Tax

The government has announced further help, this time for self-employed people (sole traders and partnerships)

The government will make a taxable grant of 80% of your average trading profits, up to £2,500.

This will be calculated on the average of your trading profits over the following tax years.

• 2016/17
• 2017/18
• 2018/19

You do not have to have traded for all three years, your average would simply be calculated on the lesser number of years.

If eligible (and you applied) then you would be paid the grant in one instalment in June by bank transfer.

Eligibility Criteria

• Your trading profits are under £50,000
• Over half your income must be from self-employment (or your partnership)
• You were trading in 2019/20
• You intend to continue trading in 2020/21
• You are currently trading or would expect to be if it were not for Covid-19
• You have lost trading profits due to Covid-19
• You have filed your 2018/19 tax return (if you have not, you have a 4 week period from now to get it filed)
• If you are eligible then HMRC will invite you to apply online.

You cannot apply for this yourself initially. HMRC will contact you if you are eligible. You would then complete a form on the gov.uk website.
If you are asked to apply through any other website, it is a scam.

The grant is taxable. You can continue to trade. You must also include it in any relevant tax credits claim.

Who it won’t help

• Company directors (the government suggestion is, if directors are on PAYE, that they may be eligible for the Corona Job Retention Scheme that is open to employees)
• Self-employed people with profits over £50k in 2018-19 or over an average of £50k profits in the three qualifying years, 2016/17, 2017/18 and 2018/19
• Newly self-employed people who don’t have a 2018-19 tax return for self-employment

It unfortunately won’t cover any business fixed costs that cannot be cancelled or curtailed or otherwise reduced.

The self-employed can access Universal Credit between now and when the grants are paid in June as well as the Business Interruption Loan Scheme which are interest-free for the first 12 months.

Links to Government Guidance

• Claim a grant through the coronavirus covid 19 self employment income support scheme
• HM Treasury news update: Chancellor gives support to millions of self employed individuals
• Business Interruption Loan Scheme

[Last Updated 26 June 2020]

Coronavirus Job Retention Scheme

The Government has announced the Coronavirus Job Retention Scheme.  Under this scheme, HMRC will reimburse your business 80% of furloughed employees wages up to a maximum of £2,500 per month.

This is a temporary scheme that is currently in place from 1 March to 30 June 2020.

Furloughed means that your employees are temporarily laid off but remain on your payroll and what you pay them is subsidised by the government through HMRC.

This measure is designed to help you retain your employees rather than terminating them.

The government has extended the eligibility date.

Employees must be on the payroll on 19 March 2020.

This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020.

Employers may opt to continue paying employees who are not eligible for the government support at the business’s own expense.

Employers may also top up an employees pay up to their usual 100%.

Employers may re-employ previous employees that were made redundant or left after 1 March and 19 March, provided that they were on their payroll on 28 February and subject to an RTI submission on or before 28 February 2020.

Critically, the employees must be paid the full amount that was claimed from HMRC.

The minimum period of time that an employee can be furloughed for is 3 weeks.

You will need to designate employees as furloughed and you need to inform the employees themselves.  However, normal employment law is still in place and you must check their employment contract as to what you need to do to change their employment status.  It might be that you need to talk with your employee to change them to being furloughed, which hopefully you would be doing anyway.

Furloughed employees must NOT be carrying out work for you.

You will also need to inform HMRC which of your employees are furloughed and make a claim for the government’s reimbursement and you will only be able to do this every 3 weeks.

The normal PAYE systems and reporting methods were obviously not set up for this situation, so further guidance will be released on how you will need to go about doing this.

Claims may be backdated to 1 March 2020

Making a claim through the Coronavirus Job Retention Scheme

The online HMRC portal went live on 20 April 2020. You can claim via your own Government Gateway login (you can add PAYE to your services if you hadn’t already) or your accountant/agent can do it on your behalf if there is an online authorisation in place.

Information you’ll need to have at hand before you begin:

• Your Employer PAYE reference number
• Your Employer Accounts Office reference number
• Corporation Tax UTR (if the employer is a company)
• Number of employees being furloughed.
• Dates of furlough
• For each employee, the amount of gross, employERs NICs and employERs auto-enrolment pension contributions (you will need to give the 80% figures that you are actually claiming) for the period you’re claiming for.
  (This may involve you working out pro-rated amounts.)
  This is so that you can give the total 80% amount that you are claiming for and have a breakdown available, should HMRC check your claim at a later date.
• Bank account details
• Address (the one that is on the bank statements)
• Contact details

From 1 July, there is a separate template for claims involving 100 or more employees.

