As we emerge slowly from lockdown, now is a good time to take stock of things and look ahead to how we can run our businesses with the “New Normal” environment we face.
What is clear is that some form of social distancing will remain, and many businesses are adopting new ways of working within the rules. The Government has published guidance to assist employers: https://www.gov.uk/guidance/working-safely-during-covid-19
We have been helping many clients with their issues relating to the current situation, so please contact us if you would like some help from us.
Here is all you need to know:
- New “Furlough” System for Employee Wages Up and Running
- Small Employers Can Reclaim 2 Weeks SSP
- Deferral of VAT Payments
- IR35 “Off-Payroll” Rules Delayed
- Deferral of 31 July Payments on Account
- Extra Time To Pay Your Tax Liabilities
- Business Rates Relief
- Retail and Hospitality Grant Scheme
- Coronavirus Business Interruption Loan Scheme
- Useful Documents
So, here is what you need to do right now:
- Stay healthy, follow the Government guidelines for you, your family, co-workers, employees and community. Work from home where you can manage administration.
- Plan – what will your business look like in six months’ time? The best way to predict your future is to create it.
- So, take time to look at your business, Strengths, Weaknesses. Opportunities and Threats. Make notes involve everyone. Brainstorm. Draft a written plan.
- Work out your expenses (including salaries) for the next six months.
- Estimate your cash flow over the next six months. We have the tools to help.
- If you need help in doing these calculations talk to us – we can talk you through these for you. Without the figures, you cannot make clear decisions.
- Once you have a grasp on your figures and you consider you have a “viable” business (can you survive for the next six months?):
- Get your members of staff involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues.
- Review your list of products and services and eliminate those that are unprofitable or not core products/services.
- Get rid of won’t pay customers.
- Review your debtor’s list and chase up overdue invoices (if appropriate).
- Offer existing debtors extended payment terms and/or discounts.
- Agree extended payment terms with all suppliers in advance.
- Put extra effort into making sure your relationships with your better customers are solid.
- If your business is not viable – talk to us and we will run through the options.
Above all stay strong! Remember your health and welfare is more important than anything else just now. We will help you every step of the way. Together we will get through this!
- Furlough Calculator
- Self Employed Income Calculator
- Business Planning
- The Coronavirus Large Business Interruption Loan Scheme CLBILS Update
- Updated Guidance For Businesses UK
- Coronavirus Self Employment Income Support Scheme
- Universal Credit
- Temporary Wage Subsidy Scheme FAQ Irish Members
- Increase In Working Tax Credits UK Members
- Housing Executive Rent Increase Put On Hold Northern Ireland
- Business Support Grant Funding
- Government Relaxation of Financial Solvency Rules During Pandemic
- Business Rates Relief and Related Government Support
- Coronavirus Job Retention Scheme – Latest Announcement UK
- How To Claim For Your Employees Wages Through The Coronavirus Job Retention Scheme
- Coronavirus Job Retention Scheme Q&A
- COVID-19 Pandemic Unemployment Payment – Ireland
- Temporary Wage Subsidy Scheme – Ireland
- The Business Support Call Centre – Ireland
- Summary Of Current Advice And Government Supports – Ireland
- £150 Million Grant Support Reaching Businesses With More To Come – Wales
- Economy Minister Praises Businesses Helping Coronavirus Fight – Wales
- Novel Coronavirus Covid-19 Checklist For Businesses – Scotland
- Useful Covid-19 resources to help businesses manage the Pandemic – Scotland
- Business Disruption Checklist – Scotland
The Coronavirus Job Retention Scheme (CJRS) claims portal opened on Monday 20 April and early indications are that it seems to be working smoothly but with a few teething problems as you would expect from a brand-new system.
In the run-up to the start of the system, there was limited detail from HMRC on what could be claimed as the initial guidance was rather sketchy and did not cover all situations. The government also decided late on to change the qualifying conditions so that it would apply to those on the payroll at 19 March instead of 28 February to cover those employees taken on in March, or so we thought. It turned out that the employee needed to be included in an RTI (real-time information) submission by 19 March to be included.
