Dental News
Autumn 2020

Welcome to our Autumn 2020 Dental News

The Partners and staff at Humphrey & Co hope that all our clients and contacts are keeping well and staying safe. We would like to reassure you that Humphrey & Co continue to support you in this very unsettling time.

The Autumn Dental News focuses on the key measures outlined by the Chancellor in his recent Winter Economy Plan, further government announcements on the Job Retention bonus and preparations required to be made by employers in order to claim alongside other specific dental updates. As the situation is fast moving, information is constantly changing.

The key measures outlined by the Chancellor have been updated with the latest increases in financial support for businesses and workers announced on 22 October 2020.

Winter economy plan – announced measures

Following the recent announcement of further restrictions intended to curb the spread of Coronavirus, the Chancellor has outlined his Winter Economy Plan with the main goal of protecting jobs and supporting businesses over the forthcoming winter period by announcing the following five main measures: -

New Job Support Scheme (JSS)

The Job Support Scheme is designed to protect viable jobs in businesses that are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce. For these employers, the Job Support Scheme, through JSS Open, will give employers the option of keeping their employees in a job on shorter hours rather than making them redundant. The employer must continue to pay workers for hours worked, but support through the new JSS is available for the cost of the hours not worked. JSS Closed is for employers that have been legally required to close their premises as a direct result of Coronavirus restrictions set by one or more of the four governments of the UK. The information set out below is for the JSS Open Scheme.

The new job scheme starts 1 November 2020 and will replace the current Job retention (“furlough”) scheme which ends on 31 October 2020.

All small and medium-sized businesses are eligible and larger businesses must show their turnover has fallen during the pandemic. Employers can use the new scheme even if they have not previously used the furlough scheme.

The new Government scheme will last for six months to 30 April 2021 and to be eligible employees will need to be working a minimum of 20% of their hours. For the remaining hours not worked the Government will provide up to 61.67% of wages, up to a cap of £1,541.75 per month and the employer contribution to those unworked hours is 5% up to a cap of £125 per month. These caps are based on a monthly reference salary of £3,125. Employee’s National Insurance contributions and pension contributions will also remain payable by the employer. 

By way of an example a typical full-time employee paid an average of £1,100 per month. Under the Jobs Support Scheme for open businesses, they will still take home at least £807 a month. All the employer needs to pay is a total of £283 a month or just £70 a week; the government will pay the rest.

Employees must be on an employer’s PAYE payroll on or before 23 September 2020. Employees will be able to cycle on and off the scheme and do not have to be working the same pattern each month, but each short-time working arrangement must cover a minimum period of seven days.

Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee.

The employee must work at least 20% of their usual hours and they can undertake training in their working hours whilst being claimed for.

Staff on any type of contract are eligible, including those on variable or zero hours and agency workers.

Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.

Grants will be payable in arrears meaning that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.

Employers will be able to make their first claim from 8 December 2020, covering salary for pay periods ending and paid in November. 

It is expected that the process to register for the scheme will be broadly similar to the Job Retention scheme and HMRC are expected to announce details shortly.

Self-Employment Income Support Scheme (SEISS)

The existing self-employed grant (SEISS) will also be extended on the same basis as the job support scheme. 

A third taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to Coronavirus. The lump sum will cover three months’ worth of profits for the period from November 2020 to the end of January 2021. This is worth 40% of average monthly profits, paid in a single instalment up to a total of £3,750 i.e. £1,250 per month.

The fourth grant will cover a three-month period from February 2021 until April 2021. The government will review the level of this grant and set this in due course.

The grants are taxable income and also subject to National Insurance contributions.

To be eligible for the further grants, taxpayers must meet the following: -

  1. Have submitted a 2018/19 Tax Return within the permitted time frame.
  2. Have traded in the tax year 2019/20.
  3. Intend to continue to trade in the tax year 2020/21.
  4. Have trading profits that do not exceed £50,000 in 2018/19 or an average of 2016/17, 2017/18 and 2018/19.
  5. Have the majority of income being derived by self-employment.
  6. Carry on a trade which has been affected by reduced demand due to Coronavirus since 1 November.

