November 2020 | DSK Partners LLP

Coding out debts deadline

Posted on November 12, 2020 by Ketan Umretiya

The coding threshold entitles tax payers to have tax underpayments collected via a tax code, provided they are in employment or in receipt of a UK-based pension. The coding applies to certain debts such as Self-Assessment liabilities, tax credit overpayments and outstanding Class 2 NIC contributions.

Instead of paying off debts in a lump sum, money is collected in equal monthly instalments over the tax year.

The amount of debt that can be coded out ranges from £3,000 to £17,000 based on a graduated scale. This is a different limit to that for paying your Self-Assessment bill where the amount owed must be less than £3,000. The maximum coding out allowance only applies to taxpayers with earnings exceeding £90,000.

The full breakdown is as follows:

Earnings	Coding out limit
Less than £30k	£3k
£30k to £39,999.99	£5k
£40k to £49,999.99	£7k
£50k to £59,999.99	£9k
£60k to £69,999.99	£11k
£70k to £79,999.99	£13k
£80k to £89,999.99	£15k
£90k or more	£17k

If you had tax underpayments in the 2019-20 tax year you have until 30 December 2020 to file your Self-Assessment returns in order to have the monies collected in the 2021-22 tax year starting on 6 April 2021.

Source: HM Revenue & Customs Wed, 11 Nov 2020 00:00:00 +0100

Protection for landlords and tenants

Posted on November 12, 2020 by Ketan Umretiya

The government guidance for landlords and tenants as a result of the coronavirus pandemic has been updated. The Coronavirus Act 2020 provides protection to social and private tenants by delaying when landlords can start proceedings to evict tenants.

To give tenants greater protection from eviction, landlords are required to provide tenants with 6 months’ notice period before they can start possession proceedings. This applies except in cases raising other serious issues such as those involving anti-social behaviour, domestic abuse, false statement and where a tenant has accrued rent arrears in excess of 6 months’ rent.

The stay on possession proceedings expired on 20 September 2020 and landlords can now progress their possession claim through the courts. The most egregious cases will be prioritised by the courts ensuring landlords are able to progress the most serious cases.

To protect against coronavirus transmission, bailiffs have been asked not to enforce evictions during the national restrictions in England except in the most serious circumstances. Together with pause on enforcement of evictions starting in December that has been agreed with bailiffs, this means that evictions in England will not be enforced until 11 January at the earliest, except in the most serious circumstances.

Landlords can continue to carry out repairs and safety inspections during the English lockdown period provided this is done in line with public health advice.

The guidance is clear that tenants should continue to pay rent and abide by all other terms of their tenancy agreement to the best of their ability. Tenants who are unable to do so should speak to their landlord at the earliest opportunity.

Source: HM Government Wed, 11 Nov 2020 00:00:00 +0100

Further support for mortgage borrowers

Posted on November 12, 2020 by Ketan Umretiya

The Financial Conduct Authority (FCA) has announced new proposals to ensure that lenders provide tailored support to mortgage borrowers who continue to face payment difficulties due to the COVID-19 crisis. This follows the additional government measures announced over recent weeks to control the spread of coronavirus.

Payment holidays to support mortgage borrowers who are experiencing payment difficulties because of coronavirus will be extended. These measures were due to come to an end on 31 October 2020.

This means that:

those who have not yet had a payment deferral will be eligible for 2 payment deferrals of up to 6 months in total
those who currently have an initial payment deferral, will be eligible for another payment deferral of up to 3 months
those who have resumed repayments after an initial payment deferral will be eligible for another payment deferral of up to 3 months

Under the FCA’s proposals, borrowers would have until 31 January 2021 to request a payment deferral. A payment deferral under these proposals would not be reported as missed payments on a borrower’s credit file.

The FCA is also proposing that no one will have their home repossessed without their agreement until after 31 January 2021.

Some borrowers would not be eligible for a payment deferral because they may already have had 2 payment deferrals (of up to 6 months in total), and tailored support will be more appropriate to their circumstances. Tailored support may be reported on a borrower’s credit file, and lenders should inform borrowers where this will be the case.

Source: Other Wed, 11 Nov 2020 00:00:00 +0100

Holiday entitlements if furloughed

Posted on November 12, 2020 by Ketan Umretiya

The Coronavirus Job Retention Scheme (CJRS) commonly known as the furlough scheme is open to all UK employers and will now run until 31 March 2021. From 1 November 2020, employees will receive up to 80% of their salary for hours not worked with a review date in January.

One common question concerns holiday pay entitlement if furloughed. Employees will accrue holiday entitlement while they are furloughed and can also take leave while on furlough.

If a furloughed worker is not working on a bank holiday they usually take as paid leave, they can agree with their employer to either take it as normal or to take it at a later date.

An employer can continue to claim for a furloughed worker’s wages when the worker takes annual leave. If the holiday pay is more than the employee earned whilst on furlough their employer must pay the difference.

The government has also passed legislation to relax the restrictions on carrying leave between leave years during the coronavirus pandemic. Since 26 March 2020, where it has not been reasonably practicable for a worker to take some or all of the 4 weeks’ holiday due to the effects of coronavirus, the amount not taken may be carried forward into the following two leave years.

Source: HM Revenue & Customs Wed, 11 Nov 2020 00:00:00 +0100

Business Asset Disposal Relief

Posted on November 12, 2020 by Ketan Umretiya

Business Asset Disposal Relief used to be known as Entrepreneurs’ Relief before 6 April 2020. The relief was renamed in Finance Act 2020. The name change does not affect the operation of the relief.