Remember that CJRS allows employers to claim 80% of an employee’s regular pay subject to a limit of £2,500 a month if they have been “furloughed”, in other words, unable to work during the crisis.
The claim can also include employer’s NIC and the employers 3% auto-enrolled pension contribution on the restricted amount.
Note that company directors may be furloughed provided they do not work for the company other than complying with their statutory obligations. The furlough claim only applies to their salary, not dividends.
Depending on how long the Coronavirus lockdown lasts future claims should be a lot more straightforward now that we have more detailed guidance from HMRC. As usual, if we can be of assistance please get in touch.
Documents: Coronavirus Self Employment Income Support Scheme, Coronavirus Job Retention Scheme Briefing Notes, How To Claim For Your Employees Wages Through The Coronavirus Job Retention Scheme, Coronavirus Job Retention Scheme Q&A, Furlough Calculator
Like the CJRS scheme for employers the initial HMRC guidance on the grant scheme to support the self-employed and members in partnerships was also very sketchy.
In outline the Self-Employed Income Support Scheme (SEISS) allows the self-employed to claim 80% of their average profits for the period up to 2018/19 limited to £2,500 a month, initially for a three-month period.
Like CJRS there are lots of conditions that need to be satisfied such as being self-employed in 2018/19 and continuing to trade in 2019/20 and 2020/21 or would be doing so if it the business had not been impacted by coronavirus.
At the time of writing, we are still awaiting details of the claims process but HMRC has recently updated their guidance on the calculation of “self-employed profits” and “total income”.
In order to be able to make a successful claim, the self-employed profits in 2018/19 must not exceed £50,000 and must be more than 50% of the individual’s total income. If that test is not met, then the same £50,000 and 50% tests are applied to average profits and total income over the three years (or shorter period) to 5 April 2019.
We can, of course, help you determine whether you are eligible and assist you with your claim if required.
HMRC guidance has defined self-employed profits for the purposes of SEISS as turnover for the business less allowable business expenses and capital expenditure. This figure may not be the same figure as that originally declared in your self- assessment tax returns. If the calculation results in a trading loss the amount that is averaged is not nil for that year but the negative result.
HMRC state that total profits for the purposes of the 50% test would be taxable income from all sources for the relevant year such as property income, bank interest, employment income and social security income.
There are still several unknowns but at least we now have a bit more clarity. Unlike the furlough scheme mentioned earlier the self-employed can continue trading, albeit at a reduced level.
HMRC will open the SEISS claims portal shortly and the grants will be paid to self-employed individuals at the end of June 2020.
Charities across the UK will receive a £750 million package of support to ensure they can continue their vital work during the coronavirus outbreak, tens of thousands of charities will benefit from direct cash grants to ensure they can meet increased demand as a result of the virus as well as continuing their day-to-day activities supporting those in need.
- £750 million available for frontline charities across the UK – including hospices and those supporting domestic abuse victims
- £360 million direct from government departments and £370 million for smaller charities, including through a grant to the National Lottery Community Fund
- government will match donations to the National Emergencies Trust as part of the BBC’s Big Night In fundraiser later this month – pledging a minimum of £20 million
As part of a UK-wide package of support, £360 million will be directly allocated by government departments to charities providing key services and supporting vulnerable people during the crisis.
Charities providing vital services and helping vulnerable people through the current crisis will benefit from the £360 million allocated by government departments. These will include:
- hospices to help increase capacity and give stability to the sector
- St Johns Ambulance to support the NHS Victims charities, including domestic abuse, to help with the potential increase in demand for charities providing these services
- vulnerable children charities, so they can continue delivering services on behalf of local authorities
- Citizens Advice to increase the number of staff providing advice during this difficult time
£370 million will be allocated for small and medium-sized charities, including through a grant to the National Lottery Community Fund for those in England, will support those organisations at the heart of local communities which are making a big difference during the outbreak, including those delivering food, essential medicines and providing financial advice.
