Individuals

New scheme to give people in problem debt breathing space launched

Hundreds of thousands of people struggling with debt problems will be supported through a new debt respite scheme that was announced on 4 May 2021. Around 700,000 people struggling with problem debt are to benefit from Breathing Space this year as the scheme will give those facing financial difficulties 60 days to get finances back on track – without debts piling up, worrying letters or enforcement action.

People will also have access to professional debt advice, with stronger protections for people in mental health crisis treatment.

Under the scheme, people will be given legal protections from their creditors for 60 days, with most interest and penalty charges frozen, and enforcement action halted. They will also receive professional debt advice to design a plan which helps to get their finances back on track.

Recognising the link between problem debt and mental health issues, these protections will be available for people in mental health crisis treatment – for the full duration of their crisis treatment plus another 30 days.

People across England and Wales who are struggling to repay their debts could be eligible, and the Government expects 700,000 people to benefit in the first year of the scheme. Please click here for further information.

Working from home tax relief continues, but new claims required

HMRC have confirmed that employees working from home due to the coronavirus pandemic can continue to claim tax-relief on costs not reimbursed by their employer, but a new claim will need to be made for the 2021/22 tax year.

HMRC have advised that where claims were made in the 2020/21 tax year, these will not be automatically rolled forward. Once the pandemic is over, these rules will revert to the previous position under which the allowance is tax-free only where paid by employers.

Further details on working from home tax relief and how to claim can be found here. www.gov.uk/tax-relief-for-employees/working-at-home

Getting back to business and the support available

As restrictions start to lift and the government’s four-step roadmap progresses with the opening of some businesses and activities, we have put together two factsheets on the funding schemes available to help you get back to business as fast as possible.

There are two factsheets, one for businesses and one for the self-employed, detailing each grant, incentive and programme currently available, with corresponding links to gov.uk so you can access the funding. Plus, we’ve also included important information on who is eligible for each support scheme, and the key dates you need to apply by.

You can view the factsheets below:

SDLT Thresholds Extended

With the UK having been adversely affected by the Coronavirus (COVID-19) pandemic, Chancellor Rishi Sunak presented the 2021 Budget against a backdrop of ongoing economic hardship. We’ve summarised the key points relating to the Stamp Duty Land Tax and 5% mortgage schemes extensions.

Last March in order to stimulate the housing market the Chancellor announced a temporary cut in Stamp Duty Land Tax for home buyers across England and Northern Ireland which was scheduled to last until 31 March 2021.

This has now been further extended until 30 June 2021 so that transactions in progress will continue to benefit from the reduced rates.

As a transitional measure from 1 July 2021 the Nil Rate Band of Residential SDLT in England and Northern Ireland will then decrease to £250,000 for 3 months until 1 October 2021 when it will revert to £125,000 for purchases completed on or after that date. There has been no change to the SDLT rates above the Nil Rate Band. The 3% supplementary charge for second and subsequent homes in England and Northern Ireland will continue to apply.

Note that there are different rates of tax on property transactions in Scotland and Wales as such taxes have been devolved in those countries.

For more information on the extension please click here.

5% Mortgage Schemes Extended

Another measure announced to stimulate the housing sector is a new 95% mortgage scheme guaranteed by the government that will mean that people buying a house will only need a 5% deposit where the purchase price is no more than £600,000.

Our summary of the Chancellor’s 2021 Budget is now available below.

Budget Summary

More help for Self Assessment taxpayers

HM Revenue and Customs announces Self Assessment taxpayers will not be charged the 5% late payment penalty if pay their tax or set up a payment plan by 1 April 2021.

The payment deadline for Self Assessment is 31 January and interest is charged from 1 February on any amounts outstanding. Normally, a 5% late payment penalty is also charged on any unpaid tax that is still outstanding on 3 March. But this year, because of the impact of the COVID-19 pandemic, HMRC is giving taxpayers more time to pay or set up a payment plan.

