Tag: Job Support Scheme

Taxes are a fact of life. No-one likes paying them but if we didn’t there would be no NHS, no welfare state and no public services.

As the saying goes ‘Money Makes the World Go Around’ and without people paying taxes the world would stop turning. Not literally, but you know what we mean!

Given that tax is intrinsically unpopular, it’s no surprise that the Government prefers them to be…less obvious. We won’t say “hidden” because that suggests skulduggery but if they are not quite so blatant, all the better.

So what are these, ahem, “less obvious” taxes and how can we spot them?

National Insurance – it’s just another tax

National Insurance – or “paying your stamp” – comes off your wages. It’s right there, it’s a big chunk and it doesn’t make happy reading on your pay slip. The impression given is that it’s going towards your pension. It actually isn’t. It’s paying for today’s pensions.

So NI isn’t hidden. Or at least YOUR part of it isn’t hidden. What’s not so obvious is that your employer also pays a contribution on your wage. So your boss pays for the privilege of employing you! Critics would call it a tax on jobs. In total NI can be more than the Income Tax on your wage.

Excise Duty – it’s a tax on a tax!

The tax we pay on petrol has become more obvious in recent years but we’ve still come to accept high prices at the pumps.

You only have to fill up a hire car abroad or do a double-take at the prices at the filling stations to see a huge discrepancy in fuel prices in the UK and Europe, for example. Oil is oil. The difference is tax.

The UK has excise duty on fuel and we see the Chancellor often tinker with it at Budget time. The oil company and the retailer calculate their costs and then add the excise duty. Then they add VAT on top. So we end up paying a tax on a tax. I’ll leave you to digest that one…

Air Passenger Duty – a holiday tax

When you’re all packed and ready to go on holiday the last thing you want to think about is tax. But in 1994 the UK Government introduced Air Passenger Duty and it costs up to £176 per flight from UK airports. It was brought in as a revenue raiser and had little to do with cutting the environmental impact of flying.

Insurance Premium Tax – a tax on something else we don’t like to pay out for

This was another tax introduced in the 1990s when the Government decided the insurance industry was “under-taxed” because it wasn’t subject to VAT. Car insurance, home insurance and pet insurance are taxed at 12% while travel insurance, electrical appliance insurance and some vehicle insurance is 20%.

Tariffs – don’t mention Brexit!

Consumers may be blissfully unaware of import tariffs and excise duty on goods coming in from overseas. With negotiations over a Brexit deal underway these are the kind of issues that prove very thorny indeed and we all have to pay.

You can’t avoid most of these taxes if you want to live a “normal” life and we all do need to pay our fair share to help society and protect those less fortunate. So what can we do minimise our tax burden?

Five simple ways to reduce your tax bill and not feel guilty about it

1. Salary Sacrifice

Take a portion of your gross salary and put it into a pension, childcare vouchers or a bike-to-work scheme. The cost comes off your gross salary before the taxman takes his cut, meaning you pay less tax.

2. If you’re self-employed pay into a pension and claim all your allowable expenses

Paying into a pension is a great way to save for the future. For every £100 invested by a basic rate taxpayer the Government adds another £25. Every business can claim expenses against its tax liability but those allowance expenses will be different for each business. Claim what you are entitled to. If you’re not sure, take advice.

3. Marriage Tax Allowance

The marriage allowance lets you transfer £1,250 of your Personal Allowance to your husband, wife or civil partner, reducing their tax by up to £250 in the tax year.  It can also be back-dated to 2016. Marriage has a financial perk but you must have tied the knot!

4. Working From Home Tax Relief

If your employer requires you to work from home you’ve always been able to claim for extra costs. That’s become a big issue in 2020 with most people told to work from home during the pandemic. Even if you’ve worked from home for just one day you can claim a whole year’s tax relief. You can claim £1.20 a week if you’re a basic-rate (20%) taxpayer, £2.40 a week if you’re a higher-rate (40%) taxpayer or £2.70/week if you’re an additional-rate taxpayer (45%). So over the year, that’s £62.40 for basic-rate taxpayers, £124.80 for higher-rate taxpayers, and £140.40 for additional-rate taxpayers.

