The fifth SEISS Grant

by Leah McGarvey | 11 Jun, 2021 | LB News, Tax

The fifth SEISS Grant

Claims for the fourth SEISS grant have now closed, as the last date for making a claim was 1 June 2021. However, a fifth grant covering May 2021 to September 2021 will be open to claims from late July 2021.

The grant is taxable and will be paid out in a single instalment. Guidance for claiming the grant will be available by the end of June 2021.

To be eligible for the grant you must be a self-employed individual or a member of a partnership.

You must have traded in the tax years:

2019 to 2020 and submitted your tax return on or before 2 March 2021
2020 to 2021

You must either:

be currently trading but are impacted by reduced demand due to coronavirus
have been trading but are temporarily unable to do so due to coronavirus

To work out your eligibility for the fifth grant, HMRC will first look at your 2019 to 2020 Self-Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.

If you’re not eligible based on your 2019 to 2020 tax return, HMRC will then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020.

You must declare that:

you intend to continue to trade
you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus from May 2021 to September 2021

You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.

How the fifth grant works

The amount of the fifth grant will be determined by how much your turnover has been reduced in the year April 2020 to April 2021. HMRC provide more information and support by the end of June 2021 to help you work out how your turnover was affected.

The amount of the grant

Turnover reduction	How much you will get	Maximum grant
30% or more	80% of 3 months’ average trading profits	£7,500
less than 30%	30% of 3 months’ average trading profits	£2,850

When can you claim the grant?

The online claims service for the fifth grant will be available from late July 2021.

If you are eligible based on your tax returns, HMRC will contact you in mid-July 2021 to give you a date that you can make your claim from.

You can find further details on the GOV.UK website: Self-Employment Income Support Scheme fifth grant – GOV.UK (www.gov.uk)

If you have any questions or would like to discuss your situation with one of our team, then please get in touch. You can call us on 01243 782 423, or email [email protected].

The LB Roundup – The Fourth SEISS Grant

by Leah McGarvey | 23 Apr, 2021 | LB News, Tax

The LB Roundup – The Fourth SEISS Grant

Thank you to those who attended our roundup webinar! The recording is at the bottom of this blog 👇

The focus of today’s webinar was on the fourth SEISS grant, which is now open to claimants!

The fourth SEISS grant covers the period from 1 February 2021 to 30 April 2021, and to claim you must have:

Submitted your 2019/2020 tax return on or before 2 March 2021
Traded in both tax years 2019/20 and 2020/21

You must also be trading but impacted by reduced demand OR was trading but temporarily unable to do so.

You must declare that you intend to continue to trade and you reasonably believe there will be a significant reduction in trading profits.

Significant reduction in profits

Before you make a claim, you must decide if the impact on your business between 1 February 2021 and 30 April 2021 will cause a significant reduction in your trading profits for the tax year you report them in
You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced, before you make your claim
You do not have to consider any other coronavirus scheme support payments that you have received when deciding if you’ve had a significant reduction in your trading profits

See here for examples on the GOV.UK website.

The fifth and final grant coveting the period from May 2021 to September 2021 will be available in due course…

If you have any questions or would like to discuss any topics further, then please get in touch. You can call us on 01243 782 423, or email [email protected].

To see our other Roundup webinars head to our Videos and Podcasts page, or you can subscribe to our YouTube Channel.

The next LB Roundup is on 30th April at 9.30am – To register head to: https://LBLink.uk/WKLYRNDUP_REG

The LB Business Broadcast – Podcast

You can also listen to our Weekly Roundup recordings on our Podcast!

It’s available on Apple, Spotify and Google – just search for ‘The LB Business Broadcast‘.

Pre Year End Tax Planning – 2021

by Leah McGarvey | 25 Feb, 2021 | Tax

Pre Year End Tax Planning – 2021

See the webinar recording at the bottom of this blog 👇

As we’re coming towards the end of the tax year, we are very conscious that time is running out and that at some point, the Chancellor will inevitably have to put measures in place to help pay back money that has been borrowed due to COVID-19.

In this webinar, our Tax Director Tom Foster and Senior Tax Adviser Shaun Dodson will go through some Pre Year End Tax Planning tips and areas which you may wish to review before the end of the tax year!