Business Asset Disposal Relief applies to the sale of a business, shares in a trading company or an individual’s interest in a trading partnership. Where this relief is available CGT of 10% is payable in place of the standard rate. There are a number of qualifying conditions that must be met in order to qualify for the relief.

When the relief was first introduced there was a lifetime limit of £1 million for gains. This was increased to £2 million from 6 April 2010, to £5 million from 23 June 2010 and to £10 million from 6 April 2011. The limit was reduced to £1 million on 11 March 2020.

The £1m lifetime limit means that individuals can qualify for the relief more than once subject to an overriding total limit of £1m of qualifying capital gains. The changes to the lifetime limit are not retrospective.

To qualify for relief, you should be either an officer or employee of the company and own at least 5% of the company and have at least 5% of the voting rights. There are also other qualifying conditions that must be met in order to qualify for the relief. The minimum period during which certain conditions must be met in order to qualify for Business Asset Disposal Relief increased from one to two years from 6 April 2019.

Source: HM Revenue & Customs Wed, 11 Nov 2020 00:00:00 +0100

VAT – transfer of business as going concern

Posted on November 12, 2020 by Ketan Umretiya

The transfer of a business as a going concern (TOGC) rules concern the VAT liability on the sale of a business. Normally the sale of the assets of a VAT registered or VAT registerable business will be subject to VAT at the appropriate rate.

Where the sale of a business includes assets and meets certain conditions the sale will be categorised as a TOGC. A TOGC is defined as 'neither a supply of goods nor a supply of services' and is therefore outside the scope of VAT. Under the TOGC rules no VAT would be chargeable on a qualifying sale.

All the following conditions are necessary for the TOGC rules to apply:

The assets must be sold as part of a 'business' as a 'going concern'. In essence, the business must be operating as such and not just an 'inert aggregation of assets'.
The purchaser intends to use the assets to carry on the same kind of business as the seller.
Where the seller is a taxable person, the purchaser must be a taxable person already or become one as the result of the transfer.
Where only part of a business is sold it must be capable of separate operation.
There must not be a series of immediately consecutive transfers.
There are further conditions in relation to transactions involving land.

The TOGC rules can be complex and both the vendor and purchaser of a business must ensure that the rules are properly followed. The TOGC rules are also mandatory which means that it is imperative to establish from the outset whether a sale is or is not a TOGC. For example, if VAT is charged in error, the buyer has no legal right to recover it from HMRC and would have to seek to recover this 'VAT' from the seller.

Source: HM Revenue & Customs Wed, 11 Nov 2020 00:00:00 +0100

Company trading losses

Posted on November 12, 2020 by Ketan Umretiya

Corporation Tax relief may be available where a company or organisation makes a trading loss. The loss may be used to claim relief from Corporation Tax by offsetting the loss against other gains or profits of the business in the same or previous accounting period.

The loss can also be set against future qualifying trading income. Any claim for trading losses forms part of the Company Tax Return. The trading profit or loss for Corporation Tax purposes is worked out by making the usual tax adjustments to the figure of profit or loss shown in a company or an organisation’s financial accounts.

Some of the basic requirements for a trade loss to be set off against other income sources include:

being within the charge to Corporation Tax
the trade must be carried on a commercial basis and with a view to the realisation of profit
at least some of the trade must be carried out within the UK

The rules for the Corporation Tax treatment of carried forward losses changed from 1 April 2017. The changes increased flexibility to set off carried forward losses against total profits of the same company or another company in a group whilst at the same time introduced new restrictions as to the amount of profits against which carried forward losses can be set. Any losses carried forward prior to 1 April 2017 fall under the old loss relief rules and must be handled accordingly.

Source: HM Revenue & Customs Wed, 11 Nov 2020 00:00:00 +0100

New Furlough Scheme guidance published

Posted on November 11, 2020 by Ketan Umretiya

The detailed Furlough Scheme rules were updated 10 November 2020.

To use the extended scheme – to 31 March 2021 – the steps that are required are:

Check if you can claim
Check which employees you can put on furlough
Steps to take before calculating your claim
Calculate how much you should claim
Claim for your employees’ wages online
Report a payment in PAYE real time information (RTI)

Full details of these steps are set out at https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

Source: HM Revenue & Customs Wed, 11 Nov 2020 00:00:00 +0100

Barter your way through COVID disruption

Posted on November 10, 2020March 18, 2021 by Ketan Umretiya

While we wait for the magic-bullets that promise to reduce the impact of COVID – vaccines etc – should we be exploring ways to exchange goods and services with our suppliers and customers?
Barter is defined as: the exchange of goods and services without using money.

Perhaps a decorator could repaint the outside of a local restaurant in exchange for a prepaid voucher for a number of meals once the present restrictions are lifted.

Exchange in this way could help to sustain economic activity without the need to impact the cash-flow of either party.

Obviously, invoices would need to be exchanged and VAT regulations observed and in certain circumstances – if any VAT could not be recovered by one of the parties – then cash flow would be affected.

Likewise, the deemed cost of goods exchanged would need to be a tax allowable deduction to the other party’s business, otherwise tax liabilities may be increased.

Nevertheless, there may be mileage in this approach if the boxes are ticked:

No VAT issues, and
No tax issues.

As a bonus, barter would underline support between businesses and create lasting goodwill that will benefit all as we gradually emerge from the threat of coronavirus in the coming months.

Source: Other Tue, 10 Nov 2020 00:00:00 +0100

Month: November 2020

Coding out debts deadline

Protection for landlords and tenants

Further support for mortgage borrowers

Holiday entitlements if furloughed

Business Asset Disposal Relief

VAT – transfer of business as going concern

Company trading losses

New Furlough Scheme guidance published

Barter your way through COVID disruption

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