Coronavirus Job Retention Scheme and Redundancies

Initially the government paid 80% of the furloughed employees wages up to a monthly limit of £2,500, but from 1 July 2021 this has changed.

Whilst the monthly limit of £2,500 remains, the government’s contribution to the scheme has reduced to 70% with companies having to contribute the remaining 10%.

Companies using the scheme also need to be aware that, from 1 August to when the scheme ends on 30 September 2021, the government will contribute only 60%, with the remaining 20% being met by the employer.

One of the questions an employer will currently be asking itself is “are the contributions that need to be made, a cost that the business can afford in the current climate?”  This could lead to questions on workflow, cashflow and as a result, staffing requirements.

Often, salaries are the biggest cost to a company which is why this is the first-place employers will look to save costs.  It is important that if a decision to make redundancies is made, that professional advice is sought to ensure that redundancy entitlements have been calculated correctly and that the correct legal process is carried out to avoid any unforeseen complications.  Making redundancies at the wrong time and without specialist advice could unwittingly lead to even bigger challenges.

Whilst all companies are different, redundancies may not be the only way to help a business get back on its feet and it is important that all options are explored.  It can be key to seek the assistance and advice from a qualified, professional.  The earlier assistance is sought and the position is reviewed, the more options there are likely to be available.

Should you need any assistance or would like to discuss any of the matters covered above then please do not hesitate to contact Kim Richards on 01922 922 943 or at kim.richards@bkplus.co.uk

Changes to EU VAT Regulations from 1st July

The changes made will effect everyone in the e-commerce supply chain, including businesses who;

  • Sell or supply goods from Northern Ireland to non-VAT registered customers in the EU
  • Make supplies of goods from the EU to non-VAT registered customers in Northern Ireland
  • Send low value goods to Northern Ireland/EU from outside the EU and Northern Ireland
  • Have goods located in Northern Ireland at the point of sale (applies to non-EU businesses)

The changes will also affect online marketplaces that facilitate the sale of goods located in NI/EU by non-EU businesses to non-VAT registered customers in the EU and NI consumers, as well as online marketplaces that facilitate the sale of goods from Great Britain to consumers in NI and the EU.

Starting July 1st, the exemption for goods imported with a value of up to £19 (€22) will no longer apply, and instead will be charged VAT regardless of value. For businesses importing goods with a value of £135 (€150) or less, they will be able to use the EU’s new IOSS (Import One-Stop Shop), which enables them to charge VAT at the point of sale (excluding goods that are subjected to excise duty).

The distance selling VAT threshold regime has also changed. Before these changes, EU businesses had to register VAT in each EU country that they sold goods in, and they’d also charge their customers their domestic VAT rate once sales hit a certain threshold. The new changes remove this threshold and enforce that the VAT rate must be charged at the first sale. However, businesses can file all sales through a single sale One-Stop Shop (OSS) VAT return if they choose to close their VAT registration in different EU countries.

For further information visit the GOV’s dedicated page. For professional advice get in touch with our team at hello@bkplus.co.uk.

 

 

 

What is the Business Asset Disposal Relief (Entrepreneur’s Relief)?

What is it?

There are many reasons why an Entrepreneur may wish to sell or give away their business, and when this happens, the entrepreneur may be able to gain a benefit of a reduced tax rate, this benefit in particular is called The Business Asset Disposal Relief (previously known as the Entrepreneur’s Relief before April 2020).

The Business Asset Disposal Relief (BADR) is a tax relief scheme, which helps you maximise your financial gains if you are eligible to claim this when you are selling all or a part of your business.

The financial gain comes from the 10 % reduction of Capital Gains Tax that is paid on the profits you make when you sell any eligible assets (where usually you would be required to pay the standard 20% rate).

Are you eligible?

Unlike many Government schemes, the BADR is only available to individuals – not companies. These individuals include sole traders, company Directors and Partners, however there is a criteria you must meet in order to be eligible for the tax relief.

This scheme can only be applied if the company (or part of it) is being sold or if the company enters a formal liquidation process. The BADR scheme cannot be claimed if the company has been dissolved or struck off using a DS01 form.

To begin, you need to meet the criteria below during the ‘qualifying period’, this period is 24 months leading up to the disposal – the company also must have been trading during this time;

  • You haven’t exceeded your £1m lifetime limit
  • You have been a sole trader, officer or employee of the business
  • You have held 5% or more of the share capital of the business and also 5% of voting share capital.

All of this criteria must be met for the duration of this 2 year qualification period.

However, whilst the above is the general criteria, there are some differences that should be noted.

Selling the business – If the business is being sold as a whole or in parts, you must be the exclusive business owner or a business partner during the 2 year qualifying period, as well as also having owned the business for a minimum of two years.

Selling shares – If business shares are being sold, you needn’t be the business owner or business partner, however you must have been an employee or officer within the business during the 2 year qualifying period. You also must have held the share capital stated above. As well as this, to be able to claim the BADR on the disposal of shares, the company must be a trading company or a holding company of a trading group.

How to calculate BADR

Follow these steps to calculate the Business Asset Disposal Relief;

  1. Work out your total taxable gain by adding together all of your capital gains, less any losses.
  2. Take away your tax-free Capital Gains Allowance (£12,000)
  3. You will now only have to pay 10% on the final figure, the rest goes in your pocket.

How to claim

The BADR claim must be made to HMRC. This is usually submitted as a claim on your annual Self-Assessment tax return.

To avoid making any errors or to check if you qualify, get in touch with one our experts at hello@bkplus.co.uk.