Previously, in order to be eligible for the first and second grant, the business had to be ‘adversely affected’ which included being unable to work because the taxpayer is shielding, self-isolating or is on sick leave or has care responsibilities because of Coronavirus. It also included scaling down, temporarily stopped trading or incurring additional costs because:-

  • the supply chain has been interrupted
  • the business has fewer or no customers
  • staff are unable to work
  • one or more of contracts have been cancelled, or
  • protective equipment was purchased to comply with social distancing rules.

In order to claim the third and fourth SEISS the taxpayer must also: -

  • have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
  • declare that they intend to continue to trade and either:
    • are currently actively trading but are impacted by reduced demand due to Coronavirus
    • were previously trading but are temporarily unable to do so due to Coronavirus

The requirements to be “actively trading” and to be “impacted by reduced demand” are new and HMRC is expected to publish further guidance to clarify the meaning of these terms.

The requirement to be actively trading will mean that businesses that have had to close during the pandemic will not be able to claim if they have not restarted during the qualifying period.

This is designed to ensure that only viable businesses are supported and to align the scheme with the Job Support Scheme which will require employees to be working at least 20% of their usual hours.

HMRC will provide full details about how to claim on gov.uk and we will publish more information as it becomes available.

 

Self Assessment – time to pay extension

Approximately 11 million Self Assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, to help those who are unable to make the 2019/20 Self Assessment tax payment deadline by 31 January 2021.

Specifically, taxpayers with liabilities of up to £30,000 can make use of HMRCs ‘self-serve time to pay’ facility to secure a payment plan over an additional 12 months. This means that liabilities ordinarily due by 31 January 2021 can be deferred up until 31 January 2022. This also means that payments due by 31 July 2020 that were previously deferred until 31 January 2021 can be further deferred up to 31 January 2022.

The self-serve time to pay scheme will be available through HMRCs website and eligible taxpayers will receive automatic and immediate approval.

Customers who wish to set up their own self-serve Time to Pay arrangements must meet the following requirements:

  • they need to have no:
    • outstanding tax returns
    • other tax debts
    • other HMRC payment plans set up
  • the debt needs to be between £32 and £30,000
  • the payment plan needs to be set up no later than 60 days after the due date of a debt

Customers using self-serve Time to Pay will be required to pay any interest on the tax owed. Interest will be applied to any outstanding balance from 1 February 2021.

You can still pay your deferred July 2020 payment on account any time up to 31 January 2021. There’ll be no interest or penalty as long as you pay in full by that date. More details can be found here.

Self Assessment customers can set up their own online payment plan to help spread the cost of their tax bill. Please click here for further details.

HMRC’s normal time to pay self-assessment helpline (details can be found here: https://www.gov.uk/difficulties-paying-hmrc) is still available to taxpayers unable to use the online service, whose debts exceed £30,000 or require more than a year to repay their tax debts.

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 their payments on time.

Bounce back loans – repayment flexibility

Businesses including dental practices and principals who took out a Bounce Back Loan (BBLS) will get more repayment time through a new Pay as You Grow flexible repayment system.

This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses.

The Government also intends to give Coronavirus Business Interruption Loan Scheme (CBIL) lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.

The Chancellor also announced an extension in applications for the government’s coronavirus loan schemes until the end of November.

Please do get in touch should you wish to discuss CBILS/BBLS if you have not done so already.

NASDAL covid survey results

A recent survey undertaken by NASDAL (National Association of Specialist Dental Accountants and Lawyers) has found that 52% of UK dental practices have relied on either CBILS (Coronavirus Business Interruption Loan Scheme) or BBLS (Bounce Back Loan Scheme) from the government.

The survey was carried out last month and a sample of 121 practices (with a total fee income of £88 million) was taken from NASDAL accountant member practice owning clients on a random sampling basis. The survey found that: 

  • 11% of practices have taken out CBILS loans, mainly private practices
  • The average CBILS loan is £105k (12% of fee income)
  • 41% of practices have taken out BBLS loans, covering all types of practices.
  • The average BBLS loan is £49k (7% of fee income).

The average loan is £32k (4% of fee income) and overall, 52% of dental practices have taken advantage of Government backed COVID loans.