The service times out if you take too long and then you will have to start again. Your information is not saved. If you have to make corrections, you may also have to start again.
(There are roughly 20 screens to go through but most of the screens only have one question on them. )

There is a declaration that you agree to by submitting your claim. Expect HMRC to check claims against previous RTI submissions and to inspect some claims in more detail. Dishonest claims are fraudulent and will need to be repaid to HMRC.

Time limit

You will have until 31 July 2020 to make claims for periods up to 30 June 2020. Claims for July onwards can be made to HMRC from 1 July.

Changes to the Coronavirus Job Retention Scheme from 1 July 2020

From 1 July, employers can bring back furloughed employees and still claim the CJRS grant for the hours not worked. Previously, furloughed employees could not work at all.

From 1 August 2020, the level of grant will be tapered down.

• For August, 80% of the wages will be paid (up to a £2,500 cap) for the hours that employee is furloughed for. The employer will have to pay employERs NICs and pension contributions for the furloughed hours)
• For September, 70% of the wages will be paid (up to a £2,187.50 cap) for the hours that employee is furloughed for. The employer will have to pay employERs NICs and pension contributions for the furloughed hours) and top up the wages to ensure employees still receive 80% of their wages (up to a £2,500 cap) for the time they are furloughed.
• For October, 60% of the wages will be paid (up to a £1,875 cap) for the hours that employee is furloughed for. The employer will have to pay employERs NICs and pension contributions for the furloughed hours) and top up the wages to ensure employees still receive 80% of their wages (up to a £2,500 cap) for the time they are furloughed.

Employers can still top up to 100% of the employees wages for the hours not worked.

The wage cap is proportional to the hours not worked.

At the end of the Coronavirus Job Retention Scheme

When the Coronavirus Job Retention scheme ends on 31 October 2020, employers must decide if the employees can return to their jobs. It might be that the business is no longer viable or needs to operate on a smaller scale. If the employee(s) cannot return, then termination or redundancy may be necessary.

The Coronavirus Job Retention Scheme is not to be confused with Statutory Sick Pay. Although employees who become sick or are on long-term sick leave or who are shielding may be furloughed. You cannot claim furlough and the SSP rebate for the same employee for the same period of time (but claiming for different time periods for the same employee is allowed).

Statutory Sick Pay

Medical evidence is not legally required for the first 7 days of sickness.  Do use your discretion regarding the need for evidence for a period of sickness where your employee is advised to self-isolate.

Beyond 7 days of sickness, you may request an isolation note from your employee.  This may be emailed to you.

SSP will be payable from day 1, as opposed to day 4.  When the government passes the necessary legislation, it will apply retrospectively from 13 March.

SSP should be paid to eligible employees through payroll as usual.  The statutory sick pay is £94.25 per week but their contractual sick pay may be more, so you should also check to their employment contract.

Employees are entitled to time off work to look after dependants.  This may apply to coronavirus. There is no statutory entitlement to pay for this but some employers may offer this.

You may an employee who is in a “high risk” category, and therefore does not want to go into the workplace because they are afraid of catching coronavirus.  You may be able to implement further measures in your workplace to address their concerns.  However, it may not be possible or the employee still does not want to go in and although you do not have to, you may agree some holiday time or unpaid leave.

Where at all possible, it is sensible to agree a working from home arrangement.

Disclaimer

Since things are changing on a daily, if not hourly, basis, some of the above may change, be superseded or clarified in the future.

Please double-check any of the above before acting on them.

Links to Government and other Guidance:

• Guidance for employers and businesses on coronavirus (COVID-19)
• Statutory Sick Pay
• Online isolation notes
• ACAS Coronavirus information

[Updated 26 June 2020]

If you have been following the news on Coronavirus/Covid 19, you’ll know that the government has introduced some measures to help businesses.

Coronavirus Job Retention scheme

HMRC will reimburse 80% of furloughed workers wages up to a cap of 80% or £2,500 per month.

