In this month’s Enews we consider the roll out of the fifth SEISS grant; the imminent closure of HMRC’s payment scheme for businesses that deferred VAT payments last year; and the announcement of National Insurance reliefs for employers setting up in Freeport economic zones.
With guidance on the Plastic Packaging Tax, the Trade credit insurance scheme, the deadline for forms P11D and the latest advisory fuel rates, there is a lot to update you on.
Fifth SEISS grant will be open to claims from late July
HMRC has confirmed that the fifth Self-employment Income Support Scheme (SEISS) grant covering the period May 2021 to September 2021 will open to claims from late July.
To be eligible for the grant, an individual must be self-employed or a member of a partnership. They must have traded in the tax year 2019/20 and submitted their tax return on or before 2 March 2021, and also have traded in the tax year 2020/21. Claimants must either be currently trading but are impacted by reduced demand due to coronavirus or have been trading but are temporarily unable to do so due to coronavirus.
The amount of the fifth grant will be determined by how much an individual’s turnover has been reduced in the year April 2020 to April 2021.
HMRC will provide more information and support by the end of June 2021 to help individuals work out how their turnover was affected.
The online claims service for the fifth SEISS grant will be open from late July 2021. In mid-July HMRC will contact individuals who are eligible based on their tax returns to give them a date from which they can make their claim.
Internet link: GOV.UK publications
HMRC’s VAT Deferral New Payment Scheme to close this month
Businesses that deferred VAT payments last year have less than a month left to join online and pay in monthly instalments under the VAT Deferral New Payment Scheme, HMRC has warned.
The online portal for the new payment scheme will close on 21 June 2021.
Over half a million businesses deferred £34 billion in VAT payments due between March and June 2020 under the VAT Payment Deferral Scheme. Businesses had until 31 March 2021 to pay this deferred VAT or, if they could not afford to do so, they could go online from 23 February to set up a new payment scheme and pay by monthly instalments to spread the cost.
Jim Harra, HMRC’s Chief Executive, said:
‘Businesses that deferred paying their VAT last spring have until 21 June to join the VAT Deferral New Payment Scheme online. They should act now to avoid missing out on this opportunity to spread payment of their deferred VAT across monthly, interest-free, instalments.
‘The new payment scheme is part of the Government package of support worth over £350 billion to help protect millions of jobs and businesses during the pandemic and as we emerge on the path to recovery.
‘HMRC will continue to do all we can to help businesses as they reopen and rebuild.’
NIC reliefs set for Freeports
Freeport operators will be able to take advantage of a zero rate of secondary national insurance contributions (NICs) for employees, the government has announced.
The National Insurance Contributions Bill 2021, which legislates reliefs for those operating in Freeports, has now been published.
The Bill confirms that from April 2022, organisations with employees spending 60% or more of their time in a Freeport site will be eligible for relief on secondary Class 1 NICs for 36 months. The relief will be available to new employees earning up to £25,000 per annum.
In 2020 the government consulted on proposals to create up to ten Freeports across the UK. A UK Freeport will be a geographical area with a diameter up to 45km which is closely linked to a seaport, airport or rail port. East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth and South Devon, Solent, Teesside and Thames have been successful in the Freeports bidding process for England.
The government is now proposing a range of measures covering customs, tax reliefs, planning, regeneration funding and innovation to create Freeports as national hubs for global trade and investment across the UK.
Internet link: GOV.UK
Government confirms start date for Plastic Packaging Tax
The UK government has confirmed that its plastic packaging tax (PPT) will come into force on 1 April 2022.
The PPT will be charged at a rate of £200 per metric ton of chargeable plastic packaging components of a single specification.
It will apply to plastic packaging components manufactured in or imported into the UK.
Plastics covered by the tax include bioplastics, including biodegradable, compostable and oxo-degradable plastics.
The tax will not be chargeable on plastic packaging which has 30% or more recycled plastic content, or where the packaging is made of multiple materials of which plastic is not proportionately the heaviest when measured by weight.
