The Chancellor has confirmed the extension of a number of measures designed to assist taxpayers to weather the economic and administrative problems caused by the extended COVID-19 lockdown. These measures are welcome but sadly reflect the fact that the impact of the virus has gone on far longer than the Government initially estimated.
Furlough
As extensively trailed, there is to be an extension of the coronavirus job support scheme to September 2021 across the UK. The Chancellor announced that employees will continue to receive 80% of their salary, for hours not worked, until the scheme closes, but from July 2021 employers will be asked to make a contribution of 10%, rising to 20% in August 2021 and September 2021.
Self-employed support
The self-employment income support scheme (“SEISS”) will also be extended with a fourth grant under the running from February 2021 until April 2021, covering up to 80% of three months’ trading profits up to £7,500. There will then be a fifth grant from May 2021 to September 2021 of up to three months of average profits. The grant level will reduce to 30% if a claimant’s turnover has fallen by less than 30%. This restriction reflects the different impact that businesses have suffered, but might be seen as something of a cliff edge comparing, say, a taxpayer whose profits have fallen by 29% as compared with someone with reduced profits of 31%.
The scheme has also been extended to some self-employed taxpayers who failed to meet the threshold for the first three grants – the newly self-employed who had not previously reported any self-employed income. Taxpayers who filed their 2019/20 tax returns before midnight on 2 March 2021 can apply for the grants, with the Chancellor estimating that 600,000 additional people may now qualify.
Employment Management Incentive (“EMI”) working time test
Extensions have been announced to the working time rules for EMI schemes, where until 5 April 2022, individuals who are furloughed or who have their working hours reduced below the current statutory working time requirement for EMI as a result of COVID-19 will retain access to the scheme’s tax advantages. This will apply both to existing participants of EMI schemes and in circumstances where new EMI share options are being granted. This is a welcome move reflecting the slow emergence from lockdown and is in line with the extension to the furlough scheme mentioned above.
Home working expenses
The temporary exemption from income tax and class 1 national insurance contributions on employer reimbursed expenses to cover the cost of relevant equipment used for home working during COVID-19 has been extended to 5 April 2022. This exemption still requires that equipment is obtained by the employee for the sole purpose of enabling them to work from home as a result of the pandemic, and that the provision of the equipment would have been exempt from income tax under the normal rules if it had been provided directly to the employee by, or on behalf of, the employer. Once again this is welcome, removing a potential disincentive for people to continue home working too soon.
If you would like to discuss this in further detail, please get in touch with your usual contact or e-mail us at experts@tacs.co.uk.
