A couple of weeks ago we highlighted main aspects of the previous chancellors mini-budget. A lot has happened in the house of parliament recently and the new chancellor, Jeremy Hunt reverses most of the mini-budget tax cuts.

Below you can find the updated version from Jeremy Hunts statement.

National Insurance

One of the few things that is staying, is the reversal of the National Insurance social care levy. From 6^th November 2022, the extra 1.25% will no longer be added to National Insurance contributions. This means a saving of £330 per year for nearly 28 million people.

Originally the extra 1.25% was introduced to fund the NHS, however, this will now be funded through general taxation.

Income Tax

The biggest reversal is in the rates of income tax. The ex-chancellor said that income tax will be down to 19% from April 2023, however, this will now not go ahead. It will remain at 20% for now.

The abolition of the 45% higher rate income tax has also been reversed. The 45% higher rate income tax band now means that the higher rate earners will pay income tax on earnings over £150,000

Corporation Tax

The reversal on corporation tax for companies means that the increase from 19% to 25% will go ahead after all. This will come into action from April 2023. Only businesses with profits of £250,000 or greater will be taxed at the full 25% rate - about 10% of companies in the UK.

Any companies with profits of £50,000 or lower, will pay at the 19% rate

Benefits

Rules around the benefit system will remain and unchanged. Benefits can be reduced if people don’t actively search for job commitments. Around 120,000 more people on universal credit to be encouraged to actively seek more work, the over 50’s to be given extra time to work with coaches to help them in the return to work.

What else has been cancelled?

Other measures that have been cancelled include:

·         VAT-free shopping for overseas visitors,

• A freeze on alcohol duty. Planned increases in the duty rates for beer, cider, wine and spirits will now go ahead
• Cuts to the tax paid on shareholders' dividends - the increase introduced in April will now stay in place

Energy

A typical household using both gas and electricity would pay no more than £2,500 annually for two years the government said. However, the energy price guarantee now only covers this winter. It will be in place until April next year. A review will look at what measures should be put in place after this date.

Stamp Duty

Stamp duty will remain in place. In England, no stamp duty is paid on first £250,000 and for first time buyers, this is increased to £425,000. To check out Wales’ stamp duty rates, please click here

These rules seem like they will stay in place now but, as always, we will keep you up to date with the latest

The chancellor Kwasi Kwarteng has claimed that he has made the biggest tax cuts in a generation. So, what is in his mini-budget?

National Insurance

With the cost of living on the rise it is paramount that the Government step in to help. The biggest announcement from this mini budget is the reversal of National Insurance levy that was introduced in April 2022 by ex-chancellor Rishi Sunak. The extra 1.25% increase was going to be used to help fund health and social care. With the latest turnaround, the funding for health and social care will now come from general taxation. 

The reversal means an extra £330 per year for nearly 28 million people and will start from 6^th November 2022. National Insurance is a tax paid by employees, employers and the self-employed. Employees pay National Insurance on their wages as well as income tax, employers pay extra NI contributions for staff, and the self-employed pay National Insurance on their profits.

Income Tax

There are also cuts in basic rate of income tax. Currently at 20% for everyone that earns above the personal allowance, from April 2023 this will be down to 19% Government estimates 31 million people will be getting an extra £170 a year in their pay packets.

45% higher rate of income tax abolished for England, Wales, and Northern Ireland taxpayers and a one single higher rate of income tax of 40% from April 2023.

Corporation Tax

Companies will also benefit as the rise in corporation tax has been cancelled. Corporation tax was due to be increased from 19% to 25% in April 2023, however, now this will not go ahead.

Benefits

Rules around the benefit system have also been changed. Benefits can be reduced if people don’t actively search for job commitments. Around 120,000 more people on universal credit to be encouraged to actively seek more work, the over 50’s to be given extra time to work with coaches to help them in the return to work.