Taxpayers can pay their tax bill or set up a monthly payment plan online at GOV.UK. They need to do this by midnight on 1 April to prevent being charged a late payment penalty.

Taxpayers should still pay in full if they can. This is the only way to stop interest accruing.

Self Assessment taxpayers who have yet to file their 2019 to 2020 tax return should file by 28 February to prevent being charged a late filing penalty of £100.

Further information can be found here.

Update on Government financial supports

Mortgage payment holidays

Mortgage payment holidays will no longer end 31 October. Borrowers who have been impacted by Coronavirus and have not yet had a mortgage payment holiday will be entitled to a six month holiday, and those that have already started a mortgage payment holiday will be able to top up to six months without this being recorded on their credit file. The FCA published draft guidance setting this out on 2 November. 

Payment holidays will also continue to be available for consumer credit products such as personal loans and car finance. As with mortgages, borrowers impacted by Coronavirus who have not yet taken a payment holiday on that product can ask for one of up to 6 months and those that currently have a payment holiday will be eligible to top up to six months without this being recorded on their credit file. Borrowers with high-cost short-term credit products such as payday loans will continue to be entitled to a maximum month payment holiday. The FCA published draft guidance on this on 4 November.

However, it must be appreciated that the payment holidays are a measure to assist those suffering financial hardship due to the Coronavirus pandemic. Providers expect that if you have not suffered financial hardship and have sufficient funds available, to make their payments on time.

New package to support and enforce self-isolation

People will be required by law to self-isolate from 28 September, supported by payment of £500 for those on lower incomes who cannot work from home and have lost income as a result. New fines for those breaching self-isolation rules will start at £1,000 – bringing this in line with the penalty for breaking quarantine after international travel - but could increase to up to £10,000 for repeat offences and for the most egregious breaches, including for those preventing others from self-isolating.

For example, this could include business owners who threaten self-isolating staff with redundancy if they do not come to work, sending a clear message that this will not be tolerated.

A number of steps will be taken to make sure that people are complying with the rules, these include:

• NHS Test and Trace call handlers making regular contact with those self-isolating, with the ability to escalate any suspicion of non-compliance to Local Authorities and local police;
• Using police resources to check compliance in highest incidence areas and in high-risk groups, based on local intelligence;
• Investigating and prosecuting high-profile and egregious cases of non-compliance; and
• Acting on instances where third parties have identified others who have tested positive, but are not self-isolating.

Recognising that self-isolation is one of the most powerful tools for controlling the transmission of Covid-19, this new Test and Trace Support payment of £500 will ensure that those on low incomes are able to self-isolate without worry about their finances.

Just under 4 million people who are in receipt of benefits in England will be eligible for this payment, which will be available to those who are required to self-isolate from 28 September.

Local Authorities will be working quickly to set up these self-isolation support schemes and we expect them to be in place by 12 October. Those who start to self-isolate from 28 September will receive backdated payments once the scheme is set up in their Local Authority.

New payment for people self-isolating in highest risk areas

The Health Secretary announced the following on 27 August. People on low incomes who need to self-isolate and are unable to work from home in areas with high incidence of COVID-19 will benefit from a new payment scheme starting on Tuesday 1 September.

Starting with a trial in Blackburn with Darwen, Pendle and Oldham to ensure the process works, eligible individuals who test positive with the virus will receive £130 for their 10-day period of self-isolation. Other members of their household, who have to self-isolate for 14 days, will be entitled to a payment of £182.

Non-household contacts advised to self-isolate through NHS Test and Trace will also be entitled to a payment of up to £182, tailored to the individual length of their isolation period.

It is designed to support people who are unable to work from home while self-isolating, either after testing positive, or after being identified by NHS Test and Trace as living in the same household as – or coming into contact with – someone who has tested positive. It will be available to people currently receiving either Universal Credit or Working Tax Credit.

Payments will be provided within 48 hours of the eligible individual providing the necessary evidence. Individuals will be asked to provide a notification from NHS Test and Trace and a bank statement.

