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Should we be scared of tax increases?

Right now squirrels across the country are collecting up nuts getting ready for winter, food that they hope will feed them into next year. We as a country I’ve had a complicated year with Coronavirus and the vast social issues that has created and there are many people now who are receiving help from the government and all of this needs to be paid for. Many of us have some money squirrelled away for many of us that amount might be reducing, And it may be with some concern that we think about what tax rises there might be in store for us.

My aim here is to collect together the announcements that have been made, and some thoughts about what we might be expecting when Rishi Sunak next stands up for his autumn budget, and I will update this as we get closer to the budget. As at the date of writing the budget date has not yet been announced.

Income Tax

It is very unlikely that the rate of income tax will change in the short to medium term. Indeed with the current Labour opposition there is little pressure on the government here.

It is possible that a hypothecated increase in national insurance contributions might be introduced, but this would probably be unpopular and would take money away from the very people who need to be spending it right now.

Corporation Tax

The government have let it be known that corporation taxes might float up to somewhere around 24% almost returning to the rate of 26% at which they stood when the Conservative government came to power. Labour are not currently putting any pressure on corporation tax rates.

It is very possible that corporation taxes will be restructured to take away some of the advantages to small companies of using dividends to reduce national insurance contributions. We have been waiting a long time for such changes, and this may be as simple as applying national insurance to dividends paid to directors of close companies for example.

Business reliefs

There is increasing speculation that that might be tax relief for business investment, and this may involve another yo of the capital allowances yo-yo. The annual investment allowance is currently at £1 million under a temporary measure which expires in December 2020. It might be that this gets prolonged a little bit longer.

Alternatively the Chancellor may look at shareholding beliefs such as extending the Enterprise Investment Scheme or the Seed Enterprise Investment Scheme. Both of these beliefs are aimed at investors who are investing monies into new or relatively new companies. In the situation where we as a country need investment into new companies and investors have cash in their bank accounts it would seem sensible to allow new businesses to bubble up using such a relief. Having said that the seed enterprise investment scheme is already very attractive and a little bit of tweaking to take away some of the complications and bear traps involved in this relief might be more rewarding.

Capital Taxes

There is already a review into capital gains tax which has been referred elsewhere in this page. There is current speculation that the rate of capital gains tax might be increased up to income tax rates, but this might be seen to break with an important underlying philosophy of capital gains tax that it should not tax inflationary gains. It is for this reason that in the history of capital gains tax there have been various mechanisms to relieve the inflationary gains, starting with an indexation allowance moving onto a type of relief and currently a simple rough halving of the rate. To my mind it seems fair that capital gains tax rate is half the rate of income tax if that is seen as a simplified relief for installation of the gains.

Looking more broadly, the reason we have to have a capital gains tax is that if there was not such a tax, wealthy individuals who are able to control cash flows, might arrange that all of their ‘income’ will take the nature of capital and they would thus escape taxes. There is a long history of anti-avoidance legislation targeted at treating such short-term gains as income and it may be that this is a more fertile ground for short-term capital gains. This might lead to a general rule introduced which says there are short-term capital gain, safer assets held for less than two years, might be just added in as income.

Inheritance tax is constantly under review and this might be fairly fertile ground for changes. The rate of inheritance tax at 40% for death transfers or 20% for lifetime transfers is analogous to the rate of income tax at a basic rate (20%) or the higher rate (40%).

With rules to tax non-UK domiciled individuals on UK residential property (even when held by a non UK company) for both inheritance tax and capital gains tax, it is getting more difficult to avoid inheritance taxes on property. It would not be very surprising to see the non-domicile walls swept away completely to put all individuals on an equal footing here. It would then be the case that a non-resident individual might simply be taxed on assets in the UK without the complications that we have now. It is often the complications that allow for cracks through which tax can leak.

Taking away the tax-free probate uplift on property where not subject to inheritance tax would create a nice tax take for the country. It is clearly right and proper that if the value of an asset has been subject to inheritance tax that same value should then be the base cost for a future disposal. If however the asset was exempt in the estate, by reason of nil rate band business property relief or agricultural relief for example, then it seems fair to both future capital gains on the original cost without that probate value uplift.