The full results of the survey were:

Number of Practices in survey

121

  

Total Fees

£88,418,701

Total NHS Fees

£35,948,501

41%

Total Private Fees

£52,470,200

59%

Total COVID Support Borrowings

£3,822,000

  

Average Support Borrowings (Per Practice)

£31,587

  

Percentage of Borrowings to Total Turnover

4%

  
     

Number of Practices with CBILS

13

11%

Total Fees (of Practices with CBILS)

£11,896,317

13%

Total NHS Fees (of Practices with CBILS)

£1,941,133

  

Total Private Fees (of Practices with CBILS)

£9,955,184

84%

Total CBILS Borrowing

£1,369,000

  

Average of CBILS Borrowings to Number of Practices with CBILS

£105,308

  

Percentage of Borrowings to Total Turnover (of Practices with CBILS)

12%

  
     

Number of Practices with BBLS

50

41%

Total Fees (of Practices with BBLS)

£34,481,458

39%

Total NHS Fees (of Practices with BBLS)

£15,198,902

  

Total Private Fees (of Practices with BBLS)

£19,282,555

56%

Total BBLS Borrowing

£2,453,000

  

Average of BBLS Borrowings to Number of Practices with BBLS

£49,060

  

Percentage of Borrowings to Total Turnover (of Practices with BBLS)

7%

  

Job Retention Bonus

The Job Retention Bonus is a £1,000 one-off taxable payment to an employer, for each eligible employee that was furloughed and kept continuously employed until 31 January 2021.

The employer will be able to claim the bonus between 15 February 2021 and 31 March 2021. This does not have to be paid to the employee.

HMRC will issue updated guidance by the end of January 2021 with details on how to access the online claim service on GOV.UK.

An employer cannot claim the Job Retention Bonus until 15 February 2021.

Who can claim?

The employer can claim the bonus if it is has furloughed employees and has made an eligible claim for them through the Coronavirus Job Retention Scheme. The employee must have been eligible for the Coronavirus Job Retention Scheme grant for the employer to be eligible for the bonus.

The employer can still claim the bonus if it has made a claim for that employee through the Job Support Scheme. Guidance on the Job Support Scheme will be published soon.

If the employer has repaid Coronavirus Job Retention Scheme grant amounts to HMRC then it cannot claim the bonus for any employees that it has not paid using the Coronavirus Job Retention Scheme grant because it has repaid all the grant amounts claimed for them. This applies regardless of the reason why an employer has repaid the grant amounts.

The employer can claim for employees that:-

  • has made an eligible claim for under the Coronavirus Job Retention Scheme
  • are kept continuously employed from the end of the claim period of the last Coronavirus Job Retention Scheme claim for them, until 31 January 2021
  • are not serving a contractual or statutory notice period for an employer on 31 January 2021 (this includes people serving notice of retirement)
  • have been paid in each relevant tax month and enough to meet the Job Retention Bonus minimum income threshold (see below)

If HMRC is still checking an employer’s Coronavirus Job Retention Scheme claim, the employer can still claim the Job Retention Bonus, but payment may be delayed until those checks are completed.

HMRC will not pay the bonus if an employer has made an incorrect Coronavirus Job Retention Scheme claim and an employee was not eligible for the Coronavirus Job Retention Scheme.

Claiming for an individual who’s not an employee - You can claim the Job Retention Bonus for individuals who are not employees, such as office holders or agency workers, as long as you claimed a grant for them under the Coronavirus Job Retention Scheme and the other Job Retention Bonus eligibility criteria are met.

The minimum income threshold

To be eligible for the bonus, the employer must make sure that employees have been paid at least the minimum income threshold.

To meet the minimum income threshold, an employer must pay the employee a total of at least £1,560 (gross) throughout the tax months:

  • 6 November to 5 December 2020
  • 6 December 2020 to 5 January 2021
  • 6 January to 5 February 2021

The employer must pay the employee at least one payment of taxable earnings (of any amount) in each of the relevant tax months.

