News and Information from HMRC

This HMRC Stakeholder Digest provides a round-up of our latest news and updates, which we’d be grateful if you could share with your clients, customers or members.

The government has set up a dedicated support page where businesses can find the right support, advice and information to help with the impact of coronavirus (COVID-19).

• Self-Employment Income Support Scheme (SEISS) third grant: Full details now published
• ‘Tax avoidance: don’t get caught out’ campaign
• Spending Review (SR21/22)
• More dates added for HMRC customs import declarations webinar
• Capital Gains Tax changes that Self Assessment customers need to know

Self-Employment Income Support Scheme (SEISS) third grant: Full details now published 

Full details of the third SEISS grant to support self-employed people affected by coronavirus have been published on GOV.UK. 

The rules on who is eligible to claim are different to those for the previous SEISS grants. However, a Self Assessment tax return for the tax year 2018 to 2019 showing self-employment income (unless one of the existing exceptions applies) will still need to have been submitted in order to claim.  

The third grant will be based on 80% of three months’ average trading profits, paid out in a single taxable instalment capped at £7,500, and will cover the period from 1 November to 29 January 2021. Self-employed people who are eligible will be able to claim the third grant at any time from 30 November 2020 to 29 January 2021.

What customers should do to get ready?

• Check who is eligible to claim as this is different to the previous SEISS grants.
• Be aware that, like SEISS 1 and 2, tax agents cannot claim this grant on behalf of their clients; they must do so themselves. If an agent tries to make a claim on a client’s behalf, it will trigger a fraud alert that will delay the payment. Applying online is quick and easy. Similar to the process for SEISS 1 and 2, it takes just 5 minutes and they can do it on a smartphone.

Who is eligible? 

To make a claim for the third grant, customers must meet a number of conditions, and make an honest assessment about whether they reasonably believe their trading profits will be significantly reduced due to coronavirus.

As previously, the third grant will also be subject to Income Tax and self-employed National Insurance and must also be reported on 2020 to 2021 Self Assessment tax returns.

As before, to make a claim for the third grant, customers must:

• be self-employed or a member of a partnership. They cannot claim the grant if they trade through a limited company or a trust
• have traded in both the tax years 2018 to 2019 and 2019 to 2020.

For the third SEISS grant customers must also:

• either be currently trading but are impacted by reduced business activity, capacity or demand, or have been previously trading but are temporarily unable to do so due to coronavirus
• declare that they intend to continue to trade, or restart trading, and that they reasonably believe that the impact on their business will cause a significant reduction in their trading profits
• only claim if the reduction in profits is caused by reduced business activity, capacity or demand, or inability to trade due to coronavirus. Reduction in profits due to increased costs (such as having to buy masks) does not make a business eligible for the third SEISS grant.

When deciding whether the reduction is significant, customers will need to consider their wider business circumstances.

We expect claimants to make an honest assessment about whether they reasonably believe their trading profits will be significantly reduced compared to what they would otherwise expect to achieve during this period.

The business must have been impacted on or after 1 November 2020. Claimants must keep evidence that shows how their business has been impacted by coronavirus, resulting in reduced activity, capacity or demand, or a temporary inability to trade.

More information 

More information and examples to help customers check eligibility to claim is available on GOV.UK.

We’re contacting all self-employed people in the UK that may be eligible to let them know about the third grant.

A fourth grant will also be available from February 2021 to April 2021. We’ll tell you more about that nearer the time, including how much it will be and the rules for claiming.

‘Tax avoidance: don’t get caught out’ campaign

HMRC has launched the ‘Tax avoidance: don’t get caught out’ campaign. The campaign is about helping people make informed choices about their tax affairs, so they aren’t tempted by avoidance schemes that promise higher take-home pay, only to be left with unexpected tax bills.

These schemes are marketed through word-of mouth and online price comparison-style websites to contractors. We want them to be better informed about the consequences of avoidance and to help you support your clients, customers and members. The ‘Tax avoidance: don’t get caught out’ page contains guidance and personal stories so contractors can educate themselves about the signs and dangers of tax avoidance schemes. We would be grateful for your support in signposting the landing page to those who are currently contractors or are looking to become one.

We have also published the ‘Use of Marketed Tax Avoidance Schemes in the UK’ report, which brings together information about the numbers and characteristics of taxpayers using avoidance schemes.

It includes the types of schemes most used, occupations, locations and the declared incomes of those involved. We are doing this so we can make sure the people most likely to be offered tax avoidance schemes fully understand the risks, and will be working with local stakeholders to get that message across.

Alongside this, we are also announcing a joint piece of work with the Advertising Standards Authority that will enable us to more quickly remove misleading online advertisements offering avoidance schemes.

Spending Review (SR21/22)

Today the Chancellor announced the outcome of the Spending Review for 2021-22 (SR21/22). This is a one-year settlement and included confirmation of HMRC’s departmental budget for 2021-22.

This funding allows us to make progress against our vision to be a trusted, modern tax and customs department, as we set out in July in our Tax Administration Strategy, alongside our work to support the government response to the COVID-19 pandemic, and to reform and enhance the UK’s customs system after the end of the EU exit transition period.

The settlement also provides the funding announced this summer for implementation of the next stages of Making Tax Digital.

More dates added for HMRC customs import declarations webinar

More dates have been added for HMRC’s popular, live Brexit Transition webinar about how to complete customs import declarations. The webinar covers how to make import declarations when importing goods from EU countries into Great Britain. It would be useful for any businesses who intend to import goods from EU countries into Great Britain from 1 January 2021.

We have a series of short videos on HMRC’s YouTube channel to introduce customers to importing and exporting processes. Customers may find it helpful to watch these before attending the webinar.

• What you need to know to bring goods into the UK
• What you need to know to send goods out of the UK

Please share this update and the link to register with your clients, customers and members who may be interested in attending.

Link to register for the live webinar

HMRC will be launching more webinars shortly and we will let you know once they are live.

Capital Gains Tax changes that Self Assessment customers need to know

HMRC would like to remind customers that they have until 31 January 2021 to declare any profit made from selling a UK residential property, which was not their main home, during the 2019 to 2020 financial year, and pay the Capital Gains Tax due.

Since 6 April 2020 there have been changes to how customers declare and pay Capital Gains Tax. The new rules affect landlords or property developers selling on part of their residential property portfolio, or UK residents who sell a residential property that is not their primary home.

Customers should use the online service to inform HMRC and pay the tax due within 30 days of the sales completion.

More information on the changes and Capital Gains Tax can be found on GOV.UK.