Tax Update 09/10

Keep up to date with the key announcements made this past week.

Self-assessment time to pay limit increased to £30,000

HMRC has announced that the threshold for Self-assessment customers to spread the cost of the tax bills is being tripled from £10,000 to £30,000. The measure is introduced to help ease the financial burden resulting from the COVID-19 pandemic.

From 1 October 2020, the online payment plan service can be used to set up an instalment arrangement for paying tax liabilities up to £30,000. This increase follows Rishi Sunak’s announcement made on 24 September 2020 to increase support for individuals and businesses affected by the ongoing coronavirus pandemic.

Taxation of coronavirus support payments

Treasury directions have been made in relation to the Coronavirus Job Retention Bonus, which can be claimed between 15 February 2021 and 31 Match 2021. New guidance for employers on the eligibility requirements for claiming this Job Retention Bonus has been published by HMRC.

The Job Retention Bonus is a one-off taxable payment of £1,000 that can be made to employers, for each eligible employee that they furloughed and kept continuously employed until 31 January 2021. The bonus can be claimed between 15 February 2021 and 31 March 2021.

Treasury directions have been laid which have the effect of bringing the payment within the scope of the Finance Act 2020 measures on taxation of coronavirus support payments.

HMRC has provided guidance that provides information on :

  • who can claim the bonus,
  • employees for whom the bonus can be claimed,
  • the minimum income threshold that must be paid to employees to be eligible for the bonus, and
  • what employers need to do before making a claim.

HMRC has also published a set of examples to help employers decide which employees will meet the minimum income threshold for the Job Retention Bonus. HMRC will update this guidance by the end of January 2021 with details on how to access the online claim service on GOV.UK.

Protected pension age easement will not be extended

In the latest update to Pension Schemes Newsletter 124, HMRC has announced that the protected pension age easement for certain pension scheme members re-employed as a direct result of COVID-19 will expire on 1 November 2020.

Individuals who were members of pension schemes before 6 April 2006, including some police, firefighters and other uniformed service personnel, have protected pension ages in respect of those schemes. This means that they can receive pension benefits at an age below the current normal minimum pension age of 55.

Under current legislation, those individuals with a protected pension age in the range 50 to 54 would lose the benefit of their protected pension age and become liable to unauthorised payment tax charges if they access their pension benefits and either:

  • continue to work without a break in service or;
  • return immediately to service without a break of at least one month.

The Government temporarily suspended these rules if such individuals returned to work as part of the Government’s response to coronavirus. The easement only covered the period from 1 March to 1 November 2020, and in an update to Pension Schemes Newsletter 124 HMRC has confirmed that it will not be extended and will expire on 1 November 2020.

Changes to VAT treatment of overseas goods sold to customers from 1 January 2021

HMRC has updated its policy paper on changes to the VAT treatment of overseas goods sold to customers from 1 January 2021 with several changes.

This includes:

• a requirement to include a reference to ‘reverse charge’ on invoices where a direct seller or OMP is selling to a business customer in the UK

• clarification that the new rules will apply to sales that have a time of supply for VAT purposes of 1 January 2021 or later, and

• information on who should register for UK VAT from 1 January 2021.

Importing and Exporting excise goods to the UK/EU

Guidance on importing and exporting excise goods has been published by HMRC. The guidance aims to help stakeholders prepare for the final stage of the transition period. Further guidance may be issued depending on the precise terms upon which the UK leaves the European Union, so stakeholders should monitor relevant HMRC pages for updates.

The guidance covers:

• importing excise goods

• moving imported excise duty suspended goods within Great Britain

• becoming a registered consignor

• what to do if goods are dispatched on or before 31 December 2020 but received from 1 January 2021

• exporting excise duty paid goods and duty suspended goods

• moving excise duty suspended goods to the place of export from Great Britain 

• the protocol for registered excise business or those who use authorised destinations

Council removes Cayman Islands and Oman from EU list of non-cooperative jurisdictions

The European Council has announced the jurisdictions which are being added and removed from the EU list of non-cooperative jurisdictions for tax purposes.

The Cayman Islands and Oman have both been removed from the list after ‘having passed the necessary reforms to improve their tax policy framework’, meanwhile Anguilla and Barbados have both been added to the list following reports published by the Global Forum on Transparency and Exchange of Information for Tax Purposes downgrading the jurisdictions to ‘non-compliant’ and ‘partially compliant’ respectively.

The list now contains twelve non-cooperative jurisdictions: American Samoa, Anguilla, Barbados, Fiji, Guam, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, the US Virgin Islands and Vanuatu.