Medical News Spring 2020

Welcome to our Spring 2020 Medical News

In this issue we take a look at

Technical and Client update

New Partners

Coronavirus Update

Moving to Digital - Accounting, Payroll and VAT

Business and Tax Return records

Tax payments due 31 July 2020 – do you really need to defer?

Pension Annual Allowance

Job Retention Scheme - Flexible Furloughing and important dates

Technical and Client update

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.

Following the latest announcement from the Government regarding the move into the next phase of managing the Coronavirus pandemic, we would like to update you as to how we at Humphrey & Co are continuing to support our clients and our staff, including adapting our working practices to accord with the Government guidelines.

Safety is paramount so our offices remain closed to client meetings but we continue to assist our clients and deal with new enquiries whilst working from home over secure connections.  Also, since 18 May, following a comprehensive risk assessment of our offices in respect of the threat of Covid-19 in our workplace, we have a reception team member who will facilitate the delivery of records and documents. If clients would like papers delivered to the office, please liaise with your usual Humphrey & Co contact who will arrange for access at an agreed time, so papers can be safely and securely dropped off. If records need to be returned to clients whilst the office is closed to the public again please request this via your usual contact.

Where we would usually meet with you face to face we can arrange a meeting via video link using either Zoom or Skype. Rest assured that our reception team are taking calls as normal and we all have access to our emails so if you have any questions or concerns please either call the office during our office hours of 9am to 5.30pm Monday to Friday on 01323 730631 or email your usual contact.

All members of our technical team continue to keep abreast of the updates issued by HM Revenue & Customs (HMRC) in relation to financial support and initiatives; key updates with web links are on our Coronavirus Hub. Again, if clients wish to discuss how specific changes affect them or if assistance is required in claiming financial support (and agents are allowed to submit such claims to HMRC on behalf of clients) we are of course here to help.

We aim to provide more direct access to our offices and our team only when it is safe to do so. We will provide further updates once further Government guidance is issued. 

New Partners

We are delighted to announce that our two Associates have become Partners this month.

Lewis Hampton and Mike Bryan have both been working for the practice for a number of years and their dedication to providing excellent service for their clients is being recognised with their progression to Partners within the firm.

Lewis joined us in 2010 and qualified as a Chartered Accountant and Chartered Tax Adviser in 2011 and 2017 respectively. Lewis is based in our Eastbourne office and acts for a broad range of clients located in different areas of the UK. He has a special interest in individuals and corporate bodies associated with the Lloyd’s of London insurance market and provides a number of specialist services including auditing, valuations and tax advisory and compliance.

Mike Bryan completed his honours degree in Accountancy & Finance in 2010; he then went on to study for his Chartered Accountant qualification which he achieved shortly after joining the firm in 2014. Mike has worked within the healthcare sector throughout his career and has expert knowledge and experience in this industry. He also presents seminars on accountancy and taxation to healthcare professionals and has provided healthcare updates to some of the leading UK banks.

Lewis said “I am delighted and extremely proud to be appointed a partner of the firm after many years of hard work. It has been my aim since starting my accountancy career to become a partner so I am pleased to have been able to achieve this with a firm like Humphrey & Co.

I’m looking forward to working with the other partners to drive the firm forward during this challenging time whilst continuing to provide an excellent service to our clients”.


“Joining the partnership in May 2020 was an immensely proud occasion” said Mike. “I would like to thank the partners for allowing me to achieve my ambition since embarking on a career in accountancy 10 years ago.

The partners continue to inspire and motivate our team by proving that hard work, motivation and sound knowledge can be rewarded with career progression.

I will continue to provide my clients with a pro-active and exemplary service, assist clients to overcome the challenges that COVID-19 presents and look forward to positively impacting the firm and my clients in the years ahead.”


Anthony Smith, Senior Partner comments “Succession within any professional services firm is critically important and we often plan years in advance to ensure a seamless transition for our clients and continuity of service. We also need new partners to fuel our continued growth especially in our niche areas.

Lewis and Mike have shown determination and ambition over the past 2 or 3 years especially, and we are delighted that they have now committed to Humphrey & Co for the long term. These are undoubtedly extremely challenging times, and as a partnership, we are confident both Lewis and Mike will skilfully guide our clients to calmer waters on the other side, and beyond.

We have big plans for them both and combined with their skill sets, we are excited about the future. In the meantime, all the existing partners offer their sincere congratulations. It’s just a pity we can’t celebrate together at this time in a more traditional fashion!”

Coronavirus Update

During the Covid-19 crisis we have been updating 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:

Twitter
Facebook

The full range of support measures can be found at: www.gov.uk/coronavirus/business-support

Or find out what support is available by completing this survey: www.gov.uk/business-coronavirus-support-finder

Please contact us if you need help and advice in relation to any of the support schemes available to you.