The idea of an annual wealth tax has been mooted, but I do not see an appetite for this at the moment. To me, a new tax on capital would be politically unacceptable to the Conservative party at this moment in time. However we will need to wait and see…

VAT

As we move away from Europe so we will be unshackled from the EU is VAT rules. This gives the Chancellor some scope for adjusting VAT rates or the commodities and services on which VAT is charged.

Kickstart

Businesses are now able to sign up to the Kickstart scheme under which people aged between 16 and 24 who are claiming Universal Credit can receive a six-month work placement.

Under the scheme, the Government will pay 100% of the age-relevant National Minimum Wage, National Insurance and pension contributions for 25 hours a week.

Employers will be able to top up this wage, while the Government will also pay employers £1,500 to set up support and training for people on a Kickstart placement, as well as helping pay for uniforms and other set up costs.

Further information can be found Landmark Kickstart scheme opens.

Capital Gains Tax review

This is coming at an interesting time: Rishi Sunak has called for a review of capital gains tax. The review will consider Capital Gains Tax and the taxation of chargeable gains in relation to individuals and smaller businesses and develop recommendations for simplification including reducing distortions from both an administrative and technical standpoint.

This will include consideration of general areas such as:

the overall scope of the tax and the various rates which can apply
the reliefs, exemptions and allowances which can apply, and the treatment of losses
the annual exempt amount and its interactions with other reliefs
the position of individuals, partnerships and estates in administration
the position of unincorporated businesses and stand-alone owner-managed trading or
investment companies, including the setting up, selling or winding up of such businesses or
companies
any distortions to taxpayers’ personal or business investment decisions
interactions with other parts of the tax system such as Income Tax, Capital Allowances,
Stamp Taxes and Inheritance Tax, including potentially different definitions for similar
transactions/events.

This is an area that has changed many times over the years, and it almost feels that each Chancellor wants to carve his or her own identity into the capital gains tax system. Let’s wait to see whether Rishi Sunak can make capital gains tax sit alongside all other taxes comfortably, most especially income tax. We wait with bated breath.

Details are available here

Reference

Capital Gains Tax Simplification Review: Scoping Document

A plan for jobs 2020

8 July 2020

A personal view from Stephen Poole

It is fair to say there was a heavy burden of expectation on Rishi Sunak when he stood up today, so it is worth having a calm look at what he has announced, what he hasn’t and to give a little comment.

We have had a week of announcements of spending to support the country out of the covid crisis, with welcome monies earmarked towards museums and galleries and for a green recovery. So now was the time to pull this all together into a coherent scheme.

The announcements

Job Retention Bonus

This will be a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021. Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021. Payments will be made from February 2021. Further detail about the scheme will be announced by the end of July.

Kickstart Scheme

The government will introduce a new Kickstart Scheme very similar to Gordon Browns Future Jobs Fund from 2008. This £2 billion fund is designed to create hundreds of thousands of high quality 6-month work placements aimed at those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment. Funding will be available to cover 100% of the relevant National Minimum Wage for 25 hours a week for each job, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions.

It is worth pointing out that the rates of minimum wage for those under 25 are quite low as follows:

Under 18	£4.55
18 to 20	£6.45
21 to 24	£8.20

Rates applying from 1 April 2020

Traineeships for young people

The government will provide an additional £111 million this year for traineeships in England, to fund high quality work placements and training for 16-24 year olds. This funding is enough to triple participation in traineeships. For the first time ever, the government will fund employers who provide trainees with work experience, at a rate of £1,000 per trainee. The government will improve provision and expand eligibility for traineeships to those with Level 3 qualifications and below, to ensure that more young people have access to high quality training.

Payments for employers who hire new apprentices

The government will introduce a new payment of £2,000 to employers in England for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over, from 1st August 2020 to 31st January 2021. These payments will be in addition to the existing £1,000 payment the government already provides for new 16-18 year-old apprentices, and those aged under 25 with an Education, Health and Care Plan – where that applies.