Topics covered in the webinar include:

Payroll Considerations – (skip to 00:57)
P11d Benefits – (skip to 04:46)
Working From Home – (skip to 09:21)
Inheritance Tax – (skip to 14:43)
The Self Employed – (skip to 19:18)
Company Owners – (skip to 24:32)
Pension Planning – (skip to 28:10)
Capital Gains Tax – (skip to 31:07)
General Tax Planning Points – (skip to 34:43)
The Budget – (skip to 38:36)

We have also put together a guide, which explores these Tax Planning Tips further.

You can download the guide here: https://www.lewisbrownlee.co.uk/tax-planning-tips-2021/

If you wish to speak to one of our tax team about your situation and the options you may have for efficient tax planning, you can call us on 01243 782 7423 or email [email protected].

Succession Planning for your farming business…

by Leah McGarvey | 13 Dec, 2020 | Agriculture & Horticulture, Business, Tax

Succession Planning for your farming business…

Now is the time to look at the succession planning for your farming business…

It may not seem it, but the current tax regimes for Inheritance Tax is relatively generous. This is certainly the case when they are compared with the ones that are forecast to come next year.

There is no Inheritance Tax to pay on gifts or bequests between spouses or civil partners. You can give them as much as you like during your lifetime, as long as they live in the UK permanently.

There is also no inheritance tax due on the first £325,000 worth of assets passed on death or chargeable assets given in life.

Available Reliefs

Reliefs are available for inheritance tax purposes for lifetime gifts of business and agricultural property. This also includes transfers into discretionary trusts.

People you give gifts to will be charged Inheritance Tax if you give away more than £325,000 in the 7 years before your death.

If the giver dies within 3 years of the gift, the recipient pays inheritance tax at 40% of the value when given. There is a reducing amount of inheritance tax due in the next 4 years. And if the giver survives 7 years after the gift, there is no inheritance tax due on the gift. These are called potentially exempt transfers (PETs).

Currently, on death, there is an uplift of the value for capital gains tax purposes of assets left to family and other beneficiaries. If the estate has items such as property, these are treated as received by the beneficiaries at their value at the date of death. This reduces any capital gains tax due if they are subsequently sold.

At the moment, values are low, due to Brexit and COVID.

We all know that taxes will need to be raised to pay for the costs of COVID. The government have pledged not to raise income tax, national insurance contributions and VAT. So it needs to look at other means of raising revenue…

It has been proposed that PETs be removed. So gifts in life exceeding the exempt amount would be taxable on the recipient.

The amount that you can gift in life or leave in death without tax being due is currently £325,000. This amount may decrease.

Agricultural and business property relief is another area at risk. It may be that if these tax saving reliefs are available, the capital gains tax uplift on death may not be.

Lewis Brownlee can help you with your succession planning. We can sit with you (socially distanced, of course) and help you decide what you want to achieve. We will then work with you to make your succession plan as tax efficient as possible.

If you would like to speak to one of our Agricultural and Horticultural Specialists, please call us on 01243 782 423. Alternatively, head to our contact page and they will be in touch!

Horticultural and Agricultural Specialists - Chichester Accountants

SEISS – The Tax Effect

by Leah McGarvey | 22 Oct, 2020 | Accounting, Tax

The SEISS grants are taxable in the tax year of receipt. If you are a sole trader who has an accounting year end after 5 April 2020, the tax effect could be unexpected.

For example, if your accounting year end is 30 June 2020, you may have had a good year up to the middle of March. But what happens if the profit dropped in the final three months. Those accounts form the basis of the tax year 2020/21. You will have been entitled to claim the grant in June, and may receive the second, third and fourth grant in due course. These will also be taxed in the tax year 2020/21 (i.e. tax year of receipt). The trading profit for the year ended 30 June 2021 is likely to be considerably less. So you could end up with:

Tax year 2020/21 – 9 months of “normal” trading taxable PLUS all the SEISS grants received in that tax year. This could result in the grants being tax at 40% when you have never been a higher rate tax payer before.
Tax year 2021/22 – 12 months of reduced trading and very little taxable profit, and no grants, so a significantly reduced tax liability.

In Context…

Let’s try and put this into context. Let’s assume you have made average profits of £45,000 in the three tax years to 5 April 2019. Then in March 2020 you were forced to stop trading due to the coronavirus crisis. Your profit for the year ended 30 June 2020 decreased to £33,750. And, you claimed the maximum you could in SEISS grants.