5. Work Clothes Allowance

From hair nets for catering to steel toe-capped boots for builders, if your employer requires you to wear protective clothing at work you can claim an allowance, even if your employer provides the gear for you. It’s not a fortune but every little helps. Basic rate taxpayers can claim back £12 a year, higher-rate taxpayers twice that.

There’s no getting away from tax but you shouldn’t have to pay more than your fair share. It pays to be tax savvy.

Financial Support Available During the Second Lockdown

Last week, just days after the Chancellor Rishi Sunak announced amendments to the Job Support Scheme, we were notified as a nation that a second national lockdown would be enforced and therefore changes would be made to the proposed financial support packages.

Whilst this brings good news to many, the endless changes and amendments to the various schemes is causing widespread confusion. So where do we stand in terms of the financial support available as we head into lockdown?

Let’s explore!

Furlough scheme extended

In a shock turn of events, Chancellor Rishi Sunak announced that the Furlough Scheme would be extended until March 2021, despite originally announcing it would only be available until some point in December.

Whilst the majority of the criteria and rules remain the same as when it was first introduced, there are some significant elements which are worth noting.

• As before, the government will pay 80% of employees’ wages up to a cap of £2,500. This grant must be paid to the employee in full. 
• Neither the employer nor employee needs previously to have used the JRS, however, to be eligible under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020. This is a significant change from the JRS in recent months, employees could only be furloughed if they had been prior to 30 June 2020.
• Employers should continue to pay the employee for hours worked in the normal way.
• Employers will only be required to cover National Insurance and employer pension contributions for employees on furlough. 
• There’s no change to the level of the scheme available in August i.e. employers can claim a grant of 80% of hours not worked however they are required to settle employers’ national insurance contributions and pensions contributions.  
• The Job Support Scheme (JSS) which was due to replace the furlough scheme has been postponed until the furlough scheme ends.
• Flexible furloughing will continue to be available, as well as full-time furloughing. 

The government has announced they will soon be confirming when claims can first be made, but as far as we know, there will be no gap in support between 31 October when the scheme was originally due to end.

Financial help for the self-employed

The Self-Employed Income Support Grant is being extended from 40% to 80% for the period of the lockdown and up to March at the latest.

• The government is providing a total of £4.5 billion worth of grants between November and January.
• Maximum grants increase to £5,160.
• You must have qualified for the first and second grants earlier this year to be eligible for the new grant, which is the third round of grant funding for the self-employed. However, you do not need to have claimed these earlier grants to be eligible for this new grant.
• The grants are available to the self-employed and those in partnerships, but not for limited company directors.
• To qualify, you must declare an intention to continue trading.
• You will need to be experiencing reduced demand due to Covid-19 or have been previously trading but unable to do so now because of the pandemic.
• The grant claim will be based on your trading profits in the 2018/19 tax year, or average profits in 2018/19, 2017/18 and 2016/17.

Despite this extension, there are still thousands of self-employed who will be excluded from any form of financial support, raising cause for concern as the pandemic continues to disrupt their ability to earn.

New Style Jobseeker’s Allowance (JSA) and Universal Credit

The new style jobseeker’s allowance has been introduced for those who are unable to work due to the pandemic and do not qualify for other forms of support.

You could get this if:

• you usually work less than 16 hours a week
• you are under State Pension age
• you have made enough National Insurance contributions over the last 2 to 3 years

It’s worth noting that your savings and partner’s income will not affect how much you can claim.

Depending on your circumstances, you may also be able to claim Universal Credit at the same time as JSA. This can include additional amounts for things like rent or the costs of raising children.

The criteria for Universal Credit states:

• you must have less than £16,000 in savings
• you or your partner must be under State Pension age

As always, if you require support or have any questions in relation to the updated schemes, please get in touch with Sherad Dewedi via sherad@shenward.com.