Have you overclaimed Business Asset Disposal Relief? Redundancy support for employees, plus details of the new Worker Protection (Amendment of Equality Act 2010) Act 2023
Today we provide you with further details of the Business Asset Disposal Relief checks being carried out by HMRC, ensuring you are fully aware of the lifetime limitations set in place. We also provide details of potential support from the Redundancy Payments Service for employees who are being made redundant where their employer has run out of cash, plus the new legislation regarding sexual harassment.
HMRC conducting Business Asset Disposal Relief checks
The Institute of Chartered Accountants in England and Wales (ICAEW) have reported that HM Revenue and Customs (HMRC) are contacting taxpayers they believe may have overclaimed Business Asset Disposal Relief.
What is Business Asset Disposal Relief (BADR)?
BADR, which was formerly known as entrepreneur’s relief, is a tax relief that’s designed to encourage business owners to sell or dispose of their business assets by offering a reduced rate of capital gains tax. However, there is a lifetime limit to the amount of gains that can qualify for BADR. As of 2024, this limit is £1 million.
Why are HMRC writing to taxpayers about this?
ICAEW report that HMRC is writing to taxpayers who claimed BADR on their 2022/23 tax return where they believe the taxpayer has either exceeded the lifetime limit before 2022/23, and so the claim on the tax return should be removed, or the claim on the tax return has taken the taxpayer over the limit, and so the claim needs to be reduced in line with the limit.
This may be an issue for some taxpayers because the lifetime limit for disposals was reduced from £10 million on and after 11 March 2020. Taxpayers not aware of this reduction therefore may have made a claim they believe is valid but isn’t actually in line with the reduced limit.
What should you do if you receive a letter?
If you receive such a letter, then it’s important to promptly check your claim. Where an adjustment is needed then you can simply amend your tax return. If you believe that your claim is in fact valid then HMRC need to be contacted within 30 days using the details contained in the letter.
Failing to do anything is likely to mean that HMRC will amend the return to discount the claim or open an enquiry into the return. If they then find any additional tax is due to be paid during the course of the enquiry, HMRC may charge a penalty.
Where we prepared your tax return, please simply hand the letter to us and we will be pleased to contact HMRC on your behalf. Whatever the case, if you are not sure about what to do, please feel free to contact us and we will be happy to help you.
See: https://www.icaew.com/insights/tax-news/2024/jul-2024/taxpayers-may-have-exceeded-badr-limit
Getting help with redundancy: The Redundancy Payments Service
Losing a job can be a very challenging and stressful experience. However, if your employer has become insolvent and cannot pay you money that you are owed this adds even further to your stress.
If you are in this situation, the latest Annual Report from the Insolvency Service highlights some important information about the support available that may be available to you through the Redundancy Payments Service (RPS).
Here’s what you need to know.
Key Figures and Support
In 2023-2024, the RPS received 85,592 claims for redundancy payments. Funded by National Insurance Contributions, the service disbursed a total of £494 million to individuals who had been left in financial distress due to their employers’ insolvency. This means that there is substantial support available to help you get back on your feet.
Quick Processing of Claims
The report shows that on average, claims for redundancy payments are processed within 10 days. This is good news as it means you can expect to receive financial support relatively quickly, which may help to alleviate some of the immediate financial pressures you might have following a job loss.
What Can You Claim?
The RPS covers a variety of payments you might be owed, including:
- Redundancy Pay: This is compensation based on your length of service, age, and weekly pay.
- Unpaid Wages: Any wages you are owed by your former employer.
- Holiday Pay: Payment for any accrued but unused holiday.
- Statutory Notice Pay: If you didn’t receive the notice period pay you were entitled to.
- Protective Awards: Compensation if your employer didn’t consult you before making you redundant.
For example, last year, nearly 10,000 former employees of the high street chain Wilko received £53.7 million in redundancy and statutory notice pay, with claims processed within 24 hours. Additionally, protective awards included payouts to over 400 former employees of Debenhams and more than 700 former employees of Norwegian Air Resources UK Limited.
How to Apply
If you need to apply for redundancy payments, the process is straightforward and can be completed online. Here are the steps to follow:
- Check your rights: The Insolvency Service provide guidance on this at https://www.gov.uk/government/publications/redundancy-payments-links-to-further-information-and-guidance/redundancy-payments-links-to-further-information-and-guidance. From here you will be able to find out what your rights are, what you can apply for and the types of payments that can be made.
- Prepare your details: You’ll need to provide some details about yourself and your employment. The online application (see below) includes a list of the items you’ll need to have on hand. You’ll need a CN number to make an application. If you don’t have one, then you can contact the insolvency practitioner who is handling your employer’s insolvency, and they will provide you with this.
- Submit your application: There are 2 applications to complete, and these must both be completed online. To claim for redundancy and other money you’re owed by your employer, see: https://www.gov.uk/claim-redundancy. To claim for loss of notice pay, see: https://www.gov.uk/claim-loss-notice.
- Understand the calculation: You may find it helpful to review what payments you can expect and when you can expect to receive them. For this see: https://www.gov.uk/government/publications/redundancy-payments-from-the-insolvency-service/explaining-your-redundancy-payment.
- Await your payment: The Insolvency Service aim to process claims and make payments within 6 weeks. Although as indicated in the report, your waiting time may be shorter than this.
Recovering Funds
It’s worth noting that the RPS also works to recover money from insolvent companies, which helps to cover some of the costs it pays out. Last year, £29 million was recovered, a worthwhile contribution to the support system.
Conclusion
If you’ve lost your job due to your employer’s insolvency, the Redundancy Payments Service is designed to provide financial support and help you through this difficult time. Understanding your rights and the support available can make a significant difference as you navigate the challenges of job loss. For more detailed information and to start your application, visit the government’s RPS website.
Upcoming change to the law on sexual harassment in the workplace
The new Worker Protection (Amendment of Equality Act 2010) Act 2023 will come into force on 26 October 2024.
This Act will bring in a new positive legal obligation on employers for them to take reasonable steps to protect their workers from sexual harassment.
The Equality and Human Rights Commission (EHRC) has powers to take enforcement action where an employer fails to meet its duties under the act. Employment tribunals will also be given powers to be able to increase compensation for sexual harassment by up to 25%.
To help employers understand their obligations and comply with the new requirements, the EHRC have updated their guidance to include information on the new preventative duty.
They have also opened a consultation to make sure that the new section is clear and helpful. This consultation closes on 6 August 2024.
To review the new guidance in entirety including the new section, see: https://www.equalityhumanrights.com/equality/equality-act-2010/sexual-harassment-and-harassment-work-technical-guidance-0
To participate in the consultation, see: https://www.smartsurvey.co.uk/s/QCKP8E/