This includes importers of packaging which already contain goods, such as plastic bottles filled with drinks and where the imported packaging already contains other goods as the tax only applies to the plastic packaging itself.
The introduction of the plastic packaging tax is designed to encourage the use of recycled rather than new plastic within plastic packaging and will in turn stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.
Internet link: GOV.UK
Effectiveness of OTS set to be reviewed by Treasury
The Treasury has launched a review into the effectiveness of the Office of Tax Simplification (OTS), the independent body responsible for helping to make the UK tax system simpler and easier to interact with for taxpayers.
In a new call for evidence, the Treasury said that whilst the review is internal, it is keen to gather the views that stakeholders, businesses, tax professionals and academics have on the OTS.
The Treasury is seeking views on the resourcing, funding and governance of the OTS; the OTS’s relationship with HMRC; the OTS’s work to date; the impact of the OTS’s work on the government’s approach to tax simplification; and steps that could be taken to enhance the effectiveness of the OTS.
The call for evidence also asks stakeholders whether they believe the OTS is sufficiently independent from the government, and whether it has the correct breadth of expertise on its board.
The Treasury stated that the outcomes arising from the review will be published in the autumn of 2021.
Internet link: GOV.UK
Trade credit insurance scheme to close
The temporary Trade Credit Reinsurance (TCR) scheme that helped struggling supply chain firms secure insurance protection during the pandemic will close at the end of June, it has been confirmed.
In a statement, the government and the Association of British Insurers said the scheme will close on 30 June as planned.
The TCR scheme was designed as a temporary solution to companies struggling to get insurance cover for transactions because of the pandemic.
The government says the TCR has directly benefitted over half a million businesses but is now ending in the context of a positive outlook for economic recovery in 2021.
Participating insurers have indicated to the government that the scheme is no longer required and they are keen to take back full underwriting control.
The government says it will work with participating insurers to ensure there is a smooth transition to the private sector resuming its normal role of providing cover.
Chris Wilford, Head of Financial Services Policy at the Confederation of British Industry, said:
‘There is growing concern amongst businesses about the future of the Trade Credit insurance market following the end of the government’s guarantee at the end of June.
‘It is vital that there is clear guidance on what businesses need to do to ensure coverage beyond the end of the TCI guarantee to smooth the transition towards a normalised market. The CBI welcomes the joint statement by the government and insurance industry and will continue to actively engage to find a solution.’
Advisory fuel rates for company cars
New company car advisory fuel rates have been published and took effect from 1 June 2021.
The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.
The advisory fuel rates for journeys undertaken on or after 1 June 2021 are:
|1400cc or less||11p|
|1401cc – 2000cc||13p|
|1400cc or less||8p|
|1401cc – 2000cc||9p|
|1600cc or less||9p|
|1601cc – 2000cc||11p|
HMRC guidance states that the rates only apply when you either:
- reimburse employees for business travel in their company cars
- require employees to repay the cost of fuel used for private travel.
You must not use these rates in any other circumstances.
The Advisory Electricity Rate for fully electric cars is 4 pence per mile. Electricity is not a fuel for car fuel benefit purposes.
If you would like to discuss your car policy, please contact us.
Internet link: GOV.UK AFR
Forms P11D – reporting employee benefits
The forms P11D which report details of benefits and some expenses provided to employees and directors for the year ended 5 April 2021, are due for submission to HMRC by 6 July 2021. The process of gathering the necessary information and completing the forms can take some time, so it is important that this process is not left to the last minute.
Employees pay tax on benefits provided as shown on the P11D, generally via a PAYE coding notice adjustment or through the self assessment system. Some employers ‘payroll’ benefits and in this case the benefits do not need to be reported on forms P11D but employers should advise employees of the amount of benefits payrolled.
In addition, regardless of whether the benefits are being reported via P11D or payrolled the employer has to pay Class 1A National Insurance Contributions at 13.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form. The deadline for payment of the Class 1A NIC is 19th July 2021 (or 22nd for cleared electronic payment).
If you would like any help with the completion of the forms or the calculation of the associated Class 1A NIC please get in touch.
Internet link: HMRC guidance