HM Revenue & Customs (HMRC) has confirmed that employees serving notice cannot be claimed for from the Coronavirus Job Retention Scheme (CJRS) from 1 December 2020 onwards.

It has also confirmed further details of plans to disclose details of claims made by employers from December onwards.

Notice periods

The change means employers cannot claim furlough grants in respect of employees serving any contractual or statutory notice periods from 1 December onwards. This includes employees serving notice of redundancy, as well as those who are serving notice of resignation or retirement.

In circumstances from 1 December onwards where you have already submitted a claim and an employee subsequently begins a notice period, you must make an adjustment.

For claims relating to November, you can still claim for employees serving statutory notice periods. However, CJRS grants cannot be used to substitute redundancy payments.

Redundancies must be made in accordance with employment law, while statutory redundancy and statutory notice pay must be calculated based on an employee’s usual wages.

Publications of claims

HMRC has also published further details of plans to publish information about claims for periods from December onwards.

HMRC previously confirmed plans to publish the names and registration number of limited companies and Limited Liability Partnerships (LLPs) claiming CJRS grants.

It has now clarified that this applies to all employers claiming from the scheme, including individuals, ordinary partnerships and trusts, unless they can demonstrate doing so would lead to a “serious risk of violence or intimidation”.

HMRC will require evidence of this threat, which could include:

• A police incident number;
• Documentary evidence of a threat or attack; or
• Evidence of possible disruption or targeting.

At the same time, HMRC has also said that, in addition to employer names and reference numbers, it will also publish “an indication of the value of the claim”.

Further information about what this will mean in practice and how to request that claim information is not published is expected by the end of November.

For advice on furlough and the CJRS, please contact us today.

The Institute for Fiscal Studies (IFS) has predicted that taxes will need to rise by more than £40 billion a year by the middle of the decade to prevent Government debt from growing out of control.

The widely-respected think tank issued the warning following the news that the Government’s Coronavirus response has cost more than £200 billion to date.

At the same time, the IFS predicts the economy will be five per cent smaller in 2024-25 than had been projected in March, creating a £100 billion loss of tax revenues.

In August, the UK’s national debt rose to about £2 trillion for the first time.

Paul Johnson, Director of the IFS said: “We are heading for a significantly smaller economy than expected pre-COVID and probably higher spending too.

“Without action, debt – already at its highest level in more than half a century – would carry on rising. Tax rises, and big ones, look all but inevitable, though likely not until the middle years of this decade.”

The prediction from the IFS has led to widespread speculation about the possibility of tax rises.

Link: Tax rises of more than £40bn a year ‘all but inevitable’

HM Revenue & Customs (HMRC) has received more than 50,000 claims for tax relief for working from home since opening a new online portal on 1 October.

Since the start of the current tax year on 6 April 2020, employers have been permitted to pay employees up to £6 a week in respect of the additional costs of working from home.

Employees who have not received working from home expenses directly from their employer, but who have been told to work from home to limit the spread of Coronavirus can use the new portal to claim tax relief from HMRC.

Tax relief is provided at the rate at which a person pays income tax. This means that basic rate taxpayers receive tax relief of £1.20 a week (20 per cent of £6 a week) and higher rate taxpayers receive tax relief of £2.40 a week (40 per cent of £6 a week).

The relief will offer an annual reduction in an employee’s tax bill of £62.40 or £124.80 for the current tax year.

The relief will be provided through a change to an individual’s tax code, which will mean they will pay less tax between now and the end of March 2021.

Karl Khan, Interim Director General of Customer Services at HMRC, said: “We want everyone to get the money that they are entitled to, so we’ve made the online service as easy to use as we can – it takes just a few minutes to claim.”

The tax relief can be claimed here: https://www.gov.uk/tax-relief-for-employees/working-at-home.

Link: 54,800 customers claim tax relief for working from home

The Office of Tax Simplification (OTS) is calling on HM Revenue & Customs (HMRC) to simplify the process of applying for tax reliefs so that fewer taxpayers miss out.

In total, the UK has 1,190 tax reliefs, that each require taxpayers to claim or make an election to benefit from them.

The OTS in its report has considered the administrative processes for making claims and feels that most could be simplified, across income tax, corporation tax, capital gains tax (CGT) and VAT.

As a result of its investigation into tax reliefs the OTS has made 15 recommendations that would help to either improve the general operation of claims throughout the tax system or assist taxpayers with specific elections where processes could be simplified.

The OTS has also called on HMRC to improve the functionality of its online tax accounts, both personal and business, including adding the ability to make more claims and elections within the account and store information and supporting documentation about them.

Another key proposal would be to change employee expenses to improve the claim process and reduce the different levels of flat-rate expenses.

The OTS said that more than five million employees each year currently claim tax relief on expenses that are not reimbursed by their employer.

The report also highlighted inconsistencies in the time limits for amending claims and elections and recommends that they should be made the same whether within or outside of a return.

Looking at HMRC’s online forms, the OTS said that many taxpayers found them hard to fill in because users often cannot see what information will be needed beforehand and that the forms cannot be saved part-way through and returned to.

Bill Dodwell, OTS Tax Director, said: “Millions of people make claims and elections every year. However, there are still those who aren’t making claims for all that they are entitled to.

“Claims for employee expenses are a particular focus, together with claims for higher rate relief for pension contributions and gift aid donations.

“We welcome the commitments that the Government set out in its recent vision for the future of tax administration, including the introduction of a single online tax account that is capable of doing more.

“Increasing the functionality of the personal tax and business tax account, as recommended in this report and in our tax reporting and payment arrangement report, would significantly ease the process for many people.”

Link: OTS Claims and Elections review

A survey of almost a thousand company directors by the Institute of Directors (IoD) has found that nearly a quarter of businesses are not prepared for Brexit and do not expect to be ready by the end of the transition period on 31 December 2020.

A further 21 per cent said they were still not ready, but hoped to be prepared by the start of 2021 when the UK will formally leave the EU single market and customs union.

The survey also found that 28 per cent of businesses didn’t think that Brexit would affect their company in any way.

Of the actions already taken by businesses to prepare, most had or were looking at building up cash reserves, with more than a third of respondents having done so already.

However, many firms still needed to obtain EU licences and authorisations to continue trading once the transition ends and new customs arrangements come into place.

Half of the businesses surveyed said that the Coronavirus pandemic would magnify the impact of a no-deal Brexit on their organisation, while less than one in 10 thought the reverse. The remaining businesses thought that it would have little or no effect.

Allie Renison, Senior Policy Advisor at the IoD, said: “The prospect of no-deal would be daunting enough, let alone dealing with it in the middle of a global pandemic. These disruptions won’t cancel each other out, if anything they would compound the pain for British businesses.

“When it comes to preparing for Brexit proper, directors’ hands have been tied by a number of constraints and competing pressures. Reacting to the pandemic has taken up so much of business leaders’ time and energy throughout the year. On top of this, much of the information companies need is still subject to negotiations.

“Brexit adjustments will further add to businesses’ cash flow challenges in the months ahead. The Government must look to how it can smooth that process. Financial support as seen in other countries, whether through vouchers to help access advice or through extending tax reliefs to facilitate that adjustment, would give small firms a much better chance of coping.”

Link: Quarter of businesses not ready for Brexit