Eat Out to Help Out

The new Eat Out to Help Out scheme is to encourage people to return to eating out. This will entitle every diner to a 50% discount of up to £10 per head on their meal, at any participating restaurant, café, pub or other eligible food service establishment. The discount can be used unlimited times and will be valid Monday to Wednesday on any eat-in meal (including on non-alcoholic drinks) for the entire month of August 2020 across the UK. Participating establishments will be fully reimbursed for the 50% discount.

VAT – the reduced rate expanded

One advantage of being outside the EU is that we have more freedom to tinker with VAT rates. Mr Sunak has decided to make more use of the 5% reduced rate.

From 15 July 2020 to 12 January 2021, to support businesses and jobs in the hospitality sector, the reduced (5%) rate of VAT will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK. Further guidance on the scope of this relief will be published by HMRC in the coming days.

In addition, from 15 July 2020 to 12 January 2021, to support businesses and jobs, the reduced (5%) rate of VAT will apply to supplies of accommodation and admission to attractions across the UK. Further guidance on the scope of this relief will be published by HMRC in the coming days.

Temporary Stamp Duty Land Tax (SDLT) cut

The government will temporarily increase the Nil Rate Band of Residential SDLT, in England and Northern Ireland, from £125,000 to £500,000. This will apply from 8 July 2020 until 31 March 2021 and cut the tax due for everyone who would have paid SDLT. Nearly nine out of ten people getting on or moving up the property ladder will pay no SDLT at all.

Green Homes Grant

Something dear to my heart, the government will introduce a £2 billion Green Homes Grant, providing at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household. For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household. In total this could support over 100,000 green jobs and help strengthen a supply chain that will be vital for meeting our target of net zero greenhouse gas emissions by 2050. The scheme aims to upgrade over 600,000 homes across England, saving households hundreds of pounds per year on their energy bills.

My thoughts

A lot of the measures are welcome, especially those aimed at getting young people into jobs. However it feels to me that a lot of the effort here it’s in trying to put the clock back to where it was before Covid has struck rather than trying to reimagine the way the economy works.

Putting money directly into local economies is a good move at this stage so I welcome the efforts to get people eating out and I think it’s a very good move to give grants to people to insulate their homes. This should hopefully get money very quickly into local traders pockets, who will then spend it, taking on apprentices, and supporting the local economy. This is a good way of getting money flowing out to all regions. I did notice before anyone point it out that the eat out to help out scheme applies to food and drinks but, sadly, only to non alcoholic drinks.

As far as the environment is concerned, and farming in particular, I feel that, as long as Brexit can be managed well, in the agriculture bill and environment bill we have enough to work with in re-shaping the future of farming towards a green future. If ELMS (speaking from England) gets off to a good start with serious intent I think the future is very bright for agriculture. We have the tools we need as long as we have the will to use them, and therefore it is leadership that’s going to be needed over the next decade or two.

As a parting shot I notice there is no voucher for haircuts, so I guess my hair will just keep on getting longer . . .

Woodlands

Stephen Poole

Where are we with woodlands – are they still a good tax planning vehicle? I seek to tease out some answers below

What is woodland?

Growing trees on land is a very ancient activity, and there are many reasons to do so. Nowadays woods can be held for various activities which might be for felling to provide timber or heating, it might be grown as a habitat for hunting-based activities, it may be part of a woodland burial trade, it may be grown as part of a countryside stewardship activity with mainly ecological motives, and it may be part of a rewilding scheme where payments are received for public goods.

Certain activities are deemed by the legislation to be trades if they would not otherwise be so. Farming is one such occupation and it is worth pondering a moment on section 996 of the Income Tax Act 2007, because the wording with this old piece of legislation has defined the way farming has been taxed for generations.

Here we see that farming is the occupation of land for the purposes of ‘husbandry’. This is taken to not include forestry activities or market gardening but it does include hop growing, some horse based activities (which I will look at elsewhere), and short rotation coppicing. A “short rotation coppice” is defined as “a perennial crop of tree species planted at high density, the stems of which are harvested above ground level at intervals of less than 10 years“.