Tax liability for the year ended 5 April 2020 (based on profit of £45,000 for the year ended 30 June 2019) is £9,932
Tax liability for the year ended 5 April 2021 (based on profit of £33,750 plus the four lots of grants of totalling £17,820) is £12,041

The SEISS is intended to replace lost income. But you will be paying in excess of £2,000 more in tax, despite the fact your income will have dropped.

You will have total income for 2020/21 of £51,570. So you will be a higher rate tax payer for the first time. You will also have breached the threshold for paying back child benefit if you or your partner are in receipt of it. An additional amount will be payable in respect of that. Your income from your business for the year ended 30 June 2021 could be severely affected. It could result in unutilised basic rate band, or worse, personal allowance in that year. So a huge tax bill at a time when your have very little income coming in.

What if the accounting year is 5 April or 31 March?

If the accounting year is 5 April or 31 March this won’t be a problem. This is because your year ended 31 March/5 April 2020 coincides with the start of the crisis. So in all probability the only income in the tax year to 5 April 2021 is the self employment grants. That’s plus whatever profit you have managed to achieve this year. If your costs exceed the grant then, you will not be taxed on that grant. If your accounting year end is not 31 March or 5 April it is worth keeping a close eye on this. It could be possible to counteract the timing impact by changing your year end. We will be happy to look into this for anyone affected. We specialise in ensuring income and tax liabilities are spread as evenly as possible.

At Lewis Brownlee, we are here to help! Our expertise in this area is second to none. So, if you are at all concerned by SEISS grants, please do get in touch. We are always happy to see how we can help.

If you have any questions about the SEISS grants and how they affect you, you can call us on 01243 782 423 or head to our contact page and we will be in touch!

HMRC’s Online Gateways – Can you access them?

by Leah McGarvey | 13 Aug, 2020 | Tax

HMRC’s Online Gateways – Can you access them?

Going are the days of interacting with business and government via the medium of paper and telephone. Increasingly we are all encouraged to adapt to communicate through their apps and websites.

Are these new mediums faster? Are they easier to access? And are they more efficient?

Yes, of course they are. If you have a phone, tablet, or laptop you can engage with modern business almost anywhere. No waiting for paper forms, no waiting on hold for assistance, you can almost do it all by yourself. All you need is a little knowhow and the relevant hardware and then ‘you are off’.

However, this is not strictly true for everyone though.

Questions…

The question that appears not to be asked is – can everyone access these services? Plainly, the answer is no. Why then are traditional mediums ebbing away without consideration to those people left behind. Although I can appreciate the adage that you cannot please all of the people all of the time, it surely must need to be the case that there are arrangements for people who simply cannot (or refuse) to operate via the new(ish) style mediums.

After that long-winded diatribe against modern business, why am I bothering to even speak about this somewhat inevitable and foreseeable situation.

Well, turning to the world of HMRC tax compliance and namely the new Capital Gains Tax portal and the relatively new Trust registration portal, it appears interacting with these government services to complete mandatory tasks now has to be undertaken solely online.

What can be done?

What can be done when you cannot comply with the requirements because the mandated medium cannot be used through no fault of your own? It is not a legal requirement to own a computer, so HMRC should not expect you to have one. For those who live in remote areas, there is the added issue of requiring a strong internet signal.

Well it appears that HMRC have yielded when it comes to completing your post April 2020 Capital Gains Tax Return. If you do not have access to a computer, you may call HMRC who will complete the process on your behalf (i.e. you provide them with the information over the phone). Not perfect, but a solution of sorts, nonetheless.

You might be right in thinking that this approach will be taken for making your annual Trust register declaration. Of course not. That would be far too easy. Readers of Taxation Magazine may have seen the article on 19 May 2020 discussing this topic. The author stated and I quote “So far, we do not have full details of how the digitally excluded group will be supported” but “we understand that provision will be made through HMRC’s extra support team”. Well, I have as of August 2020 contacted HMRC on three occasions about this matter and I have been assured that a senior member of HMRC’s support team would call me to discuss the proposed options.

What to learn?

Well, what did I learn? Nothing! The relevant individual(s) did not call when a mutually agreed time was set, so the saga continues. I will continue to press this issue with HMRC and hopefully a resolution can be found.

If you think that you will need access to the discussed services and you have not previously used them, please ensure that you contact your accountant and/or HMRC at the earliest convenience to ensure there is sufficient time to deal with any access issues.

If you have any questions you can call 01243 782 423 and ask for Shaun Dodson or head to our contact form and he will be in touch!