Shopping

Overseas visitors will also benefit as VAT-free shopping to be introduced. This will encourage visitors to spend more while in the UK. Planned increases in the duties on beer, cider, wine, and for spirits have also been cancelled.

Stamp Duty

Stamp duty is paid when people buy a property. No stamp duty is paid currently on first £250,000 and for first time buyers, this is increased to £425,000. This is currently for England, we will have to wait and see what the Welsh Government do for us.

Energy

Energy bills was the one that worried most homeowners. There will be a freeze on energy bills which the government claims will reduce inflation by 5%

Total cost for the energy package to be expected around £60bn for the 6 months from October.

Click here to find out all the other information covered in the mini-budget.

As we try and get back some normality in our lives, and places start to open back up for business. We still need to remember that the fight is not over and need to abide by the rules set in place. Well done to all pushing through and staying motivated. Throughout lockdown we have updated you with what the government have announced and plan to do. There have been a lot of information announced, you can find all the latest below.

How has the Furlough scheme changed?

One of the many questions we get asked is, how has the furlough scheme changed? The Coronavirus Job Retention Scheme, furlough as its more commonly called is designed to help people who could not do their jobs because of the virus and prevent mass redundancies.

The scheme is to close in October and has had some criticism with the decision to close, but it has been backed by the Bank of England boss, which says workers should be helped to ''move forward'' and not kept in unproductive jobs.

From 01 August 2020 the government will pay 80% of wages up to a cap of £2,500. Employers will now have to pay employers National Insurance Contributions (NIC) and pension contributions. You can bring back employees to work shifts and then put back on furlough if needed. Remember any hours worked, the employee is entitled to 100% of their wage and this needs to come directly from the employer.

From 01 September 2020 the government will contribute 70% of wages up to a cap of £2,187.50. Employers will again pay employer National Insurance Contributions (NIC) and pension contributions just like for August. However, now employers will have to pay 10% of wages to make up the 80% total up to a cap of £2,500. Part time furlough is still available, but any hours worked by staff, employers will have to pay 100% of wage.

From 01 October 2020, 60% of wages will be contributed by the government up to a cap of £1,875. Employers will pay employer NICs and pension contributions and top up 20% of wages to make up 80% total up to a cap of £2,500 until when the scheme ends at the end of the month.

The aim of the tapering is to allow employers to ease employees back in to work at the same time as businesses productivity hopefully resumes.

How does the part time furlough work?

The part time furlough is designed to give you the chance to call an employee back in to work if there is a lot of work or put them back on furlough if the workload drops off. So, how does it work?

If you have a member of staff who works 8 hours a day, 5 days a week and your business is closed, you can furlough the member of staff and the government will cover a percentage of the wage, depending on the situation as mentioned above. If you want to trial opening your business for a couple of days a week, and you need the member of staff for 3 days a week, you will be liable to pay 100% of the wage for the 3 days worked, and the government will pay the percentage equivalent for the remaining 2 days not worked and on furlough. The rules mentioned above applies, regarding the percentage amount and NIC’s being paid by yourself.

The government has allowed the part time furlough to relieve some of the financial strain of keeping staff and prevent mass redundancies. For each furloughed member of staff still employed as of 31 January 2021, the government will give the employer a one-off £1,000 bonus

Kickstart Scheme

The chancellor also announced a new Kickstart Scheme worth to be in the region of £2 billion. The plan is to be launched to create hundreds of thousands of new, fully subsidised jobs for young people. If you claim Universal Credit and are aged between 16-24 and at risk of long-term unemployment will be eligible. Funding will be available for each six-month job placement and will cover 100% of the National Minimum Wage for 25 hours a week. Employers will be able to top this wage up if they please.

How to apply for this, still has not been fully revealed by the government. As it gets closer to the scheme being live, more information will be revealed and as always, as soon as we know, we will pass the information to you.