In addition section 11 of the Income Tax (Trading and Other Income Act) 2005 exempts the commercial occupation of UK woodlands from income tax, so profits or losses arising from such occupation are therefore ignored for income tax purposes. Incidentally this is does not spring from altruistic motives on the part of government, but by the particular problems of accounting for tree growing. If this were to be taxable HMRC would be given tax reliefs up front and waiting a long time for their share of the profits…

Before I go into detail I think it helpful to tabulate the income tax, capital gains tax and VAT position as regards some activities on land.

	Income tax	Capital gains tax	VAT	Inheritance tax
Farmland used for growing crops	Trade	Land subject to CGT but rollover relief and other trade reliefs may be in point	Land exempt unless opted. Sales of crops taxable subject to zero rating for food	Agricultural Relief on agricultural value if for human consumption, also potentially Business Relief on full value
Short rotation copping	Trade included with all other farming	Land taxable, crops outside scope	Sales of wood standard rated -see note 1	Business relief if trading
Commercial woodland	Exempt from income tax	Trees exempt but land taxable.	As above	Business relief if trading
Other woodland	Potential taxable if there is a trade	Land taxable	Trees taxable if there is a business – see note 1	Business relief may be possible if within and environmental scheme

1) sales of wood subject to reduced rate of 5% if for heating

Income tax

In general the sale of timber from woodland will be exempt from income tax to some extent. Either the woodland is managed commercially in which case the exemption would apply or if it’s not managed commercially then there may not be a business in the nature of trade in which case the trees will not be subject to income tax. For the income tax exemption this will apply to operations on the tree until it is felt and lying on the ground “in the round”.

Operations on the wood after felling are potentially taxable. For example if the wood is then going to be chipped to be used in heat generation they will need to be a value transfer into the chipping trade. The chipping activity and become the taxable activity.

If the woodlands are not commercially managed then whether or not the sale of trees will be taxable will be dependent upon whether there is a trading type activity carrying on. If there is then there was a potential income tax charge on the sale of trees and note in particular that short rotation compassing is treated as trading within the farming definition. There may also be a charge for capital gains tax see below.

Investment into EIS, SEIS and VCT is generally not available, not surprisingly perhaps.

Capital gains tax

If a woodland is not managed commercially and not within the income tax and capital gains tax exemption then is a question as to whether the sale of a tree is subject to capital gains tax, But trees would be each treated as a single chattel and not a set and therefore subject to a couple of gains tax exemption each of £6000. It is therefore unlikely that a single tree would be subject to capital gains tax. In the case of the sale of a woodland which was not commercially managed the value of the wood in the woodland would be part of the proceeds for capital gains tax. Clearly there are many complications here and advice will need to be taken in each case. HMRC provide a good summary here.

Rollover relief can be available on a purchase or sale of Woodlands but only to the extent of the underlying land if the land is managed commercially. The proportion of the total price represented by the land will depend upon the age of the trees but in any cases it is it will be significant.The same applies to other business capital gains tax reliefs such as holdover relief and entrepreneurs relief. Specific advice needs to be taken in these areas.

Rollover relief is a relief from capital gains tax whereby if a capital gain is made and within the four year window starting one year before and ending three years after that disposal the proceeds on sale are reinvested into another trading asset, the capital gain on the disposal might be rolled into the base cost of the new asset leading to a much reduced capital gains tax bill but at the price of a potential future bill. I do not intend to go into the complexities of this here but happy to give advice if necessary.

VAT

Sales of Woodlands will be treated as taxable for VAT purposes if there is a business activity. In many cases this will be based upon how things look on the ground and in most cases where trees are felled and sold on a relatively commercial basis VAT should be assumed to be in point. It will therefore be necessary to check whether the registration threshold has been exceeded. The lower rate of 5% can be available on the sale of wood if the wood is going to be used for heating. Specific advice taken.

Inheritance tax

If your client owns woodland, an election may be made to leave out the value of the timber from the value of the estate (but the value of the land will be included). This is not a forever gain as the tax or come back into point Adam when trees are sold. Detailed records will therefore need to be kept.

Subject to the above election it will often be more important to consider where the business relief will be available on the value of the Woodlands on death. This would include the full value of the land and the growing trees to potentially fully exempt the woodland.

