Welcome to our round up of the latest business and Covid-19 news for clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you through these tough times.
First Minister Mark Drakeford announced a 4-week pause to the Coronavirus rules on Friday 18 June 2021 to help boost protection against the new Delta variant.
The Welsh Government reviewed the public health situation this week, mid-way through the current three-week regulations cycle, after announcing a phased move into alert level one. The rules around larger outdoor activities and events were relaxed on 7 June 2021.
Although there will be no substantive changes to the rules for a 4-week period, the regulations will be reviewed again on 15 July 2021 – some small technical amendments are being made to the Coronavirus regulations to make them easier to understand and easier to apply for businesses.
- The number of people who can attend a wedding or civil partnership reception or wake, organised by a business in an indoors regulated premise, such as a hotel, will be determined by the size of the venue and a risk assessment.
- Clarifying small grassroots music and comedy venues will be able to operate on the same basis as hospitality venues, like pubs and cafes.
- Primary school children in the same school contact group or bubble will be able to stay overnight in a residential outdoor education centre.
Pilot events in theatre, sport and other sectors will also continue throughout June and July.
Pension Contributions are tax efficient for employee and employer
Pension contributions to approved pension funds on behalf of employees and directors continue to be a tax-free benefit provided the annual input limit is not breached. The contributions are also deductible for the employer provided incurred wholly and exclusively for the purposes of the trade and paid before the end of the accounting period of the business.
For most taxpayers, the annual input limit is £40,000 and this limit includes contributions by the employee and contributions made by the employer on their behalf. It is also possible to take advantage of unused relief from the previous three fiscal years.
Payments into the pension by the employing business will be deductible against business profits. Currently this will only save 19% Corporation Tax but from 1 April 2023 will save 25% where profits exceed £250,000 and 26.5% where profits are between £50,000 and £250,000. Note that these limits are divided by the number of associated companies, i.e. under common control.
There are provisions for exceptionally large contributions where the deduction is spread over 2, 3 or 4 years.
Although the contribution on behalf of the employee or director may be tax free, they are generally not able to access the fund until age 55.
There have been several “schemes” devised over the years to exploit the pension rules.
HMRC warn employers not to use Unfunded Pension Arrangements
HMRC are currently attacking a marketed tax avoidance scheme using unfunded pension arrangements to avoid Corporation Tax, Income Tax and National Insurance contributions.
HMRC strongly believes these arrangements do not work and will seek to challenge anyone promoting or using these arrangements and make sure the correct tax is paid.
The arrangements involve a company creating an unfunded pension obligation to pay one or more of their directors a pension. This is to create an expense in the company accounts to reduce the company’s profit. The intended result of this step is to reduce the amount of Corporation Tax payable.
With many of these arrangements, the company then transfers the pension obligation to a closely associated third party. The third party is usually a relative or colleague of the director due to receive the pension. The intended result of this step is a payment to the director or a closely associated third party, with no immediate liability to Income Tax and National Insurance contributions.
Users of these arrangements may pay considerable fees to use them yet may still have to repay the tax claimed to be avoided, as well as interest and a penalty.
HMRC Employer Bulletin June 2021
HMRC publishes the Employer Bulletin 6 times a year, giving employers and agents the latest information on topics and issues that may affect them.
June’s bulletin covers updates and information on:
- tax and changes to guidance
- customer support
The employer bulletin is only available online. You can register for HMRC’s employer email alert service to receive emails from HMRC which tell you when the latest issue is available.
Carbon Capture, Usage and Storage Competition
£20 million in grant funding for innovative projects to reduce the cost of deploying carbon capture, usage and storage technology is now available. The Department for Business, Energy and Industrial Strategy (BEIS) is looking to support the deployment of advanced carbon, capture, usage and storage (CCUS) technologies within the UK. Applications will open on 28 June 2021. You will have until 8 August 2021 to apply.
Up to £20 million grant funding will be available to:
- support innovation in novel CCUS technology increasing its technology readiness level (TRL)
- demonstrate and de-risk next generation CCUS technologies to allow it to deploy commercially from 2025
- reduce the cost of deploying CCUS and create competitive pressure on current available technology
- Projects will be split into 2 lots:
- Lot 1 CCU: for projects primarily focused on developing technology for carbon capture and usage
- Lot 2 CCS: for projects primarily focused on developing technology for carbon capture and storage
- Projects will be considered for grant applications of:
- up to £50,000 for industrial, waste or power sector companies performing analysis on next generation CCUS technology that are most suited to their site or industrial sector
- up to £1 million for projects developing and piloting mid-stage (TRL 3-5) CCUS technology
- up to £5 million for projects demonstrating late-stage (TRL to 6-8) CCUS technology at intermediate scale at site
Covid 19 Government Support News
Below is our weekly roundup of changes to government support information generally and for businesses, employers and the self-employed.
