Asset Protection examples…

THE UK GOVERNMENT has extended the furlough scheme until the end of March 2021.

The Chancellor announced today (November 5) that the Coronavirus Job Retention Scheme (CJRS) will be made available to all parts of the UK under the highest levels of Covid-19 restrictions until March 2021, with the government paying 80 per cent of wages up to a cap of £2,500.

The new CJRS, which was initially extended to 2 December, will be reviewed in January 2021 to decide whether economic circumstances have improved enough to ask employers to contribute beyond NICs and pension contributions.

For the self employed, the next iteration of the self-employed grant, which covers the period November to January, will also now increase to 80 per cent of average profits up to £7,500 over the three-month period.

Summary of the new CJRS measures

• The furlough scheme will now be extended until the end of March 2021
• Employees receiving 80% of their current salary for hours not worked.
• The next self-employed income support grant will also increase from 55% to 80% of average profits – up to £7,500
• Employers will only be asked to cover National Insurance and employer pension contributions for hours not worked. For an average claim, this accounts for just 5% of total employment costs or £70 per employee per month.
• The incentive of the £1000 Job Retention bonus will fall away. This was one-off taxable payment to the employer, for each eligible employee that was furloughed and was then continuously employed until January 31 2021.

If you are affected by any of the issues above and would like more information, please call 0114 272 4984 or email info@shipleystax.com.

Please note that we do not give free advice by email or telephone.

SOMEWHAT BELATEDLY, the embattled UK government announced on 31 October that from Thursday 5th November 2020, England will go into lockdown and businesses such as non-essential retail and hospitality will close. At Shipleys Tax we have summarised how the extension will work below.

The overly complicated Job Support Scheme (JSS), which was due to launch on 1 November, will now be postponed.

Instead, the government will extend the Coronavirus Job Retention Scheme (CJRS/furlough scheme) until December, to help employers furlough their staff. Crucially, this new extension allows new claims to be made where previously this was denied.

…the government will extend the CJRS/furlough scheme until December, to help employers furlough their staff. Crucially, this new extension allows new claims to be made where previously this was denied.

The furlough scheme extension

• The Coronavirus Job Retention Scheme (CJRS) will now remain open until Wednesday 2 December and the JSS will be postponed.
• The extended CJRS will operate as before, with businesses being paid upfront to cover wage costs. Although initially, while HMRC update their systems, businesses will be paid in arrears.
• Employers do not need to have furloughed staff before to claim under this extended scheme.
• Employees must have been on the employer’s PAYE payroll by 23:59 on 30 October 2020.
• Full furlough grants will cover 80% of staff pay, to a maximum of £2,500 per person, per month. However, employers will need to pay National Insurance and pension contributions. 
• Flexible furloughing and full-time furloughing will be allowed. Useful for employers that stay open but operate with fewer hours.
• A Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020.
• Employers may top-up employee wages above the scheme grant at their own expense if they wish.
• There will be no gap in eligibility for support between the previously announced end date of the CJRS and this extension.

If you are affected by any of the issues above and would like more information, please call 0114 272 4984 or email info@shipleystax.com.

Please note that we do not give free advice by email or telephone.

INHERITANCE TAX is sometimes referred to as the “optional tax”. At Shipleys Tax we have experts who can help manage your inheritance tax exposure. However, did you know that you can arrange to pay inheritance tax in instalments for up to 10 years? This only applies to certain types of assets, and not any assets that have already been sold – in today’s Shipleys Tax news we look at this valuable option in detail.

Paying Inheritance tax

Inheritance tax is normally payable by the end of the sixth month following that is which the person died. So, for example, if someone died on 4 April 2020, any inheritance tax due on their estate would be due by 31 October 2020.

Often the deceased estate will include non-cash assets, such as property, shares and suchlike and the beneficiaries may need to sell some of the assets to realise the cash with which to pay the inheritance tax bill. The tax system recognises this and allows the inheritance tax on assets that may take some time to sell to be paid in instalments.

… you can arrange to pay inheritance tax in instalments for up to 10 years. This only applies to certain types of assets, and not any assets that have already been sold …

Instalment option

The executors must state on form IHT400 if they wish to pay inheritance tax in instalments. Inheritance tax on certain assets that take time to sell can be paid in equal annual instalments over 10 years.

However, if the assets have been sold, the tax must be paid in full.

Assets qualifying for payment in instalments

Inheritance tax can be paid in instalments on:

• Land, for example a house that a beneficiary keeps to live in or rent out;
• shares or securities where the deceased controlled more than 50% of the company;
• unlisted shares and securities worth more than £20,000 that represent either 10% of nominal value of the shares or 10% of the value of the ordinary share capital of the company.

Payment can also be made in instalments where at least 20% of the inheritance tax owed by the estate is on assets qualifying for payment in instalments and paying them in a single lump sum will cause financial difficulty.

Where there is inheritance tax still to pay on gifts in the form of buildings, shares or securities or all or part of a business, this too can be paid in instalments.

If the deceased estate includes a business that is run for profit, if IHT is due, this can be paid in instalments on the net value of the business, but not on the business assets.

Where the instalment route is taken, interest is payable on the second and subsequent instalments on both the full balance of the outstanding tax.

Payment dates

The first instalment is due on the normal IHT due date – the end of the sixth month after the month in which the deceased died. Subsequent instalments are due on this date each year for the next nine years.

Interest

Where the instalment route is taken, interest is payable on the second and subsequent instalments on both the full balance of the outstanding tax. Where an instalment is paid late (including the first instalment), interest is also payable on the instalment from the due date to the date of payment.

Clearing the bill

The outstanding bill and any associated interest can be paid off at any time. Clearing the outstanding debt may be a preferred option if the assets are sold at a later date. A final settlement figure can then be obtained from HMRC.

If you are affected by any of the issues above and would like more information, please call 0114 272 4984 or email info@shipleystax.com.

Please note that we do not give free advice by email or telephone.