Moving to Digital - Accounting, Payroll and VAT

Keeping your financial records will become increasingly digital and most businesses will need to use software or apps to keep business records - the days of manual record keeping are over.

We consider Xero to be the software of choice and we use this to provide our clients with the best possible fully compliant accounts package, and there are significant benefits to your business if you use us to help:

  • It’s on the Cloud so you can get a clear view of your finances any time any place.
  • Run your business from work, home or on your mobile.
  • It automatically grabs bank receipts and payments in real time and
  • Use your mobile to photograph purchase invoices and expenses and upload these to the software.

Please talk to us about moving your records to Digital especially payroll where we can assist with the Job Retention Furlough calculations.

Business and Tax Return records

We are encouraging all clients to provide their tax year end records as soon as possible, so we can better plan for forthcoming tax liabilities. Please contact your usual Partner to arrange the transfer of digital records or the delivery of physical records.

Tax payments due 31 July 2020 – do you really need to defer?

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.

Pension Annual Allowance

Due to the ongoing COVID-19 crisis, the government has extended the voluntary scheme pays deadline for the 2018/19 tax year by a further three months from 31 July 2020 to 31 October 2020. This deadline is also expected to be reviewed again at the end of July 2020.

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 £200,000 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 penalizing 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.

For the 2019/20 tax year, NHS England have also agreed to fund the cost 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 pension tax legislation.

Job Retention Scheme - Flexible Furloughing and important dates

On 29 May 2020, the Chancellor outlined how the government plans to reshape the Coronavirus Job Retention Scheme (CJRS) from 1 July 2020 to encourage businesses to bring those who are furloughed back to work. We have outlined the key changes below and how the scheme will evolve over the coming months in terms of what can be claimed.

From 1 July 2020, businesses will have the flexibility to bring previously furloughed employees back to work part-time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August.

Businesses can decide the hours and shift patterns that their employees will work on their return and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as the business needs, with no minimum time that staff can be furloughed for.

Any working hours arrangement that are agreed with an employee must cover at least one week and be confirmed to the employee in writing.

When claiming the CJRS grant for furloughed hours, businesses will report and claim for a minimum period of a week. Businesses can choose to make claims for longer periods such as one monthly or two weekly cycles if this is more appropriate.

Businesses will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. We can assist and make the claims for you.

If employees are unable to return to work, or businesses do not have work for them to do, they can remain on furlough and businesses can continue to claim the grant for their full hours under the existing rules.

Employer contributions

From August 2020, the government grant will be tapered as follows:

  • For June 2020 and July 2020, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee does not work – employers will have to pay employees for the hours they work (applicable from 1 July).
  • In August 2020, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions.
  • From 1 September 2020, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500
  • For the final month of the scheme in October 2020, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
  • The cap on the furlough grant will be proportional to the hours not worked.

It is important to note that the scheme closed to new entrants on 30 June 2020. From this point onwards, businesses will only be able to furlough employees that have been furloughed for a full three-week period prior to 30 June 2020.

Also, for periods starting on or after the 1 July, the maximum number of employees you can claim for in any period cannot be higher than the maximum number you have claimed for in a previous period. For example, if your highest single claim for periods up to 30 June was for 100 people, you can’t claim for more than this number in later periods.

Please note that HMRC's online calculator can only be used for claims ending on or before 30 June. After this date, you will need to work this out. This means that for any employees who you are flexibly furloughing, you’ll need to do a series of calculations to work out what the furlough pay will be for the usual hours that your employee is not working during your claim period. Further guidance on how to calculate what you can claim can be found in the links below.

Example of how to calculate the amount you should claim for an employee who is flexibly furloughed

Examples of how to calculate your employees' wages, National Insurance contributions and pension contributions

Parents Returning to Work after Extended Leave Eligible for Furlough

Staff members on paternity and maternity leave who return to work in the coming months will be eligible for the government’s furlough scheme, even after 10 June cut-off date (assuming the employer has previously made a claim via the CJRS).

Making changes to your claims if you have over-claimed

If you’ve made an error in a CJRS claim that means you received too much money, you must pay this back to HMRC.

HMRC have updated the application system so you can tell them if you have over-claimed in a previous claim – when you apply you’ll be asked if you need to reduce the amount to take account of a previous error. Your new claim amount will be reduced to reflect this. You should then keep a record of this adjustment for six years.

If you have made an error in a CJRS claim and do not plan to submit further claims, HMRC are working on a process that will allow you to let them know about your error and pay back any amounts that you have over-claimed. HMRC will update guidance and keep you informed when this is available.

HMRC have provided a webinar on how the scheme is changing please click here to book your place.