The minimum income threshold criteria apply regardless of:

  • how often an employer pays its employees
  • any circumstances that may have reduced an employee’s pay in the relevant tax periods, such as being on statutory leave or unpaid leave

What payments are included in the minimum income threshold

Only payments recorded as taxable pay will count towards the minimum income threshold. Taxable pay is reported to HMRC as a single figure through Full Payment Submissions via Real Time Information (RTI).

Preparing to make a claim

An employer must:

  • still be enrolled for PAYE online
  • comply with its PAYE obligations to file PAYE accurately and on time under Real Time Information (RTI) reporting for all employees between 6 April 2020 and 5 February 2021
  • keep it’s payroll up to date and make sure it reports the leaving date for any employees that stop working before the end of the pay period that they leave in
  • use the irregular payment pattern indicator in Real Time Information (RTI) for any employees not being paid regularly
  • comply with all requests from HMRC to provide any employee data for past Coronavirus Job Retention Scheme claims

When the government ends the scheme

An employer has until 31 March 2021 to make a Job Retention Bonus claim after which the scheme will close. No further claims will be accepted after this date.

An employer will not be able to claim until 15 February 2021 and this guidance will be updated by the end of January 2021 with details on how to access the online claim service.

See: https://www.gov.uk/guidance/check-if-you-can-claim-the-job-retention-bonus-from-15-february-2021

For clients that use Humphrey and Co for payroll services and have agent authority for the PAYE online service, we will be able to claim the Job Retention Bonus on your behalf. We shall be in touch in due course to provide more details.

Pension contributions for high earners

Due to the ongoing COVID-19 crisis, the government has further extended the voluntary scheme pays deadline for the 2018/19 tax year by a further five months from 31 October 2020 to 31 March 2021.

Generally, an individual may invest £40,000 in their pension(s) each year and will be entitled to tax relief unless their “threshold income” (for ease think taxable income) exceeds £110,000 and their “adjusted income” (for ease think taxable income plus pension growth) exceeds £150,000 (for years 2016/17 to 2019/20).  An individual’s pension annual allowance is abated by £1 for every £2 their adjusted income surpasses the £150,000 threshold. This continues until it reaches the minimum taper annual allowance of £10,000 (this is when adjusted income is equal or exceeds £210,000).

Any unused annual allowance from the last three tax years can also be carried forward and added to the current year’s annual allowance. However, it is now likely that many higher earners will have now fully utilised available unused annual allowances against previous tax years. Assuming NHS pension growth (plus any contributions to private pension schemes) remains below £40,000 and ‘threshold income’ remains below £150,000 then annual pension tax charges should be avoided

From 6 April 2020, both the threshold income and adjusted income thresholds have been extended by £90,000 (to £200,000 and £240,000 respectively).  This should remove a significant proportion of dentists from these annual tax charges.  To combat penalising the highest earners, the maximum abatement is now £36,000, meaning those with an adjusted income of over £312,000 will have a pension annual allowance of just £4,000.

Should you be faced with an annual pension tax charge then it may be possible to elect for the scheme to pay this on your behalf.  We strongly advise you take independent pension advice should this be relevant to you.

2019/20 NHS annual allowance pension savings statements

NHS Pensions are currently in the process of issuing 2019/20 Annual Allowance Pension Saving Statements individually for the 1995/2008 and 2015 schemes.

Dental practitioners should be automatically provided with these statements by October 6 following the end of the relevant tax year.

If you have not received these, you should request Pension Savings Statements by:-

  1. Calling NHS Pensions on 0300 330 1346 (it needs to be the person requesting the statement)

OR

  1. Email to nhsbsa.pensionsgeneral@nhs.net and request a statement.

What do I need to do next?

It is important that the Pension savings statements for 2019/20 are forwarded immediately to Humphrey & Co upon receipt to ensure that we are able to review your tax position accordingly and advise whether any tax charge is due as the Self Assessment tax deadline of 31 January 2021 draws closer.

If you are in any doubt whether this may affect you we would urge you to speak to your IFA (Independent Financial Adviser).

For the 2019/20 tax year, NHS England have also agreed to fund the costs of scheme pay elections and as a result, this will not lead to a reduction in NHS Pension benefits for this year. NHS England will repay any reduction on retirement. The measure has been introduced with the aim of removing the disincentive to work extra hours as a result of the impact of tax legislation.

