- Self-employed income support package
- Coronavirus Job Retention Scheme
- Deferring VAT and PAYE Tax payments
- Statutory Sick Pay relief package for SMEs
- 12-month business rates holiday (for all retail, hospitality, leisure and nursery businesses in England)
- Small business grant funding of £10,000 for all business (in receipt of small business rate relief (SBRR) or rural rate relief (RRR).
- Grant funding of £25,000 for retail, hospitality and leisure businesses.
- Coronavirus Business Interruption Loan Scheme (CBILS)
- New lending facility from the Bank of England to help support liquidity among larger firms
- HMRC Time To Pay Scheme
- Relief on Income tax
- Insurance
- Three- Month Mortgage holiday
- Late filing of company accounts
- HR Support
1- Self-employed income support package – further guidance can be found here
The chancellor has announced the following support package for self-employed individuals. The details that have been released so far are: –
Who is eligible?
Sole traders with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.
To qualify, more than half of your income in these periods must come from self-employment.
Sole traders that commenced self-employment in the 19/20 tax year are NOT eligible. You are advised to apply for Universal Credit.
The scheme will initially run for at least 3 months.
How much?
You will be eligible for a grant of 80% of your averaged monthly trading profits (not sales) based over the last 3 tax years (18/19 being the most recent) or £2,500 per month, whichever is the lower figure. If you haven’t trade for 3 years, the average will be taken from the number of years that you have completed.
How?
Individuals should not contact HMRC now. HMRC will use existing information to check potential eligibility and invite online applications once the scheme is operational. Once the claim has been accepted, the grant for the full 3 months will be paid into your bank account by early June.
Who do I cope until then?
In the meantime, to aid with cash flow, you could apply for a mortgage / rent holiday, apply for a small business loan, extend / apply for an overdraft, call in any debts that are owed to you, give your creditors a call to see of you can extend your credit terms, cancel any unnecessary direct debits, try and apply for universal credit.
2- Coronavirus Job Retention Scheme – more guidance here
Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.
All UK businesses are eligible and can access this scheme:
Businesses will need to:
- Designate effected employees as ‘furloughed workers,’ and notify these employees of this change – changing the status of employees remains subject to existing employment law and, depending on their employment contracts, may be subject to negotiations. If you would like us to provide a templated letter for you to ask your employees to sign then please let us know.
- Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)
Under Job retention Scheme, HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
CJRS – Eligibility for a company director
- Directors can be furloughed provided they meet the definition of who can be furloughed e.g. must be an employee on PAYE and on the payroll on 28 February 2020 and have no work for at least three weeks.
- Remuneration through PAYE is proving to be a dilemma for numerous directors, as to be tax efficient, most directors of limited companies take a small salary from the company, with the majority of their income being from dividends which translates into relatively smaller salary elements, which further dwindle once reduced to 80%.
- Directors are not eligible for the Self-employed Income Support Scheme (SEISS) as they are, technically, the employees of their companies.
- Directors should also sign and retain a copy of a furlough letter from their own Company. Please contact us if you need us to supply you with a letter template.
- When furloughed, directors will not be able to perform any work for the company, other than statutory duties. Their dividend payments will not be considered when calculations for relief will be performed.
- Whilst, furloughed you are only allowed to carry out duties of a director. You will find a full list of what you are allowed to do here.
- These guidelines were not issued with furloughing in mind so are open to interpretation. However, we believe that maintaining the company’s statutory and financial records are the responsibility of the directors and can therefore be kept up to date.
Full time and part time employees
For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.
Employees whose pay varies
If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:
- the same month’s earning from the previous year
- average monthly earnings from the 2019-20 tax year
If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.
Once you’ve worked out how much of an employee’s salary you can claim for, you must then work out the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.
HMRC are working urgently to set up a system for reimbursement. Existing systems are not yet set up to facilitate payments to employers. Please note that workers that are furloughed must NOT do any work for the business at all. It will not be possible for sole directors to claim furlough payments unless the company is truly dormant, and NO work is undertaken.
National Living Wage/National Minimum Wage
Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working.
Therefore, furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.
However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised
Before you ask…
I’m pleased to say nobody has asked me yet, but, we’re all in this together and if you’re going to ask us to:
- Re-run February’s payroll to increase the salaries or add any new starters, or
- Apply for the furlough grant for employees who are still working and not been laid off
then I’m afraid it’s a ‘no’ from me and we’d respectfully ask you to find another accountant. I hope you understand.
3- Deferring VAT and PAYE Tax payments
VAT
- The next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments for the Vat Quarters 29th February, 31st March and 30th April. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.
- The deferral applies automatically, and businesses do not need to apply for it. VAT refunds and reclaims will be paid by the government as normal.
- All VAT registered UK businesses are eligible for VAT Payment Deferral.
PAYE
- Businesses can defer PAYE between 1 and 3 months (they will need a valid reason – for example if the business has temporarily shut)
- Expectation is that the deferral will apply up to and including April 2020 payroll
- If the business can’t pay its PAYE liability at this point a formal payment plan can be set up between 3 – 9 months
4- Statutory Sick Pay relief package for SMEs
The Government has confirmed that employees will not need to provide a fit note in order to receive STATUTORY SICK PAY (SSP) when self-isolating due to coronavirus. Small-and medium-sized businesses and employers can reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.
Eligibility criteria will be as follows:
- Refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19.
- Employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020.
- Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
- Employers should maintain records of staff absences and payments of SSP. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website.
- Eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force.
- Government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.
- A rebate scheme is being developed. Further details will be provided in due course once the legislation has been passed.