Further information can be found here.

Is there financial support available if I return to the UK and have to quarantine?

Please note that the Foreign & Commonwealth Office currently advises British nationals against all but essential international travel. You may have to self-isolate for the first 14 days you’re in the UK when you arrive from some countries and territories not on the exempted list, see list here. This advice is being kept under constant review.

HMRC has supplied official guidance on how to self-isolate when you travel to the UK but this does not cover any financial support you may be entitled to.

Employed Staff

If you are employed and your employer agrees you can work from home during the 14 days you are self-isolating. You should receive your normal full pay during this period. If you are unable to work from home there are the following alternatives.

Statutory Sick Pay (SSP)

If an employee is unable to work during the period of self-isolation, they will not qualify for SSP unless they also meet one of the following criteria.

• have Coronavirus symptoms
• are self-isolating because someone they live with has symptoms
• are self-isolating because they’ve been notified by the NHS or public health bodies that they’ve come into contact with someone with Coronavirus
• are shielding and have a letter from the NHS or a GP telling them to stay at home for at least 12 weeks

It is at the employers discretion if they choose to pay you sick pay should you not meet the above criteria.

Annual Leave

Speak to your employer about using your annual leave entitlement to take some or all of the self-isolation period as paid holiday. You must have enough annual leave entitlement left for the amount of paid holiday you wish to take. If you develop Coronavirus symptoms it would be more appropriate to take SSP.

Furlough

If you have been furloughed through the Coronavirus Job Retention Scheme at least once prior to 30 June you could potentially be furloughed again for the quarantine period. We advise anyone in this position to speak to their employer first and any employers who are considering furloughing in these circumstances to confirm the position directly with HMRC.

Welfare benefits

You may be able to apply for Employment and Support Allowance (ESA) you can apply for ESA if you’re employed, self-employed or unemployed. You cannot get ESA at the same time as Statutory Sick Pay or Jobseeker’s Allowance.

The Government haven’t yet confirmed officially whether the entitlement conditions for ESA, which have included periods of shielding for some, now also include periods of quarantine for those returning from abroad.

Summer Economic Update

On 8th July, the Chancellor Rishi Sunak made a speech entitled “Summer Economic Update” where he unveiled further Government supports and he unveiled the Government’s plan for jobs which he described as the “Second phase in the Government’s economic response to the crisis.”

Please see our July e-news for the highlights on the following announcements:

• Coronavirus Job Retention Scheme (CJRS) and Job Retention Bonus
• Kickstart Scheme and Measures to Help People Find Work
• Value Added Tax Reduced Rate for Hospitality and Tourism Sectors
• Eat Out To Help Out Scheme
• Stamp Duty Land Tax Holiday
• Residential Rates on Purchases from 8 July 2020 to 31 March 2021

Economic Update

Today the Chancellor, Rishi Sunak, set out plans for the next stage of our economic recovery. Important announcements:

• Companies will receive a £1,000 bonus for each furloughed employee who is still employed as of 31 January 2021. 
• From today until 31 March 2021, buyers will pay no Stamp Duty on the first £500k when they move home. Nearly 9 out of 10 people getting on or moving up the property ladder will pay no Stamp Duty at all.
• The Government will cut the rate of VAT applied on tourism and hospitality related activities from 20% to 5% for six months.

More information on all the Chancellors announcements can be found here.

Avoid Pension Scams

In these tough times savers might increasingly look to transfer their pension, prompted by the instability of their employer or the financial markets.

Savers could be increasingly targeted by scammers attempting to lure them to 'safe havens'. 
Fraudsters promise high returns and low risk, but in reality, pension savers that are scammed can be left with nothing.

When savers realise they have been scammed, it can be devastating – many lose their life savings. Once the money is gone, it is almost impossible to get it back.

How pension scams work

Anyone can be the victim of a pension scam, no matter how savvy they think they are. It is important that everyone can spot the warning signs.

