Furlough scheme: has employers’ NI been overclaimed?
The Institute of Chartered Accountants in England and Wales (ICAEW) has issued new guidance that describes two scenarios where employers using the furlough scheme may have inadvertently reclaimed secondary Class 1 NI twice when the scheme was first introduced. What’s the full story?
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HMRC clarifies treatment of averaging relief under MTD IT
HMRC has updated its guidance to explain how averaging relief claims will operate under Making Tax Digital for Income Tax (MTD IT). The clarification addresses concerns about how farmers and creators will claim relief once quarterly reporting becomes mandatory. What has changed?
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Double up on the employment allowance
You’re the sole shareholder of a limited company which employs several members of staff. You’re working on plans to start another business with an ex-colleague. Can both businesses benefit from the full employment allowance (EA)?
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VAT cut for children's holiday activities over summer
The government has announced a temporary reduction in the rate of VAT applying to certain children's holiday activity programmes during the summer holidays. The measure is intended to help families with childcare costs during the school break. What has changed?
The Coronavirus Job Retention Scheme (CJRS) is complex, but broadly employers pay a percentage of an employee's regular salary (at least 80% in 2020), subject to a cap, then reclaim the 80% element from HMRC. However, it also allows secondary Class 2 NI contributions to be reclaimed, as well as pension contributions under auto-enrolment. This has led to some scenarios where employers who claim the employment allowance (EA) of up to £4,000 per year inadvertently receiving furlough payments in respect of NI that is also relieved under the EA. The ICAEW has published detailed commentary on where this may have happened. In brief, an overclaim may occur where:
- EA claims were deferred until after the final claim month for the CJRS where the £4,000 was not absorbed in full during 2020/21; or
- EA claims were made at the beginning of the tax year where the full £4,000 was absorbed before July 2020.
Potentially affected business should carefully read the guidance and contact HMRC’s Employer Helpline on 0300 200 3200 if they think there is an issue.
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