Business Related Coronavirus Information

Coronavirus Information 8th November 2020

Furlough Scheme

The Furlough scheme has been extended up until 31 March 2021.

Employees will receive 80% of their wages for hours not worked up to a maximum of 2,500 per month. Employers will have to pay for the Employers NI and Employers Pension contributions.

Up to 31 October, the maximum number of employees that can have furlough pay claimed back from HMRC cannot exceed the number of employees previously claimed for in a single claim before 1 July 2020.

You can claim for employees who have not previously been furloughed. They just have to have been employed and included on a RTI payroll submission to HMRC between 20 March and 30 October 2020.

Claims for November have to be submitted by 14 December and then 14th of each subsequent month.

The thousand-pound Job Retention Bonus will now not be paid in February due to the extension of the furlough scheme.

Self-Employment Income Support Grant

There will be two further rounds of grants available to self employed people covering the two three-month periods 1 November to 31 January 2021 and 1 February to 30 April 2021.

The maximum grant is 80% of 3 months average trading profits capped at 7,500.

The next grant will be able to be claimed online from 30 November.

The same eligibility criteria apply as for the first two grants, mainly having been self-employed in the tax year to 5 April 2019 and still being self-employed during the tax year ended 5 April 2020.

Other support

Businesses forced to close should be able to claim cash grants of up to 3,000 per month.

Councils are being provided with additional funds to be able to support businesses, so check the website of your local authority to see what support you can claim.

Businesses should be able to top up bounce-back loans until the end of January 2021.

Mortgage holidays are being extended. Borrowers should speak to their individual banks.

VAT

The VAT payment that was deferred until 31 March can be spread over 11 months from March 2021.

The lower rate VAT for hospitality will remain in place until 31 March 2021.

Time to Pay

If you are struggling as a business to manage other liabilities such as PAYE or Corporation taxes, you should ring the HMRC debt management line relevant to the tax in question to get a payment plan put in place. If you do not pay and do not ring, HMRC will chase you for the payment and apply interest and penalties. Ringing them will avoid this.

Follow this link on details for getting time to pay https://www.gov.uk/difficulties-paying-hmrc

Coronavirus Information 22nd July 2020

The Kickstart Scheme

This is a work placement scheme aimed at 16 – 24 year olds claiming universal credit, whereby they can get 6 month long work placements.

The funding pays 100% of the National Minimum wage, Employers NI and Employers Pension for up to 25 hours per week. Additional hours paid will be at the employer’s cost.

The Traineeships Scheme

Employers who hire new apprentices between 1 August 2020 and 31 January 2021 will receive payments of £2,000 where they are under 25 years old and £1,500 for aged 25 and over.

Usually these payments are made after the employee has worked with the employer for a minimum qualifying period.

VAT Rate for Hospitality Sector

The VAT rate for hospitality, accommodation and attractions is reducing from 20% to 5% from 15 July 2020 until 12 January 2021.

What is included?

• Supply of food and non-alcoholic beverages on premises;
• Takeaway of hot food and non-alcoholic beverages;
• Supply of sleeping accommodation;
• Pitch fees for tents & caravans plus associated facilities charges;
• Admission to certain attractions

There are many areas of sales which will be complicated by this change, especially the fact that the change in rate comes in the middle of a month, never mind VAT quarter. Here are the main issues we expect clients in this area to come across.

What is the Tax Point?

The tax point is the point whereby VAT becomes chargeable. In the case of goods, this is usually the point that the customer can take them away or has access to them. In the case of services this is the date that the service is performed. This point becomes more important in instances like this when the VAT rate changes.

Deposits

Where a customer pays a deposit for something such as a hotel room booking, if the deposit is paid before 15 July, there will be VAT on this amount at 20% and then when the balance is due, the VAT rate will be 5%.

If the deposit was more of a damage deposit such as on keys or a hire car, then there will be no VAT on this amount unless it crystallises as a sale when the customer breaks or loses the item thus forfeiting their deposit. The VAT rate would be the rate that applies on the date the deposit is forfeited.

Cash Accounting

The usual rules relating to Tax Points will apply. For example, if goods are sold on credit before 15 July, VAT will be charged at 20% even though they may not be paid for until after that date.

Stamp Duty Temporary Reduction

Between 8 July 2020 and 31 March 2021, stamp duty will be applied to the first £500,000 of a property sale at 0%. For additional properties, it will be 3%, which is the usual additional percentage paid.

Where someone buys a new home before selling their existing one, they will have three years to sell their initial home in order to reclaim the stamp duty paid.

Job Retention Bonus

The job retention bonus will be paid to employers who retain staff who were furloughed. The payment will be paid after February 2021 to employers at the rate of £1,000 per employee continuously employed up until the end of January 2021. The detail of this scheme has not yet been released and is expected at the end of July.

Coronavirus Information 29th June 2020

Where we are with Covid-19 support

This blog replaces all of the previous ones written since we started producing these updates on 21 March. It is up to date as of 27 June 2020.

Please note that we are continuing to provide the Q&A session via Zoom at 14:00 starting from Monday 29 June and continuing fortnightly, where we will go into more detail on this blog.

