the likely tax increases, particularly to CGT, have been deferred, the growing budget deficit means that tax increases are inevitable. This remains an ideal time to plan for both CGT and Inheritance Tax (IHT): CGT rates may increase next year from 20%-28% to match income tax rates at up to 45%. Triggering an immediate CGT liability on lifetime gifts of assets to family members as part of an IHT planning strategy can often cause clients to hesitate and defer making gifts. With an increased CGT rate on the horizon, don’t delay.
haysmacintyre client portal
Many clients are now using our online secure portal to send and receive confidential information and to facilitate the preparation of their tax returns. If you haven’t already signed up for the portal, please ask your usual haysmacintyre contact and they’ll arrange this for you; it’s a quick and easy process.
We continue to develop the functionality of the portal, and enhancements will be rolled out early next year, including multi-factor authentication to further improve security.
We hope you and your families are well during this challenging time.