You must meet a number of conditions some of which you cannot do much about, because HMRC will use your tax returns submitted on or before 23 April 2020 but also taking into account some of your current circumstances.
If you met the basic conditions for the first and second grants, you will meet them for the third and fourth grants. Note that it is not necessary for the you to have claimed the first and/or second grants in order to claim the third and/or fourth grants.
For the first and second grants, your trade must had been ‘adversely affected’ by Covid-19. For the next grants there are different conditions, either:
- You must be trading but experiencing reduced demand due to Covid-19; or
- You must have temporarily stopped trading due to Covid-19.
When claiming the third grant, you will need to confirm to HMRC that:
- you intend to continue to trade; and
- you reasonably believe there will be a significant reduction in your trading profits for the period from 1 November 2020 to 29 January 2021.
HMRC expect you to make ‘an honest assessment’ of your circumstances, and to retain evidence to support your claim.
Each grant made under the SEISS covers a three-month period; for the third grant, it is the three months ended 31 January 2021 and for the fourth grant, the three months ended 30 April 2021. The amount of the grant is equal to a set percentage of the your average trade profits, subject to a cap.
For the third grant, the relevant percentage is 80% and the cap is £7,500. This is the same as for the first grant.
You will claim the grant through an online portal and HMRC will make the payment within six days. It seems likely that it will be possible to claim the fourth (and possibly final) grant in February.
The grants are to be taken into account for tax purposes as revenue receipts of the trade for 2020/21. We expect that there will be a separate box on your return, so they should not be included in your taxable profits in your accounts. Given that part of the period for the fourth grant falls into 2021/22, it may be that the law is amended so that a proportion of the fourth grant is taxable in 2021/22.
If you claim a grant to which you are not entitled, and you do not repay it, there is a 100% income tax charge plus, in certain circumstances, a 100% penalty. But if you genuinely believe that you meet the conditions and have the appropriate evidence, there should be no problems.
Know Your Electric Vehicles
- An electric car is a car that runs on electricity at least some of the time. The main types of electric vehicle are:
- all-electric vehicle (AEV) – battery is its only power source and it is recharged by plugging it into the grid via a charge point.
- plug-in hybrid electric vehicle (PHEV) – a car that switches between running on electricity and fossil fuels. The battery is recharged by plugging it into the grid.
- hybrid electric vehicle (HEV) – the battery can only be recharged while driving.
- battery-assisted hybrid vehicle (BAHV) – there is some electrical assistance (e.g. ‘stop-start’ technology) but the vehicle does not run on electricity.
Capital allowances and Electric Vehicle
Until 1 April 2021, a 100% first year allowance (FYA) is available for a new car which is an ‘electrically-propelled’ car or which has low C02 emissions.
An ‘electrically-propelled’ car is an AEV.
A car has low CO2 emissions where the emissions do not exceed 50 g/km (typically, a PHEV).
The government announced at Budget 2020 that, for expenditure incurred on or after 1 April 2021, the FYA will be restricted to new electrically propelled and zero emission cars.
For other cars the tax treatment depends on the CO2 emissions. There is a threshold, expected to be 50g/km from April. Below that you will get 18% tax allowances each year, Above it you only get 6%.
100% FYA is also available for expenditure on new plant and machinery installed for the purposes of charging an electric vehicle.
Tough New rules at Companies House
Proposals being considered include:
- the introduction of mandatory digital filing,
- a reduction in the number of filing options available to the smallest companies and f
- filing deadlines shortened to as little as 6 months after the year end.
There seems to be a move to transform Companies House so be warned that there could be some significant changes in the pipeline.
One of the main objectives behind the reforms is to improve the quality and value of the financial information submitted to Companies House. The company financial data held at Companies House and the ease of accessibility to that information is seen as a major asset for the UK economy. In 2019, register data was accessed 9.4 billion times (according to government figures) and its research suggests this data is currently worth up to £3bn per year to users.
Filing deadlines could be potentially shortened to three months for public and six months for private companies to give a more current picture of company performance, with potential knock-on benefits for the UK economy.
Consideration is also being given to requiring companies to file the most detailed set of accounts prepared for members and reducing the number of filing options available to those under the small and micro entities regimes. This could signal a return to the more detailed public reporting of accounts that used to exist.
As part of this, it is possible that the annual accounts would be filed once with Government, and that this would provide the necessary information for both Companies House and HMRC. In this context, the government believes the value of the data could be enhanced if it were timelier, more accurate, digitally ‘tagged’, and potentially for many entities, more detailed.
The powers of Companies House could be extended, allowing it to conduct additional checks on account filings before they are accepted onto the register and giving it greater authority to scrutinize and reject them. Beefing up Companies House powers would help to address growing concerns about how the limited information provided by micro-entity accounts is being used by criminals to conduct economic crime.
If the only reason that you are using a limited company is to mitigate and control your tax liabilities, you could consider changing your company into an unlimited company and then, under current rules, you do not need to file accounts at Companies House. Call us if you want to discuss this option.