HMRC have recently published a press release entitled “Just 100 days left for Self -Assessment”.

Before readers make the obvious connection, that this heralds the end of tax returns in the UK, it is purely a reminder that 2019-20 Self-Assessment returns need to be filed by 31 January 2021.

Gathering together the information to complete your return may have been a long way down your to-do list during the unprecedented period of COVID disruption. However, there is no sign that the 31 January 2021 filing deadline is being moved and so, readers who have not yet filed should start to consider what needs to be done.

In their press release HMRC confirm that:

Taxpayers must complete a Self-Assessment return if they:

• have earned more than £2,500 from renting out property
• have received, or their partner has received, Child Benefit and either of them had an annual income of more than £50,000
• have received more than £2,500 in other untaxed income, for example from tips or commission
• are a self-employed sole trader whose annual turnover is over £1,000
• are an employee claiming expenses in excess of £2,500
• have an annual income of over £100,000
• have earned income from abroad that they need to pay tax on

Additionally, HMRC said:

The vast majority of Self-Assessment taxpayers complete their tax return by the 31 January deadline, but you don’t need to wait until January; you can send it back now and get it out of the way.

HMRC is determined to help customers during this difficult time. We know many customers will have been adversely affected by the coronavirus pandemic or will need help to spread the cost of their tax bill. That’s why we’ve made it quick and simple to set up a payment plan to spread the costs and help people get back on their feet. It’s easy to do online and there’s no need to call us to set it up.

Once Self-Assessment customers have completed their 2019-20 tax return, and know how much tax is owed, they can set up their own payment plan to help spread the cost of their tax liabilities, up to the value of £30,000.

They can use the self-serve Time to Pay facility to set up monthly direct debits and this can all be done online so there is no need to phone HMRC.

The revised Job Support Scheme (JSS) announced in the last few days comes in two varieties: Open and Closed.

JSS Open

Businesses in Tier 2 areas, that suffer the restrictions to sociability rules, never-the-less are not required to close. This is an insidious outcome for these traders, particularly those in the hospitality sector, as they may not be able to generate enough income to make their businesses financially viable.

One option available to these concerns was to lay-off staff.

To counter this, the Chancellor has now made two significant changes to his JSS scheme:

1. As long as an employee can work a minimum 20% of normal working hours (previously this was 33%) they can be funded by the JSS. Employers will pay for these worked hours.
2. Employees will also receive two-thirds of pay for normal hours not worked. Government will fund 61.67% and employers 5%. Previously, the employer’s contribution was one-third.

There is a cap to employer and employee contributions under this JSS Open initiative. They are:

• Employer’s contributions are capped at £125 per month with the discretion to pay more if they wish, and
• Government’s contribution will be capped at £1,541.75 per month.

Employees that are placed in this JSS Open scheme will also have the option to claim Universal Credits if their reduced earnings are insufficient to meet outgoings and they otherwise qualify.

JSS Closed

Businesses required to close by any of the four UK governments will have the option to claim under the so-called JSS Closed scheme. The key phrase here is “required to close”.

Eligible businesses will be able to claim as follows:

• Employees who cannot work due to government restrictions will receive two thirds of their normal pay, paid by employer, and fully funded by government to a maximum £2,083.33 per month. Employers still retain the option to pay more if they wish.
• Employees can also apply for Universal Credits if they qualify for this additional support.

Cash-flow issue

Both schemes, Open and Closed, will run from 1 November 2020 for six months. Employers should note that you will not be funded by the JSS when payments to employees are made. Claims will be processed and paid to employers in the month following a claim period.

A package of measures to help businesses in England build back better following the pandemic was recently announced by the Government.

The Department for International Trade’s (DIT) Export Growth Plan provides additional financial support and expertise, some of which is targeted towards specific regions that are most in need.

The plan includes a £38 million Internationalisation Fund for small businesses, which will help up to 7,600 SMEs in England grow their overseas trading and strengthen their business.

Additional support for exporters will be provided by 64 new International Trade Advisors (ITAs), many of them working closely with Local Enterprise Partnerships (LEPs), who will lend their expertise to small businesses in the Northern Powerhouse, Midlands Engine and South West.