Help Out Eat Out

A little more positive news from the hospitality sector is for the month of August you can get 50% off your bill in participating restaurants with the other half covered by the government. This is capped at £10 per diner and excludes alcohol and is only valid for Monday – Wednesdays in August and can be used as many times as you like. The offer is for dine in only as the government encourages people to go out. To check which restaurants are participating click here and enter your post code to see who around you are participating.

Remember to support your independently owned food venues during these tough times and remember to practice social distancing. Stay motivated and stay safe as together we can end 2020 on a positive bang!

It has been a rollercoaster of a few weeks with some unprecedented times. It is a new worry that we’ve had to face, and we’ve had to face this together. The Coronavirus has not only brought the whole country to a standstill, but has slowed down the whole world.

However, together we must have high spirits, and come out of this stronger. We hope everyone reading this is safe and our thoughts are with those directly affected by the virus. We all must adhere to what the government are saying and stay home. Travel only if necessary as this will delay any spread and get us out of this sooner.

The government has pledged support for employees, and have now put together something for the self-employed. It may not be what we all wanted, however, we have to give credit to the government for the level of support they are showing.

Coronavirus Job Retention Scheme

Q: I have heard the government will contribute towards employee wages?

• Salaried Staff: For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.
• Varied Staff: If the employee has been employed for a full twelve months prior to the claim, you can claim for the higher of either:
• The same month’s earning from the previous year
• Average monthly earnings from the 2019-20 tax year

However, if the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work. If the employee only started in February 2020, you will need to use a pro-rata for their earnings so far to claim.

Once you’ve worked out how much of an employee’s salary you can claim for, you must then work out the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.

Coronavirus Business Interruption Loan (CBIL)

Q: It’s great that the government will help with wages once it is due to be out by the end of April 2020, but how can business get help immediately?

During this interrupting time, there is bound to be a dip in cashflow, so how can businesses get an injection of cash when all trade has halted? Well the government has introduced a temporary Coronavirus Business Interruption Loan Scheme which supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.

The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.

The government will provide lenders with a guarantee of 80% on each loan to give lenders further confidence in continuing to provide finance to SMEs. This is great for businesses with low credit rating. The scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.

To be eligible your business must tick the following;

• Be UK-based in its business activity
• Have an annual turnover of no more than £45 million
• Have a borrowing proposal which the lender:
• Would consider viable, were it not for the COVID-19 pandemic
• Believes will enable you to trade out of any short-term to medium-term difficulty

To apply, you should talk to your bank or bank manager or one of the 40 accredited finance providers as soon as possible, to discuss your business plan. You can find out the latest on the best ways to contact them via their websites or click here https://bit.ly/CrossAccCBIL

Self-Employment Income Support Scheme

Q: Will the self-employed be looked after by the government?

Great credit must be given to the government as a lot of pressure is on them during this unprecedented time. They have taken strides that no government has in history. The chancellor has left the self-employed questioning whether there would be any support. However, the chancellor has announced that there will be a scheme in place to allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.

You can apply if you’re a self-employed individual or a member of a partnership and you;

• Have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
• Traded in the tax year 2019-20
• Are trading when you apply, or would be except for COVID-19
• Intend to continue to trade in the tax year 2020-21
• Have lost trading/partnership trading profits due to COVID-19

Your self-employed trading profits must also be less than £50,000 and more than half of your income, come from self-employment. This is determined by at least one of the following conditions being true;

• Having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
• Having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

If you started trading between 2016-2019, HMRC will only use those years for which you filed a Self-Assessment tax return. If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020. HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.

So to summarise, the grant will be 80% of average trading profits from the year 2016-17, 2017-18 and 2018-19 and will be up to a maximum of £2,500 per month for 3 months. The grant will be paid directly into your bank account, in one instalment.

You cannot apply for this scheme yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online. Again, this is looking to be all set up by the end of April 2020.

Q: I am in the Hospitality, Retail or Leisure sector, I have heard there is extra support since we’ve been effected the most, as we cannot work from home etc...