Other thoughts

A few other thoughts (by no means to be taken as exhaustive) not to be forgotten but each of which will require specific attention.

For people with SIPPS, a particular advantage of Woodlands is that they are treated as commercial land for the purposes of investment into pensions. Specific advice would need to be taken on this.

Carbon trading within the woodland carbon code may be available giving rise to potential upfront payments on planting of trees.

Countryside stewardship capital grants and maintenance payments may be available for planting of woodland. This will be continuing until 2024.

References

HMRC guide to CGT on trees

Woodland Carbon Code

The future of farming and green recovery

Stephen Poole

This is a personal view that I have put together partly in response to being told by farmers that they plan 2 years ahead in their plans, but accountants work one year in arrears.

Also, in my view, we have a once in a lifetime opportunity to make a real difference and it is important to understand how to make use of all the tools and incentives available. With that in mind, I am going to try to pull together the various forces acting at the moment, and keep an up to date summary here of policy and taxation measures relating to agriculture.

I have a special interest in rewilding so I have some comments on this at the end.

Natural capital accounting

As part of understanding the way we live within, make use of and return parts of the natural world, it can be useful to account for the natural capital as part of accounts.

Valuation of the natural environment in business plans takes account of

what have the business got
what can it do
what is it worth

I recommend the guide produced by EFTEC which has an example balance sheet in Annex 3. At the moment the exact figures for the various component parts are not always easy to come by, but they are starting to be tabulated, and I will update this page with full details when available.

There is a distinction between private and public consumption and the hope is that public natural capital increases can be monetised, and potentially private flows also. As a general rule we think

private amounts to the extent that the assets are protected
public if available to public as a whole

Monetising natural capital flows

This a summary of the main current ways to monetise activities:

through the future ELMS payment system which has a phased introduction to take over from basic payments. Update in process
carbon offsetting with the Woodland Carbon Code, a voluntary standard. This gives a standard value on stored carbon in tree and landowners planting trees can potentially benefit from selling Carbon upfront payments of between £5 and £15 / tCO₂. Woodland carbon guarantee scheme auctions every 6 months
biodiversity net gain offsetting under the environment bill. This will inform future planning to increase biodiversity, and farmers may benefit from offsetting payments from local development (see below)
water companies make payments to farmers who put in place flood control and water qualify improvement schemes
green prescribing – the mental health value of being outside – a source of income for businesses with outside spaces, with the impact being a pure good
Countryside stewardship payments with good examples of payments for creation of woodland giving, for example, capital grants of up to £6,800 per hectare and annual maintenance of around £200 per hectare

As a general guide, my experience is that the cost of baseline valuation will fall between about £1000 for a very simple situation to £10000 for a complex estate.

Countryside Stewardship payments

Countryside Stewardship agreements will continue for 2021, 2022 and 2023, but will then be replaced with the new Environmental Land
Management Scheme (ELMS). This will follow trialling and testing and a national pilot involving farmers and land managers. Under current plans, the full ELMS system will be in place from 2024. However it is expected that this timescale may slip.

Net gain

At the Spring Statement 2019 the government mandated that net gain would be mandated in the Environment Bill and is contained at section 90 et seq which propose a new Schedule 7A to the Town and Country Planning Act 1990. The Bill was introduced in January 2020 and is currently in committee stage and scheduled to report on 25 June 2020. In essence the Bill requires a 10% increase in biodiversity included credits obtained.

I am not going to provide a full overview of the Environment Bill here, but will comment on parts of it as it passes through the house. It contains far more than is mentioned here and requires separate study, in due course

Tax reliefs

A brief overview of tax reliefs.

Income

Averaging of profit under both 2 year and 5 year schemes

Capital

Capital allowances on investment up to a current limit of £1m

Entrepreneur Relief on sale of active farmland to give a 10% rate of capital gains tax

Inheritance Tax

Agricultural relief on land used for agricultural purposes, which is largely centred around being used for the production of human consumable food and other products

Business Relief where the land is mainly not held as an investment asset, applies where an active trading activity is carried out. This is more complex and will be covered in a separate article.

