Following on from our newsletter earlier in the week, we’d like to take this opportunity to give a further overview of all the support now in place for businesses and employees. We have kept both website links below and broken down the support available to clients classified by their circumstance.

Please take the time to read through any sections that apply to you. There are several categories or circumstances which are not covered and have so far fallen through the cracks. We will continue to keep you updated with any help available as it is announced.

Please note that these points are based on the guidance published on the website links above, and other information available at 3pm on 27th March 2020. Initial guidance and common-sense dictates that any grants referred to below are treated as income for tax purposes.

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees

Directors, Employees and Employers – Coronavirus Job Retention Scheme

As announced at the end of last week, HMRC will be offering support to all UK employers with a PAYE scheme to allow them to continue paying part of salaries, employer’s national insurance and pension contributions for those staff that would otherwise have been laid off during this crisis.

In order to qualify for this scheme, you as an employee or director, or your staff, must not be working during this period. If this is the case then HMRC will fund 80% of the staff costs mentioned above from 1st March 2020, up to £2,500 per month, for an initial 3-month period, and this will be paid direct to the employer. The employer can then choose whether or not to top up the amount paid to the staff member to equal their normal pay. Please note that any worker working reduced hours will not be eligible for this scheme.

In terms of timing and calculation, the PAYE scheme must have been created and running on or before 28th February 2020, and in order to qualify personally you must have been employed as at 28th February 2020 by your current employer. The grant will then cover 80% of the staff costs mentioned above based on the employee’s salary at 28th February 2020. If you or your staff’s pay varies from month-to-month the 80% calculation will be based on the higher of:

  • The same month’s earnings from the previous year
  • Average monthly earnings from the 2019-20 tax year

Greater detail on this scheme can be found at https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

It is up to the employer to make a claim through this scheme. If we are completing your payroll for you, we will provide further advice in due course as to how the claim process will work.

Employees and Employers – Statutory Sick Pay

The government have brought forward Statutory Sick Pay to commence from day 1 of any sickness absence due to COVID-19. This refund will cover up to 2 weeks’ SSP per employee if they have been off work because of COVID-19, but only applies to employer’s with less than 250 staff. Previously SSP was only available from day 3, although it is worth noting this only applies to staff absent because of COVID-19. Any other sickness absence would continue to apply from day 3.

Self-Employed Individuals and Partners of Partnerships

If you fall into this category then the measures announced yesterday evening will be of benefit to you. Please note that if you are a director or shareholder of a limited company this does not apply to your income.

In order to apply for the grant referred to yesterday you will need to have submitted an income tax return for 2018-19 and traded during 2019-20, are still currently trading (or would be were it not for COVID-19), intend to continue to trade AND have lost trading profits due to COVID-19. In addition your profits must be less than £50,000 and more than half of your income must have come from your self-employment. This is determined by either:

  • Having profits in 2018-19 or less than £50,000 and these constituting more than half of your total taxable income
  • Having average profits over 2016-17, 2017-18 and 2018-19 of less than £50,000 and this average constituting more than half of your average taxable income in the same period.

If this applies to you then you will receive 80% of the average profits for the tax years 2016-17, 2017-18 and 2018-19 in which you traded. HMRC will perform this calculation based on your tax returns submitted and calculate a monthly amount due to you. This will be capped at a maximum of £2,500 per month and will be paid directly into your bank account in one instalment.

You are not yet able to apply for this scheme. HMRC will contact you in due course if they believe you are eligible for the scheme and invite you to apply online. You will only access this scheme through gov.uk, and if any other correspondence is received inviting you to a different link please ignore this as it is a scam.

VAT-registered Businesses

If your business is VAT registered and has a VAT bill falling due between 20th March and 30th June 2020 this payment will be deferred until 31st March 2021. In short this means that the payments due 7th April, 7th May and 7th June 2020 will need to be paid by 31st March 2021.

You will still be required to submit your VAT returns by the normal submission deadline, and future VAT payments will need to be made by their normal due dates. This deferral is automatic although HMRC have recommended cancelling your direct debit authority with them for VAT via your bank if you wish to defer your payment.

Self-Assessment for Individuals

Any individual who has a payment due to HMRC by 31st July 2020 will have this payment deferred until 31st January 2021. This deferral is automatic and covers EVERY individual within the self-assessment regime.

Businesses with Business Property

If your business uses a business property and you receive small business rates relief then you will be eligible for a grant of £10,000. Note that small business rates relief applies to businesses with property which has a rateable value of £15,000 or less.

No action is required by you for this grant. Your local authority will be in touch to provide detail as to any cash grant you are entitled to.

If your business is renting property HMRC have initiated a measure to protect tenants from being evicted due to lack of rental payment for any missed payments up until 30th June 2020. This is not a rental holiday and your business will still be liable for this rent. You will simply be protected from eviction until this date.

Retail, Hospitality and Leisure Businesses

If you fall into one of these categories you may be eligible for business rates holiday for 2020/21, effectively reducing the business rates to nil. In addition, you may be eligible for a grant of up to £25,000 per property.

If the rateable value of the property is less than £15,000 then your cash grant will be £10,000 as per the Businesses with Business Property section above. If your property has a rateable value of between £15,000 and £51,000 then you will be eligible for a grant of £25,000.

Further detail as to which industries fall within this category are available via the first link on this newsletter. No action is required by you for either support. Your local authority will be in touch with your new business rates bill for 2020/21 of £0 and any cash grant you are entitled to.

All Businesses

The government have introduced the Coronavirus Business Interruption Loan Scheme (C-BILS) to help support businesses during this crisis. The government will cover the first 12 months of interest payments and any lender-levied fees.

You will need to discuss the terms and availability of such a loan with one of the 40 accredited finance providers (https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/current-accredited-lenders-and-partners/) should you wish to apply .  The government are guaranteeing 80% on each loan to give further confidence to lenders to continue to provide such finance.

 

Be aware of interest rates and possible security requirements – It seems like the Government will only guarantee the loan as a last resort, should the individual or company default, so it’s a guarantee for the bank, but they are still requiring security.

 

Everyone

HMRC have always offered their Time to Pay service whereby if you are in financial distress you can contact HMRC and discuss a time to pay arrangement with them. These are agreed on a case-by-case basis and if you wish to discuss this with HMRC please contact them on 0800 0159 559.

The government have asked a number of institutions to offer mortgage holidays for individuals. Please contact your mortgage provider if you feel this will be of benefit to you.

If you are struggling with any other finances, including support with rent costs, please check your eligibility for Universal Credit:
(https://www.understandinguniversalcredit.gov.uk/coronavirus/).

Other Government support is available here:
https://www.gov.uk/employment-support-allowance

https://www.gov.uk/income-support

https://www.gov.uk/how-to-claim-new-style-jsa – this may be worth looking at as you don’t necessarily need to be unemployed to qualify.

Unfortunately, we are unable to advise further on any state benefits as they do not fall within our remit as tax advisors.