Self Assessment – 2020/21 payments on account of tax

Payments on account of tax for 2020/21 are automatically calculated and are based on an individual’s tax liability for 2019/20. Given the current COVID-19 situation, income for 2020/21 may be significantly less than 2019/20 and there might be scope to reduce ‘on account’ tax payments for 2020/21.

If you would like a review of your position, please do contact us. We suggest that in order to have a better idea of your likely income for 2020/21, that you provide your income details in December.

Any claim to reduce your payments on account of tax for 2020/21 can then be submitted to HM Revenue & Customs in advance of the tax payment due on 31 January 2021.

New eDEN reporting system

NHS Business Services have announced the upcoming launch of the eDEN reporting platform for providers and practice managers.

eDEN has been designed by the NHS as an easy to use reporting cloud-based system with the aim of providing faster and easier access to financial and performance information on dental contracts.

Information will be set up on a “dentistry dashboard” which will contain elements of the Year End and dentistry reports to enable monitoring contracts across key areas such as access, activity, quality and finance. It will enable providers to review information on dental contracts including performer level detail, on a cumulative monthly basis. For dental providers based in Wales, they will also have access to a suite of ACORN reports.

Access to eDEN will soon be open to dental providers and practice managers, but not corporate providers at this time. Providers and practice managers can register their interest now by completing the relevant registration form on the NHSBSA website by clicking on the following link:-

https://www.nhsbsa.nhs.uk/eden

Making Tax Digital for VAT

Making Tax Digital (MTD) was launched by HM Revenue & Customs back in April 2019 with the intention to make the tax system more effective, efficient and easier for taxpayers.

The first phase saw the introduction of Making Tax Digital for VAT, affecting VAT-registered businesses with a taxable turnover above the VAT threshold (currently £85,000) and requiring them to maintain their accounting records in a digital format and use MTD-compatible software to submit their VAT Returns. The aim is to provide ‘real time information’ to HM Revenue & Customs.

HMRC has since announced that this will extend further to all VAT-registered businesses, regardless of turnover from April 2022.

This means all VAT registered businesses have until their first VAT return period commencing on or after 1 April 2022 to have all requirements in place.

For the majority of our dental clients, Making Tax Digital for VAT does not apply as services of registered dentists and dental care professional to perform health related treatments are exempt from VAT. However, this may be relevant to dental practices who supply cosmetic and aesthetic related procedures and are therefore registered for VAT.

For more information regarding this area, please visit:-

https://www.humph.co.uk/latest-news/2020/07/22/making-tax-digital-mtd-announcement

Making Tax Digital for Income Tax

Further expansion of Making Tax Digital is on the horizon which will also see a significant change to the administration of taxes. Dental practices, associates and hygienists will be impacted.

From April 2023, Making Tax Digital will apply to taxpayers who file Self Assessment Tax Returns for business or property income over £10,000 per annum.

In the lead up to April 2023 and for those dental practices, associates and hygienists who are not required to file quarterly VAT Returns, Humphrey & Co are gearing up to support your business and ensure it will be digitally ready.

We shall provide further details to you as and when we receive further information from the government.

In the meantime, dental associates and hygienists who continue to run their business income and expenses through their personal bank account will benefit from having a separate bank account solely for their business income and expenses.

Electric company cars

The low Benefit in Kind (BIK) on new and fully electric cars (or good hybrids) means that anyone operating via a limited company may consider leasing or purchasing a relevant vehicle.  Of course the tax legislation is complex and you should speak with your usual contact at Humphrey & Co for more details.  We will provide a more thorough article on this topic in the subsequent ENews.

Coronavirus Hub

We continue to keep our clients and contacts updated via our Coronavirus Hub with the information issued by the Government to support businesses and individuals. We will continue to update the hub with the latest developments so please check back regularly. Alternatively, you can follow us on our social media channels below:

The full range of support measures can be found at: https://www.gov.uk/coronavirus/business-support or find out what support is available by completing this survey https://www.gov.uk/business-coronavirus-support-finder