A new pilot Export Academy will also be introduced to support smaller businesses in the same areas. The Academy will deliver a series of activities to build the capabilities of smaller

These new measures are the latest in a series of measures already announced by DIT since the Coronavirus outbreak.

Full list of measures included in the scheme are:

1. New £38m Internationalisation Fund from 2020-23 for SMEs in England that will help 7,600 SMEs to internationalise. The fund is supported by the European Regional Development Fund (ERDF) and is managed through four regional projects: The Northern Powerhouse Internationalisation Fund, Midlands Internationalisation Fund, South Internationalisation Fund and London Internationalisation Fund.
2. 64 new International Trade Advisers (ITAs) to provide direct support to SME businesses in the Northern Powerhouse, Midlands Engine and South West.
3. A new, pilot, Export Academy to support smaller businesses in the Northern Powerhouse, Midlands Engine and South West who want to export.
4. 24 new Overseas Champions across the world to promote trade and investment for the Northern Powerhouse, Midlands Engine.
5. A refreshed cohort of over 100 additional Export Champions across different industries in England, to help promote and support exports.

If you are starting to give serious consideration to setting up your own business one of the issues you will need to consider is the type of business structure that best fits your planned business activity.

How risky is your business?

All business activity involves a certain degree of risk. Many of these risks can be covered by taking out an insurance policy. But some risks carry a degree of personal involvement that cannot be insured against. For example, your bank may agree to a business loan but only if you agree to a charge against your home or some other form of personal guarantee.

What are the main business structures?

The simplest form of business structure is to set up as a self-employed person, otherwise called a sole trader.

Self-employed

Any profits you make are subject to Income Tax and National Insurance.

Any business debts you incur are personal to you and therefore your business creditors may have access to your personal assets to clear any amounts the business cannot afford to pay.

Because of this personal risk, self-employment is not suitable for higher risk enterprises.

Self-employment is also not the most tax efficient structure if your business profits are taxed at the higher rates of Income Tax. If this is likely, a limited company structure may be a better option.

Partnership

If two or more people want to set up a business together they will need to form a partnership. A basic partnership, as with a self-employed person, is taxed on the basis of each partner’s share of annual taxable profits and subject to Income Tax. Similarly, liability is unlimited as for a self-employed person.

However, there is a specialised form of partnership called a Limited Liability Partnership (LLP) which does protect partners’ personal assets from claims by partnership creditors.

A Limited Company

If there are business risks or if a business is planning to make significant profits, a limited company is probably the best option. For two reasons:

• Company profits are presently taxed at 19% – this compares with Income Tax rates that can be as high as 45% (regional variations may apply).
• Limited company creditors can only claim against company assets in order to clear their bills unless the directors offer a personal guarantee.

Planning is the key

The best choice for your intended business will rest on the type and scale of your intended activity and an assessment of any commercial risks involved.

If you are considering a new business venture please call so we can help you figure out the best structure for your business, based on risk and tax issues.

The government has outlined new plans for Freeports to turbo-charge post-Brexit trade. Details have been released that assert a number of new freeports are being planned across the UK. The first new Freeport is on track to open by the end of 2021.

Responding to the consultation on the proposals the government confirmed that sea, air and rail ports in England will be invited to bid for Freeport status before the end of the year, with the government aiming for the first of the new sites to be open for business in 2021.

It also confirmed the Freeports will benefit from:

• streamlined planning processes to aid brownfield redevelopment

• a package of tax reliefs to help drive jobs, growth and innovation

• simplified customs procedures and duty suspensions on goods

Designed to attract major domestic and international investment, the hubs of enterprise will allow places to carry out business inside a country’s land border but where different customs rules apply. They have been successfully used in countries around the world to drive prosperity and boost trade.

At the centre of the new Freeports policy is an ambitious new customs model, drawing on international best practice. The flexible model will improve upon both the UK’s existing customs arrangements and the Freeports the UK had previously.

The government will also introduce a package of tax reliefs on investment by businesses within Freeport tax sites, new measures to speed up planning processes to accelerate development in and around Freeports and new initiatives to encourage innovators to generate new ideas to create additional economic growth and jobs.

A firm can import goods into a Freeport without paying tariffs, process them into a final form and then either pay a tariff on goods sold into the domestic market, or export the final goods without paying UK tariffs.