Claim for wages through the Coronavirus Job Retention Scheme
Information about changes from 1 July 2021 has been added and claims for furlough days in June 2021 must be made by 14 July 2021.
The Coronavirus Job Retention Scheme has been extended until 30 September 2021. From 1 July 2021, the government will pay 70% of wages up to a maximum cap of £2,187.50 for the hours the employee is on furlough.
Employers will top up employees’ wages to make sure they receive 80% of wages (up to £2,500) in total for the hours the employee is on furlough. The caps are proportional to the hours not worked.
Kickstart Scheme grant
If you are an employer looking to create jobs for young people, you can apply for funding as part of the Kickstart Scheme.
The Kickstart Scheme provides funding to create new jobs for 16 to 24-year-olds on Universal Credit who are at risk of long-term unemployment. Employers of all sizes can apply for funding which covers:
- 100% of the National Minimum Wage (or the National Living Wage depending on the age of the participant) for 25 hours per week for a total of 6 months
- associated employer National Insurance contributions
- minimum automatic enrolment pension contributions
Employers can spread the job start dates up until 31 December 2021. You will get funding until 30 June 2022 if a young person starts their job on 31 December 2021.
Further funding is available to provide support so that young people on the scheme can get a job in the future.
There is now a link to a video walkthrough of the online application in the ‘How to apply – Apply online’ section.
Kickstart Scheme employer resources
If you have been offered Kickstart Scheme funding, you can use these resources to show your support for the scheme.
Private providers of coronavirus (COVID-19) testing
The lists of and information about private providers who have self-declared that they meet the government’s minimum standards for the type of commercial COVID-19 testing service they offer has been updated.
Further Welsh Government support for businesses impacted by phased move to Alert Level 1
Businesses in Wales materially affected by the phased move to Alert Level One, such as indoor attractions and wedding venues, will receive £2.5m in further support from the Welsh Government, Economy Minister, Vaughan Gething, announced last week.
Additional funding is now being made available to support businesses affected by the staged transition to Alert Level One, due to the impact the delta variant of COVID-19 is having on transmission rates. The staging takes account of concerns over the impact the delta variant of COVID-19 is having on transmission rates and potential increase in hospitalisations.
Support will be available for businesses that have capacity for events of more than 30 people indoors or in contained spaces and to businesses that are still closed because of ongoing restrictions.
To receive the funding, businesses will need to have applied to the Welsh Government’s latest round of emergency funding – the deadline for which ended Wednesday 16 June 2021.
Businesses will be entitled to an additional payment of between £875 and £5,000, depending on their size and circumstance, to cover the period up to the end of June.
Eligible applicants will automatically receive the top-up where possible or will be required to self-declare via an online process. Details are available on the Business Wales website.
Business Wales Town Centre Entrepreneurship Fund
The Welsh Government has launched the Town Centre Entrepreneurship Fund as a pilot programme to provide financial assistance for entrepreneurs and businesses who are looking to start and grow a business in one of four town centres across North Wales – Bangor, Colwyn Bay, Rhyl and Wrexham.
This fund will be available as a discretionary grant of between £2,500 – £10,000 per business to support with the revenue costs associated with starting up in or relocating to a town centre.
In order to access the fund, you must submit an Expression of Interest form and register with Business Wales. You will then be assigned a dedicated Business Adviser who will support and guide you through the full application process.
The Business Wales Town Centre Entrepreneurship Fund is open to applications until 20 June 2022, funds permitting. If funds are used up before this date the scheme will close.
For further information please visit the Business Wales Town Centre Entrepreneurship Fund page.
Grants of up to £10,000 available to support Tenants and Landlords
Charitable organisations including housing associations and community interest companies (CIC’s) can apply for funding of up to £10,000 for projects that will help to educate inexperienced landlords about the obligations of being a private landlord and projects which will help educate tenants about their rights and responsibilities.
The funding is being made available through the Tenancy Deposit Scheme (TDS) Charitable Foundation and the closing date for applications is 5pm on 27 August 2021. The Foundation are particularly interested in receiving applications that seek to drive forward education and learning as well as dispute resolution, in light of the impact which Covid-19 has had on the Private Rented Sector.
For further information please visit the TDS website.