Woodland

Commercially managed woodland is exempt from income tax and capital gains tax. In addition there is an IHT relief which defers IHT payments on growing trees. This will be covered in a separate article.

Rewilding

Rewilding can be seen as a use of land to increase the biodiversity. The above schemes can be used together and note that payments can usually be claimed for the same asset if this has more than one beneficial aspect.

At the moment about 0.3% of land area in the UK is rewilded and even ambitious plans tend to only envisage this increasing to about 5%. However this rewilded area could have an impact much larger than its area suggests.

In general it is probably not going to be worthwhile to attempt to rewild small areas, and an arbitrary lower limit could be set at 1,000 acres if large mammals are part of any rewilding plan. However, working with neighbours will allow areas of land to be connected up across landscapes. For this reason, a large part of a rewilding initiative will be connecting up land areas so action across areas involving multiple land owners is envisaged.

From a tax point of view, wild land can fall within the tax reliefs, for example where land is managed under a land management program agreed with Government under ELMS or a similar scheme payments under that scheme can potentially be seen as a payment for the service of providing the ecosystem service that the payment is based around.

As far as woodland is concerned, if these are managed under an agreed scheme it might be argued that this is commercial so should fall within reliefs. This will be covered separately.

References

Farming for the future policy update February 2020

Natural capital accounts – final reports

Woodland carbon code

Bi0diversity net gain

Countryside Stewardship

Ecosystems Knowledge Network

Natural capital committee

Soft landing for UK land tax return

This covers disposals of UK property and applies where exchange of contracts on or after 6 April 2020. There is a requirement to file a return and pay estimate within 30 days of completion of disposal.

There has been an announcement of a soft landing, so no automatic penalties for late filing for returns as long as they are in fact filed by 31 July 2020

Late payment interest will still run from the statutory date of 30 days after exchange of contracts

Note that this does not cover most property transactions as there is no requirement to make return if not tax payable. This would be the case where

the gain is exempt, for example for a main residence
the gain falls within the annual exemption
the gain is covered by losses
etc

Covid tax measures

Updated 9 June: Self Employed Income Support Scheme and temporary zero rating of PPE

A summary of where we are

These notes apply to England, some of the rules are devolved to other parts of the UK.

Job retention scheme (‘furlough’)

A payment of 80% of salary originally for 3 months. This only relates to the current crisis. Start date is 1 March 2020. See update below for claims from July.

Government pay a taxable grant
must have been in employment on 28 February 2020
if acted early and already made some redundant can reverse and furlough
if off under SSP can leave them on SSP and when this ends can furlough
for zero hour contracts –
- if has been for 12 months take higher of some month and average over a whole year
- if not 12 months then average
- if only a few days then pro rate
- bonuses etc not included
Must pay at least the 80% but employers can decide to pay more
for the first period of claim the government will pay lower of
- £2,500
- 80% of pay plus employer responsibilities (employer NIC and minimum auto enrolment pension). If 80% is lower than minimum wage that is not changed as not actually working
that employee cannot do any work other than some training
If the employee has two jobs, one can be under furlough with the other unaffected. Therefore people can have income from other sources
Minimum period is 3 weeks
Directors cannot technically be furloughed because of duties under Company Law, but it appears that this should not cause a problem if the company is stopping, but further advice may be needed on this
Dividends do not count towards the 80% test

Amounts paid under these arrangements do not count as state aid for the purpose of restricting the employment allowance

Update 29 May 2020:

From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time. This is a month earlier than previously announced to help support people back to work. Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them – and will be responsible for paying their wages while in work.

From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work. That means that for June and July the government will continue to pay 80% of people’s salaries. In the following months, businesses will be asked to contribute a modest share, but crucially individuals will continue to receive that 80% of salary covering the time they are unable to work.

The scheme updates mean that the following will apply for the period people are furloughed:

June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.

Self employed

For self employed a first taxable grant will be made of up to 80% of profits for each months or £2,500 lower. This will be based on normal profits from 3 year period 2016/17, 2017/18 and 2018/19. If less then use the years available.

A second grant will be available for the following three months, see update below.