5- 12 months business rates holiday
Business rates holiday for retail, hospitality and leisure businesses will be available for businesses in England for tax year 2020/21.
Eligibility
You are eligible for the business rates holiday if:
- your business is based in England
- your business is in the retail, hospitality and/or leisure sector
Properties that will benefit from the relief will be occupied premises that are wholly or mainly being used:
- as shops, restaurants, cafes, drinking establishments, cinemas and live music venues.
- for assembly and leisure.
- as hotels, guest & boarding premises and self-catering accommodation.
You do not need to do anything to get this relief, this will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill to exclude the business rate charge. They will do this as soon as possible.
6- Small business grant funding of £10,000 for all business
The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.
Your business will be eligible if:
- your business is based in England
- you are a small business and already receive SBBR and/or RRR
- you are a business that occupies property
If you are not aware of SBRR and RRR please follow the link
https://www.gov.uk/apply-for-business-rate-relief/small-business-rate-relief)
Again, you do not need to do anything. Your local authority will write to you if you are eligible for this grant. The Guidance for local authorities can be found at the link below.
7- Grant funding of £25,000 for retail, hospitality and leisure businesses
- The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of £25,000 per property where their rateable value is between £15,001 and £51,000.
Your business will be eligible for the grant if:
- your business is based in England
- your business is in the retail, hospitality and/or leisure sector
Properties that will benefit from the relief will be occupied premises that are wholly or mainly being used:
- as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
- for assembly and leisure
- as hotels, guest and boarding premises and self-catering accommodation
Cash grants will be administered by local authorities and should be delivered automatically, without businesses needing to claim. From early April Local authorities will start approaching businesses as per latest updates.
8- Coronavirus Business Interruption Loan Scheme (CBILS) – For more info click here
- Coronavirus Business Interruption Loan Scheme delivered by the British Business Bank.
- The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs.
- The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.
Eligibility Criteria for (CBILS):
- Be UK based, with turnover of no more than £45 million per annum
- Be able to confirm that they have not received de minimis State aid beyond 200,000 equivalent over the current and previous two fiscal years
- Be unable to meet a lender’s normal lending requirements for a fully commercial loan or other facility, but would be considered viable in the longer-term
How to access the scheme:
- The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.
- You should talk to your bank or finance provider as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments, you may want to ask for a repayment holiday to help with cash flow.
- The scheme will be available from early week commencing 23 March 2020.
Complete range of financial products that are expected to fall within the CBIL scheme:
- Term facilities
- Overdrafts
- Invoice finance facilities
- Asset finance facilities
9- New Lending facility from Bank of England – For more info click here
- Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.
- This will support your company if it has been affected by a short-term funding squeeze, and allow you to finance your short-term liabilities.
- It will also support corporate finance markets overall and ease the supply of credit to all firms.
Eligibility Criteria:
- All UK businesses are eligible.
- The scheme will be available early in week beginning 23 March 2020.
- We will provide information on how to access the scheme here shortly.
- More information is available from the Bank of England official website.
10- HMRC-Time to Pay Scheme
- All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.
- These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
You are eligible if your business:
- pays tax to the UK government.
- has outstanding tax liabilities
How to access the scheme
If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559.
11- Relief on income tax
- For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.
- If you are self-employed you are eligible to defer your income tax payment.
- This is an automatic offer with no applications required.
- No penalties or interest for late payment will be charged in the deferral period.
- HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.
Self-employed people can now access full universal credit at a rate equivalent to statutory sick pay.
12- Insurance
- Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met.
- Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.
13- Three- Month Mortgage holiday
Government is going to pass emergency legislation to protect private and social renters. There are currently 4.6 million privately renting households in the UK. Legislation will ensure that landlords cannot evict tenants who struggle to pay rent for three months. Where landlords have “buy to let” mortgages, banks should be able to offer them the same deal as homeowners.
- Mortgage borrowers can apply for a three- month payment holiday from their lender. Both residential and buy-to-let mortgages are eligible for the holiday.
- Borrowers still owe the amounts that they don’t pay as a result of the payment holiday. Interest will continue to be charged on the amount they owe.
- Tenants can apply for a three-month payment holiday from their landlord. No one can be evicted from their home or have their home repossessed over the next three months.
14- Late filing of company accounts
- If, immediately before the filing deadline, it becomes apparent that accounts will not be filed on time due to your company being affected by Coronavirus (COVID-19), you may make an application to companies house to extend the period allowed for filing.
- If you do not apply for an extension and your accounts have been filed late, an automatic penalty will be imposed. The registrar has very limited discretion not to collect a penalty.
- Each appeal is treated on a case-by-case basis, and Companies house already have policies in place to deal with appeals based upon unforeseen poor health. Appeals based upon COVID-19 will be considered under these policies.
15- HR Support
As Chartered Accountants, we can’t give out legal advice on reduced working hours and layoffs. As we want to help as many of you as possible, we want to make sure help is still available.
Our friends at Croner Taxwise provide HR support and have an Employment Law helpline which is already available to all clients who currently have Tax Investigation Insurance with us. As this very difficult time we would like to make this available to all our clients.
When and How do I get this?
Until the end of April, we have decided to upgrade our policy with Croner to cover EVERY client of Figure Fairy Ltd. This means that all clients will be able to phone and speak to an expert about any employment issues you might have.
The contact number is 0844 892 2807. They will ask for your policy number – please request this from me before calling. I would appreciate this not being shared with anyone else.
Please note our policy only applies to the advice line – Tax Investigation Insurance is only available to those who pay for it – let me know if you’d like more info.