Employers will need to designate affected employees as “furloughed” (and you must notify them that they are furloughed… you should also check their employment contract – employment law still applies to changing the status of an employee), and make an online claim to HMRC. See separate posts on the Coronavirus Job Retention Scheme as it applies to employers and employees

Extra time to pay taxes

If you need to delay paying your corporation tax, or need to arrange a “time to pay” agreement (payment plan) due to Covid 19, then you can call the HMRC Coronavirus helpline on: 0800 0159 559.

These are agreed on an individual basis.  Call them if you have missed a payment or you think you will miss your next payment.

• All VAT payments from 20 March to the end of June are deferred (the VAT from the deferral period will have to be paid by the end of the 2020/21 tax year.)

VAT refunds and reclaims will be paid as usual.

All businesses are eligible; it is automatic and you don’t have to apply – you just opt not to pay, if that is what you choose to do.

• All personal income tax payments that would have been due on 31 July 2020 are deferred until 31 January 2021.

All self-employed people are eligible it is automatic and you don’t have to apply – you just opt not to pay, if that is what you choose to do.

No penalties and interest will apply to the late payment for the deferral period.

Employers who are paying sick pay

The statutory sick pay (SSP) for sickness due to Covid 19 will be cover up to 2 weeks SSP per eligible employee.  Employers will be able to reclaim expenditure for any employee who has claimed SSP.  You will need to keep records of their absences but employees will not need to provide a GP fit note.  (Employees with Covid 19 symptons can obtain an isolation note from NHS 111 online)

UK based employers who had less than 250 employees on 28 February 2020 are eligible.  Details of how to claim have not been released yet.

Business Rates Holiday

There is a business rates holiday for 2020/21 tax year for those in retail, hospitality and leisure in England.

If you are eligible, your council will write to you (they may have to reissue their April 2020 rates invoice)

Cash Grants

Cash grants for retail, hospitality and leisure businesses in England with a business property; those with a rateable value of under £15,000 will receive a grant of £10,000; those with a rateable value of £15,001 to £51,000 will receive a grant of £25,000.

If you pay little or no business rates, because of small business rate relief, rural rate relief or tapered relief and you occupy (business rateable) property, you will receive a grant of £10,000.

Your council will write to you if you are eligible.

Coronavirus Bounce Back Loan

Announced in April 2020, this scheme is intended to help small and medium businesses by providing loans from £2,000 to up to 25% of their turnover – subject to a maximum of £50,000. The government will guarantee 100% of the loan. The first 12 months are interest fee (as the government will cover the first 12 months of interest payments). After the first 12 months, the interest will be 2.5% per year.

Your business must be based in the UK, established before 1 March 2020 and be adversely impacted by the coronavirus.

If your business was considered “in difficulty” on 31 December 2019, you’ll need to comply with additional restrictions such as restrictions on the loan amount and what you can do with the loan.

If you had already received a loan up to £50,000 under CBILS (below) you can apply to transfer it to the Bounce Back Loan (you have until 4 November 2020 to arrange this)

Coronavirus Business Interruption Loan Scheme

The new temporary Coronavirus Business Interruption Loan Scheme will provide loans of up to £5million.  The government will guarantee 80% of the loan.  The first 12 months are interest fee (as the government will cover the first 12 months of interest payments)

You are eligible if your business is UK based, with a turnover of £45 million or under and you meet the British Business Bank eligibility criteria (once it is launched)

Universal Credit Minimum Income Floor

For self-employed people subject to Universal Credit, the minimum income floor requirement will be suspended from 13 March 2020 for the duration of the outbreak.

If you think you may need financial support, you may be entitled to support from the £500 million hardship fund (via your council) although it looks like the government anticipates that most of the hardship fund will be used for council tax relief.

Mortgage Payment Holiday

If you are having trouble meeting your mortgage payments due to Covid-19, you can ask for a payment holiday for 3 months (this includes landlords whose tenants are experiencing financial difficulties due to Covid 19).  You do not have to be behind with your payments in order to ask for a payment holiday.

Note that the mortgage interest is not necessarily suspended or cancelled.

Landlords will not be able to begin evicting tenants for at least 3 months.

Disclaimer

Since things are changing on a daily, if not hourly, basis, some of the above may change, be superseded or clarified in the future. 

Please double-check any of the above before acting on them.

Links to Government Guidance

• Guidance to businesses and employers
• Support for those affected by the coronavirus and covid-19
• HMRC Helpline for Businesses Affected by Coronavirus
• Business Interruption Loan Scheme