Job Retention Scheme

This scheme, known as the Furlough Scheme is available to employers who cannot maintain their workforce due to their business being adversely affected by Coronavirus.

We would advise extreme caution to employers who are continuing to furlough household family members and directors, whilst their business is continuing to trade albeit perhaps not as profitably as usual. We suspect that HMRC might regard this as abuse of the system. Please talk to us if you are not sure if you would still qualify.

From 1 July employers can bring employees back off furlough part time, so they can work some hours and be furloughed the rest of the time to maintain their usual wage.

New claims cannot be made from 1 July for employees who have been laid off after 10 June 2020. All furloughed employees from 1 July have to have been furloughed for at least three weeks before that date.

From 1 August employers will only be able to claim for 80% of the normal wage, up to £2,500 per month. They will no longer be able to claim for employers NI contributions or employer pension contributions.

From 1 September employers will only be able to claim for 70% of the normal wage. They will have to top up 10% of the wage cost and can opt to top up the remaining 20% if they so wish.

From 1 October employers will only be able to claim for 60% of the normal wage. They will have to top up 20% of the wage cost and can opt to top up the remaining 20% if they so wish.

The scheme is currently planned to close at the end of October.

Any claims relating to the period before 30 June have to be made by 31 July.

Statutory Sick Pay

Employers can claim for two weeks of statutory sick pay (SSP) paid to employees who are ill with Coronavirus or self-isolating.

This has caused much confusion as many employers did not realise that they would usually have to bear the cost of SSP. This has been the case since the Employers Allowance for NI was introduced, whereby small employers are exempt from the first £4,000 of Employers NI.

VAT Deferral

VAT payments which were due to be paid between 20 March 2020 and 30 June 2020 can be deferred without penalty until 31 March 2021.

If you have a VAT period end 31 May, where the VAT is due for payment by 7 July, or a 30 June period end where the VAT is due for payment by 7 August, you cannot defer this VAT payment under this scheme. If you are unable to pay you would have to ring HMRC on 0800 024 1222 to get help and time to pay.

We recommend taking steps now to consider how to save and ensure that the deferred VAT can be paid by 31 March 2021 as well as keeping on top of VAT liabilities that continue to arise over the coming months.

Self-Assessment Payment on Account Deferral

You can choose to defer your second payment on account for the 2019/20 tax year, which is due for payment by 31 July 2020. This can be deferred until 31 January 2021 and paid with the balancing payment due at that time.

You don’t need to apply. HMRC have been assuming that people will defer the tax and have been sending out statements with the second payment on account removed.

If you can pay, HMRC request that you do so.

Business Rates Relief

Businesses in the retail, hospitality and leisure sectors will not have to pay business rates in for the year 1 April 2020 to 31 March 2021.

This is an automatic relief. If you are in one of these sectors and have not received a replacement rates bill for £0, or are being chased for payment, you will need to contact your local authority directly.

Small Business Grant Fund and Discretionary Grants Fund

The small business grants fund was for businesses who had business rates relief or rural rates relief. In this case grants of £10,000 were being paid without the need to apply.

The Discretionary Grants fund is for businesses with fixed premises costs who did not qualify for the Small Business Grant. In this case, you need to check with your local authority to see if you qualify before applying. These grants are limited and are being dealt with in different ways between local authorities. The grants range from £2,000 to £10,000 and are only available for a short time.

Self-Employment Income Support Grant

The first trance of this grant ends on 13 July.

The Scheme allows for self employed people to claim for 80% of their average monthly trading profit for three months, up to a maximum claim of £7,500.

Their business has to have been adversely affected by Covid-19 to be eligible to claim.

There will be a second claim available from August for businesses which have been adversely affected from 14 July. Businesses who have been able to resume normal trading since the first grant will be unlikely to qualify, however those who continue to be unable to trade, or their income is a mere fraction of what it had been before, will be eligible.

Unfortunately, accountants are not able to help their clients with these claims and if HMRC believe they have, the claims will be treated as fraudulent and not paid out!

Taxation of grants

All non-refundable grants are taxable in the hands of the recipient as normal trading income. This means companies will pay corporation tax on the receipt and self-employed individuals will pay tax and NI.

Obviously if there has been a significant reduction in income because of Coronavirus, this may not make any significant difference as it will likely be offset against the business overheads and other costs.

Bounce Back Loans

The banks are encouraging small businesses looking for loan support to apply for the bounce-back loan in the first instance. This is a loan of a maximum of 25% of the last years turnover, up to a maximum loan of £50,000.

It is interest free for the first 12 months, with no repayments due in that period either.

The interest rate will be 2.5% per annum after the first 12 months.

To apply, your business has to have been adversely affected by the Coronavirus. You cannot have already claimed under the CBIL facility but you can transfer an existing CBIL loan.

The application process for this loan is very straightforward with no need to provide any detailed financial information.

CBIL – Coronavirus Business Interruption Loan

This scheme provides loans of up to £5m.

Businesses have to demonstrate that they have been adversely affected by Coronavirus and that they would be a viable business if it was not for this situation. They also have to confirm that they were not in difficulty prior to 31 December 2019.

Applying for these loans is taking significantly longer than for the bounce back loans as the banks are asking for management accounts, forecasts and other information that they deem necessary.