We round up the latest HMRC news and guidance
1) Tax changes for Health and Social Care
The government has announced tax changes to fund £12 billion a year to be spent on the NHS and social care across the UK. National Insurance contributions will increase by 1.25% for one year only for employees, employers and the self-employed from April 2022. This will cover both Class 1, (employee and employer), Class 1A and 1B and Class 4 (self-employed) NICs. From April 2023, a new ringfenced Health and Social Care Levy of 1.25% will be introduced which will apply to those who pay Class 1 (employee and employer), Class 1A and 1B and Class 4 (self-employed) NICs and will also be extended to those over State Pension Age who are in work. When the new levy comes into effect, National Insurance rates will revert to current levels. The Levy will also apply to individuals above State Pension age with employment income or profits from self-employment above £9,568.
2) Preparing for the end of the CJRS - frequently asked questions
As the CJRS closes on30 September, employers will be thinking about the next steps for their employees and their business.
HMRC says you can find everything they need to know about the CJRS on GOV.UK, and here are the most frequently asked questions currently from employers:
What to do when the scheme closes?
Employers will need to:
- Bring their employees back to work on their agreed terms and conditions
- Agree on any changes to their terms and conditions with them
- Consider ending their employment
When making decisions about how and when to end furlough arrangements, equality and discrimination laws will apply in the usual way.
When is the last claim for the CJRS?
The last day that employers will be able to claim is 30 September. Final claims for September must be submitted by Thursday 14 October.
Can employers claim CJRS for employees on notice periods?
Employers cannot claim CJRS grants for any days an employee is serving a contractual or statutory notice period, including notice of retirement, resignation or redundancy.
What support is available for employees if their employer is unable to bring them back to work?
There’s UK Government support available for employees through the JobHelp website, offering a range of support, training and advice, to help people find their next opportunity. This includes the Kickstart scheme and other Plan for Job support measures, along with advice on learning new skills and sectors which are recruiting.
Normal redundancy rules and protections apply to furloughed employees.
What support is available to help businesses grow after the CJRS has closed?
If employers are looking to grow their business, the UK Government Help to Grow Scheme offers management and digital programmes, to help them learn new skills and reach more customers.
If employers are considering taking on new employees, there’s a range of UK Government support available to help them including placements, apprenticeships and training opportunities.
3) Self-Employment Income Support Scheme (SEISS)
If customers are eligible for the latest SEISS grant they have until 30 September to apply. A YouTube video is available to help tax agents support their clients through the online service.
Reporting SEISS grants on tax returns
SEISS grants are taxable and subject to National Insurance Contributions (NICs). Eligible customers should report any SEISS grants they received on or before 5 April 2021 on their 2020-21 Self Assessment tax return (filing deadline of 31 January 2022).
For most customers, this means they need to report the first, second and third grants on their 2020-21 Self Assessment if they were paid on or before 5 April 2021. The fourth and fifth grants should not be included in 2020-21 returns, as these were paid after 5 April 2021, and should instead go on their 2021-22 return (filing deadline of 31 January 2023).
Calculating turnover as a member of a partnership
HMRC have been asked about customers who joined a partnership between April 2020 and April 2021. If they are in this situation, they need to work out their percentage share of the partnership’s turnover. It will be the same percentage of profit they took from the partnership in the 12-month period from April 2020 to April 2021. If customers have other businesses, they should add their percentage share of the partnership to the turnover from these.
What not to include when calculating turnover for the fifth grant
Anything reported as ‘any other income’ on tax returns should not be included when calculating turnover for the fifth SEISS grant. This includes things such as Universal Credit, maternity allowances, retirement income and foreign income.
Customers should also not include any previous coronavirus (COVID-19) support payments in their turnover, even though the payments may be taxable when calculating profit. COVID-19 support payments include:
- Previous SEISS grants.
- Eat Out to Help Out payments.
- Local authority or devolved administration grants.
Paying back SEISS grants into the right account
HMRC has noticed an increase in customers using the wrong HMRC bank account when repaying some, or all, of their SEISS grants. Customers should check that they are using the right HMRC bank account information – the details will be in the revenue’s most recent contact to them about their voluntary repayments.
If the customer was making voluntary SEISS repayments but has since received an Officer’s Assessment from HMRC, they should update their payment method and pay into the HMRC account given in that letter.
Software issue now resolved
From mid-August, some commercial accounting software was recording SEISS grant values incorrectly (this was an issue with an individual income Application Programming Interface (API)). A fix was in place by 31 August and the issue is now resolved.
4) Working Tax Credit (WTC) – customers need to report changes to their working hours after September
During the pandemic, WTC customers haven’t needed to tell HMRC about temporary short-term changes to their working hours because of coronavirus, as one of several measures it introduced to help those facing uncertainty.
From 30 September 2021, customers should start to tell HMRC about all changes to their hours. They don’t need to know about any temporary arrangements that will end before 25 November, as customers have eight weeks from 30 September to re-establish the normal working hours HMRC currently holds. Customers can check their current WTC claim details online here.
If they're still not back to working their normal hours, they must let HMRC know by 25 November.
Customers should continue to tell HMRC about any permanent changes to their circumstances within one month – for example, if they’re made redundant, lose their job or their hours change permanently during this time.
Any changes can be easily reported here.
If customers receive tax credits, they're not entitled to because of a chance they'll need to repay this money and may also have to pay a penalty if they don’t let HMRC know within one month.
Anyone who is no longer eligible for Working Tax Credit due to a change in their circumstances may be able to apply for other UK Government support, including Universal Credit.
For those looking to find a new job, there’s government support available through the JobHelp website, offering a range of support, training and advice to help people find their next opportunity. More information can be found here.
5) HMRC warns charities about scams
HMRC has written to leading charities warning them that tax scams continue to rise and asking them to share cyber and phone scams advice with their communities.
HMRC has seen tax-related scams roughly double during the past year. The pandemic has given criminals a fresh hook for their activity, and it has detected more than 450 Covid financial support scams alone since early 2020.
The department encourages people to report HMRC branded scams directly to us so that it can gather information to help identify cyber and phone scams and close them down.
HMRC warns people to be careful if they are contacted out of the blue by someone asking for money or personal information. The department sees high numbers of fraudsters emailing, calling or texting people claiming to be from HMRC. If in doubt, it advises people not to reply directly to anything suspicious, but to contact the department straight away.
6) Help to Grow: Management
The government-backed Help to Grow: Management course will open the door to growth for thousands of business leaders.
Delivered by leading UK business schools accredited to the Small Business Charter, Help to Grow: Management includes 50 hours of in-depth training, 1:1 business mentoring, and the opportunity to grow your business, fast.
The 12-week programme costs £750 and is 90% subsidised by the government. It can be taken around existing work commitments and access learning through a blend of online and face-to-face sessions.
Aimed at senior leaders in small and medium businesses, the course covers strategies for growth and innovation, leading high-performance teams, and digital adoption, as well as financial management and responsible business practices. Course members will hear from inspirational business leaders and learn alongside local peers, with access to a national alumni network.
By the end of the programme, the course members will have developed a tailored business growth plan to increase productivity and grow their revenue and help take their business to the next level.
Sign up here.