Scammers try to persuade pension savers to transfer their entire pension savings, or to release funds from it, by making attractive sounding promises they have no intention of keeping.

The pension money is often invested in unusual, high risk investments like:

• overseas property and hotels
• renewable energy bonds
• forestry
• parking
• storage units
Or it can be simply stolen outright.

Warning signs of a pension scam

Scammers often cold call people via phone, email or text – this is illegal, and a likely sign of a scam. They often advertise online and can have websites that look official or government backed.

Other common signs of pension scams:

• phrases like ‘free pension review’, ‘pension liberation’, 'loan’, ‘loophole’, ‘savings advance’, ‘one-off investment’, ‘cashback’
• higher returns – guarantees they can get better returns on pension savings
• help to release cash from a pension before the age of 55, with no mention of the HMRC tax bill that can arise
• high pressure sales tactics – time limited offers to get the best deal; using couriers to send documents, who wait until they are signed
• unusual high-risk investments, which tend to be overseas, unregulated, with no consumer protections 
• complicated investment structures 
• long-term pension investments

See the FCA and Pensions Regulator ScamSmart guidance on “Four simple steps to protect yourself from pension scams“ here.

If you are an employer or trustee of a pension scheme you can support the ScamSmart campaign by downloading the Pensions Regulator awareness toolkit and help by:

• Sharing The Pensions Regulator social posts
• Promoting articles in your blogs, intranets or newsletters
• Sending The Pensions Regulator leaflets and posters to your audience

However you choose to support is hugely appreciated by the Regulator and goes a long way in helping to protect consumers from harm to their pension pots.

Tax payments due 31 July 2020 – do you really need to defer? - Additional text in bold below

In response to the Coronavirus outbreak, HMRC announced that taxpayers required to make a second payment on account towards their 2019/20 income tax liability by 31 July 2020 can defer their payment until 31 January 2021. The deferral is automatic, so there is no need to inform HMRC and no interest or penalties will be charged during the deferral period.

However, it must be appreciated that this is a measure to assist those suffering financial hardship due to the Coronavirus pandemic. HMRC expect taxpayers who have not suffered financial hardship and have sufficient funds available to make the payment on time and this remains the case despite the fact that the statements they are currently issuing show a due date of 31 January 2021 for the second payment on account.

High-earners should reconsider their child benefit claims

Many households with the highest earner having annual income of £60,000 or more have not been claiming child benefit as it would have been effectively withdrawn in full by the High Income Child Benefit Charge (“HICBC”). However, should the highest earner’s annual income fall below £60,000 as a result of the Coronavirus, a claim for child benefit should be made as it will not be fully withdrawn by the HICBC. Should the highest earner’s income fall below £50,000, there will be no HICBC and thus no withdrawal of child benefit.

Please note that retrospective claims for child benefit can only be backdated by three months, so it important that claims are made as soon as possible.

Guidance on how to claim child benefit can be found here.

If we can be of any assistance, please contact your usual partner.

Coronavirus support for Sole Traders / Partnerships and Ltd Companies

Financial support measures and related guidance is being created by the Government on an almost constant basis at present. We have therefore tried to summarise the key measures specifically available to Sole Traders (or Partnerships). Please click the link below to download the document.

Sole Trader / Partnership

We hope that you will find the document useful as it is hard to navigate the Government pages and establish what you might qualify for. Naturally, on a case by case basis we can help to facilitate claims for support, if required. Now is the time to start to take practical steps to protect your position. The full package of measures is listed on the following website if you need to look at further detail:-

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

HOMES AND OUR FAMILIES

If you or your business are likely to be affected by the current situation, now is the time to consider contacting your mortgage provider who may agree a mortgage payment ‘holiday’ for a three month period. Those that are in rented accommodation are encouraged to contact their Landlords to discuss their position.

It is the marginal gains that you can make in good business practices, managing home bills and adapting your business model that will combine to help you through these times.