COVID19 – Government Announcements

Self-Assessment

For Income Tax Self-Assessment, if you are self-employed, payments due on 31st July 2020 will be deferred until 31st January 2021. This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.

Please note that the recent official publications all refer to the “self-employed” being able to defer payments. It’s not clear whether this is a specifically targeted measure to the self-employed or poorly worded and relates to all taxpayers who make payments on account through the self assessment system. We will have to wait for clarification.

HMRC Time to Pay

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. These arrangements are agreed on a case-by-case basis and tailored to individual circumstances and liabilities. You will be eligible for consideration if your business pays tax to the UK government and has outstanding tax liabilities.

Coronavirus Job Retention Scheme

Under this 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.

To access the scheme you will need to:

• Designate affected employees as ‘furloughed workers’ and notify your employees of this change. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
• 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)

HMRC will reimburse 80% of the furloughed workers wage costs, up to a cap of £2,500 per month. It’s not entirely clear at this point but the cap of £2,500 appears to include all wage costs so this would imply that Employer’s National Insurance and Employer’s pension contributions would also be included in the £2,500 cap. It’s also unclear how to calculate the “wage cost” for any furloughed staff where they may be paid varying amounts from one pay period to the next. We will hopefully receive clarification on these uncertainties shortly.

The employer can choose to fund any shortfall in wages but is not required to do so.

It is intended that the Coronavirus Job Retention Scheme will run for at least three months from 1st March 2020 but may be extended if necessary.

HMRC are working to set up a system for reimbursements.

Coronavirus Business Interruption Loan scheme

A new temporary loan scheme, delivered by the British Business Bank, will launch early next week to support primarily small and medium-sized businesses to access bank lending and overdrafts.

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.

Businesses can access the first 12 months of this finance interest free, as government will cover the first 12 months of interest payments.

You will be eligible for the scheme if:

• your business is UK based, with a turnover of no more than £45 million per year
• your business meets the other British Business Bank eligibility criteria

You should talk to your bank or finance provider (not the British Business Bank) as soon as possible to discuss your business plan with them.

VAT

VAT payments will be deferred for three months. This deferral will apply from 20th March 2020 until 30th June 2020. All UK business are eligible. This offer is automatic with no applications required. Businesses will not need to make a VAT payment during this period. Traders will be given until the end of the 2020/2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

I believe that VAT Returns should still be prepared and submitted during this time, but the exact details should be known soon.

Statutory Sick Pay (SSP)

Employees who have COVID 19 or advised to stay at home because of the virus will be entitled to SSP from day one if they would otherwise have been eligible on day four. The government are in the process of enacting this legislation and, once passed, will apply retrospectively from 13th March. The current rate of SSP is £94.25 per week.

Employers are asked to use discretion regarding proof of sickness or the requirement to stay at home as a result of the virus.

The government are in the process of enacting legislation which would allow small and medium sized business and employers to reclaim SSP paid for sickness absence due to COVID 19. The eligibility criteria for the scheme will be as follows:

• the refund will cover up to two 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 the employer will be determined by the number of people employed as of 28th 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, but employees will not need to provide a GP fit note
• 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
• the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible

Your business will be eligible if your business is UK based and employs fewer than 250 employees as of 28th February 2020.

The rebate scheme is being developed. Further details will be provided in due course once the legislation has passed.

Employment Allowance

Following the recent budget there have been changes to the Employment Allowance (EA) available to employers to offset their Employer’s National Insurance Contributions.

The maximum available will increase from £3,000 pa to £4,000.

Employers will only be able to claim EA if the total employers (secondary) Class 1 National Insurance contributions was below £100,000 in the tax year before the claim.

From 6th April 2020 Employment Allowance will operate as de minimis state aid. This means it will contribute to the total aid you are allowed to get under the relevant de minimis state aid cap in the relevant three year period. For more details on de minimis state aid please follow this link: https://www.gov.uk/guidance/changes-to-employment-allowance#ceiling

Support for businesses that pay business rates

Business rates holiday for retail, hospitality and leisure

The government will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020/2021 tax year. Businesses that received the retail discount in 2019/2020 will be rebilled by their local authority as soon as possible.

You will be eligible for the business rates holiday if your business is based in England and your business is in the retail, hospitality and/or leisure sector.

This should apply automatically but local authorities may have to reissue your bill to exclude the business rate charge. They should do this as soon as possible.

Cash grants 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 up to £25,000 per property. For businesses in these sectors with a rateable value of under £15,000, the grant is £10,000. For businesses in these sectors with a rateable value between £15,001 and £51,000, the grant is £25,000. Eligibility for the grant is the same as for the business rates holiday.

Your local authority should write to you if you are eligible for the grant.

Small Business Grant Scheme

A one-off grant of £10,000 will be available to small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and taper relief. You will be eligible if your business is based in England, you are a small business and already receive SBBR and/or RRR and you are a business that occupies (commercial) property.

Your local authority should write to you if you are eligible for the grant.

Mortgage Repayment Holidays

If you are experiencing financial difficulties meeting your mortgage repayments because of COVID 19 you may be entitled to a mortgage repayment holiday for three months. This also includes landlords whose tenants are experiencing financial difficulties because of COVID 19. The payment holiday can be made available to borrowers who are up to date with payments and not already in arrears.

Even if you are already in arrears you may still be entitled to a repayment holiday, but you should contact your lender to discuss your circumstances.

It’s important to remember that you still owe the amounts that you don’t pay as a result of the payment holiday. At the end of the payment holiday you will have to make up the missed payments. You’ll need to talk to your lender who will explain the options it offers. This could be, for example, increasing your subsequent monthly payments or extending the term of the mortgage.

It’s also likely that interest will continue to accrue on the outstanding balance unless your lender had told you otherwise.

The Financial Conduct Authority have made it clear that lenders should ensure that taking a payment holiday will not impact on your credit score.

Other help for the self-employed

Unlike the offer by the government to provide funding of up to 80% for employees on furlough there is currently no similar offer to the self-employed who find themselves without work as a result of COVID 19. This may change as it was one area which seemed to be overlooked by the Chancellor in his Friday announcement.

If you have COVID 19 or advised to self-isolate, you are not entitled to Statutory Sick Pay (SSP) however you may be able to make a claim for Universal Credit (UC) or new style Employment and Support Allowance (ESA). You may also be eligible for UC or ESA if your income is low. For more information on how to claim see https://www.gov.uk/universal-credit and https://www.gov.uk/guidance/new-style-employment-and-support-allowance

Other matters

IR35 – The roll out of the off-payroll working rules to the private sector which was due to be in place for the start of the 2020/2021 tax year has been delayed for a further year and is now scheduled to be in place for the start of the 2021/2022 tax year.

Pubs, restaurants, and cafés – asked to close on Friday 20th March 2020

Businesses in the hospitality sector – can still provide take out, delivery or drive thru’ services.