It is only open to these self employed where more then half of income from self employment profits not over £50,000
The first scheme will cover March April and May, with payment probably in June. Business loan should apply in the meantime
Must have filed 2018/19 tax return and if not already done will allow another 4 weeks. But note penalties in bringing it up to date.
Must still be trading and intend to carry on into 2021
Do not contact HMRC as they will calculate and contact you.

Amounts paid under these arrangements will count as de minimis state aid for the purposes of employment allowance.

Update 29 May 2020: Those eligible under the Self-Employment Income Support Scheme (SEISS), which has so far seen 2.3 million claims worth £6.8 billion will be able to claim a second and final grant in August. The grant will be worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.

Update 9 June 2020: no payments on account needed on 31 July 2020, so the claim to reduce payment is not needed. Direct debits will still be taken by HMRC so these may need to be cancelled where in place. This means that the payment due on January 2021 could become quite large for some people and provision should be made for this.

Self employed income support scheme receipts are now being received and this seems to be going smoothly. These amounts are taxable and subject to class 4 NIC on a receipts basis.

On the tests, every claimant needs to be able to demonstrate that they have been affected by COVID which is probably possible for most self employed, but all.

It is a requirement of the scheme that the trader intends to continue trading in the same form. For example, in the case of a sole trader was trading in 18/19 but who has incorporated, that company would not be able to make the claim.

Check if you are eligible using HMRC tool

VAT

No payments required between 20 March 2020 and 30 June 2020. Still need to file the VAT returns . Payment deferred until end of 20202/21 tax year – auto

Repayments can still be made and can voluntarily pay. Note that you need to cancel direct debit arrangements. This will need to be set up again when payments resume.

Update 9 June 2020: Sales of PPE are zero rated temporarily between 1 May 2020 and 31 July 2020. This needs to be watch where temporarily producing PPE during the current crisis.

Income tax

Income tax 31 July payment can be deferred until 31 January 2021. automatic offer. Originally only applied to self employed, but extended to all taxpayers

Time to pay arrangement still available – talk. Current debts be potentially be included = HMRC number 0800 0159559

Statutory Sick Pay

HMRC to refund 2 weeks of SSP for the two weeks of being self isolated. Applies to employers of up to 250 employees. Test date is 28 February 2020. Can qualify for up to £94.25 from day 1 (not day 4) with effect from 13 March 2020

directors of small companies who meet the requirements can also claim SSP if earning enough (£118 per week)

self employed can claim employment and support allowance

Business Rates.

Retail hospitality and leisure (see detailed list) no business rates in 2020/21. England only other countries devolved.

cash grants of up to £25,000 relating to trading from buildings per property. Retail and hospitality grant scheme – automatic. Let them do their jobs

if not paying business rates, small or rural will get one off £10,000 grant. Local councils will deal with this also

these amounts do count as de minimis state aid for the purposes of state aid.

Loans

from Monday 23 March gov guaranteed loans 12 month interest free

larger business will get debt factoring in short term

Insurance may be worth looking at

Further information

The following groups provide further information

Low Income Tax Reform Group

HMRC

Agriculture Act reference

updated on 11 November 2020: Royal Assent

The Agriculture Bill finished its tortuous path through Parliament today becoming the Agriculture Act.

The current list of purposes for England

managing land or water in a way that protects or improves the environment
supporting public access to and enjoyment of the countryside, farmland or woodland and better understanding of the environment
managing land or water in a way that maintains, restores or enhances
cultural or natural heritage
managing land, water or livestock in a way that mitigates or adapts to climate change
managing land or water in a way that prevents, reduces or protects from environmental hazards
protecting or improving the health or welfare of livestock
conserving native livestock, native equines or genetic resources relating to any such animal
protecting or improving the health of plants
conserving plants grown or used in carrying on an agricultural, horticultural or forestry activity, their wild relatives or genetic resources relating to any such plant
protecting or improving the quality of soil

the additional purposes

starting, or improving the productivity of, an agricultural, horticultural or forestry activity
supporting ancillary activities carried on, or to be carried on, by or for a producer

references

Gove 25 year plan

The Agriculture Act

ELMS – environmental land management scheme

Update 18 June 2020: announced by Victoria Prentis that full detail in Autumn 2020. Most farmers can expect form filling to be minimal.

This is a new system of making payments to land managers in England made possible by the Agriculture Bill. This is an attempt to summarise the current position.

Scotland has its own Agriculture Bill and will be building a different system.

In Wales there is the Sustainable Farming and Our Land.

I am restricting myself to the ELMS in England for the period of this post.

The 25 February 2020 consultation is the primary source of information about the future of the scheme at the present time

Time scales

The taper period is as follows

National pilot starts in 2021
ELM full roll out 2024
Taper from 2021 t0 2027 when fully operational, with phasing out of direct payments

Countryside Stewardship agreements will continue to be available until 2024.

Tiers

Three tiers are envisaged within the scheme to allow different levels of involvement

Tier 1

This tier focuses on encouraging environmentally sustainable farming and forestry and include actions to create environmental benefits for the majority of farmers to take across their farmed and forested land. Whether it’s using cover crops or planting wildflower margins, this tier could pay farmers across the country to adopt (or continue) practices that can generate valuable outcomes, focusing on those practices that are most effective when delivered at scale.

Nutrient management (including manure management)
Pest management(such as Integrated Pest Management, biological control, and precision/spot spraying pesticide application)
Livestock management (such as improving feed efficiency of livestock through targeted breeding to reduce ammonia emissions, limiting grazing to avoid compaction and run-off)
Soil management(such as avoiding cultivating/trafficking on wet soils, soil organic matter content, maintaining water levels in peat soils, contour ploughing, minimum- or no-tillage cultivation)
Field margins (such as flower-rich/species rich margins/field corners, riparian buffer strips)
Field cover (such as cover crops, arable rotations, companion cropping, leys)
Water storage/efficient water use

It is expected that payments will be based upon actions taken rather than outcomes to keep this clear and make sure farmers are given clear guidance on what they need to do in order to deliver environmental outcomes while keeping their financial and delivery risks low. Payment rates are likely to be based on the income foregone and costs incurred, with some flexibility to enable a range of outcomes.

Tier 2

This tier would be to support land managers in the delivery of locally targeted environmental outcomes. This tier would target agreed priority outcomes, making sure the right things are delivered in the right places. As such, it may need to use some form of spatial targeting and local planning. Many of the outcomes this tier will deliver may rely on collaboration between land managers. It could therefore include a variety of mechanisms for encouraging and rewarding collaboration and join-up between farmers, foresters and/or other land managers.

Examples of what we might be included:

Tree, shrub and/or hedge planting
Habitat creation/restoration/management(including woodland, wetlands, freshwater, peatland, heathland, species-rich grassland, coastal habitat, urban green space)
In stream/river and on-land interventions to mitigate flooding and to manage sediment for water quality
Species management, for example, introduction, translocation and/or recovery and invasive species prevention/control
Rights of way, navigation and recreation infrastructure
Education infrastructure, events and services
Geo diversity asset (such as limestone pavements) and heritage asset management

A farmer might be within tier 1 for most day to day farming activities, but potentially become involved in this tier on a specific locally required scheme, for example a water scheme if the farmer has a river running through the land. This would be done in collaboration with other land owners through which the river runs

Tier 3

This tier focuses on delivering landscape scale land-use change projects, where such projects drive added value over and above what can be delivered through tiers 1 and 2. It would coordinate projects that are critical in helping us meeting ambitious environmental commitments such as net zero. This would be fully aligned with activity under the government’s Nature for Climate fund for afforestation and peatland restoration.

Projects might include:

Forest and woodland creation/restoration/improvement
Peatland restoration
Creation / restoration of coastal habitats such as wetlands and salt marsh

Again, as for tier 2, a particular farmer might participate in tier 3 while also being in tier 1 (for most farming activities), tier 2 (for example the river above), and maybe within tier 3 for a land use change project – for example creation of a coastal salt marsh area if the farmer has suitable land. Such a scheme will clearly only work where there are a number of land owners coming together.

references

25 February 2020 consultation