The Chancellor also announced the Government will match fund whatever the public decides to donate to the BBC’s Big Night In charity appeal on 23 April, starting with a contribution of at least £20 million to the National Emergencies Trust appeal.
Departments will now work to identify priority recipients, with the aim for charities to receive money in the coming weeks. The application system for the National Lottery Community Fund grant pot is expected to be operational within a similar period.
Statutory sick pay (SSP) is normally payable from the fourth day of absence, however, if you are self-isolating because of COVID-19 from 13 March, you can now claim SSP from day 1. This includes individuals who are caring for people self-isolating in the same household and are in quarantine.
The rate of SSP is currently £94.25 per week and it is paid by employers for up to 28 weeks.
From Friday 20 March onwards, those who have COVID-19 or are advised to self-isolate will be able to obtain an “isolation note” by visiting NHS 111 online and completing an online form.
If you are a small or medium-sized business, you may be entitled to reclaim the costs of SSP for sickness absence due to COVID-19.
This refund will cover up to two weeks’ SSP per eligible employee who is either ill or been told to self-isolate 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 as a result of COVID-19.
Employers should maintain records of staff absences, but employees will not need to provide a GP fit note.
The Government have also announced the deferral of VAT payments for 3 months from 20 March 2020 until 30 June 2020 to assist their cash flow. All VAT registered traders are eligible. This will generally mean the deferral of one quarter’s VAT, the payments due on 7 April, 7 May or 7 June 2020 or the monthly payments due on each of these dates. This deferral will be automatic, however, it is unclear whether HMRC will automatically suspend collection of direct debit payments of VAT during this period so we suggest that you cancel your direct debit mandate but remember to set it up again in due course. Businesses have until the end of the 2020/21 tax year to pay any VAT liabilities that accumulate
VAT refunds and reclaims will be paid by the government as normal. Businesses should continue to file their VAT returns by the due date to avoid penalties.
The new rules for workers providing their services through personal service companies that were due to start from 6 April 2020 have been delayed by a year. This would have represented a significant additional administrative burden on large and medium-sized businesses and would have resulted in more income tax and national insurance being deducted from workers affected.
Self-employed taxpayers will not be required to make the payments on account of their 2019/20 tax that are normally due on 31st July 2020.
The tax-deferred will still be due on 31 January 2021 together with the balancing payment for 2019/20.
No application is required and those affected will not incur penalties or interest on those payments.
In addition to the deferral of VAT and income tax payment on account, businesses and self-employed taxpayers in financial distress as a result of Coronavirus may be able to negotiate additional time to pay their taxes.
There is a dedicated HMRC helpline number 0800 0159 559 for you to ring, or we can contact them on your behalf. Before phoning HMRC it is advisable to have financial forecasts and a statement of assets and liabilities available. We can again assist you with this.
HMRC will usually expect to set up a regular monthly payment plan with collection by direct debit. Most HMRC debt management contact centre staff have authority to agree a time to pay over a period of up to 12 months. Longer periods can be arranged but usually need to be escalated to senior HMRC staff.
The Government is introducing a business rates holiday for retail, hospitality and leisure businesses in England for the 2020/21 tax year. (Similar schemes will be introduced in Wales and Scotland)
Businesses that received the retail discount in the 2019/20 tax year will be rebilled by their local authority as soon as possible. Properties that will benefit from the relief will be premises that are wholly or mainly being used:
- As shops, restaurants, cafes, drinking establishments, cinemas and live music venues,
- for assembly and leisure and
- as hotels, guest & boarding premises and self-catering accommodation
The government will also provide additional grant 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.
A further cash grant scheme is available to businesses in the retail, hospitality and leisure sectors. Qualifying businesses are eligible for a cash grant of up to £25,000 per property. The grant applies to businesses in these sectors with a ratable value of under £15,000, they will receive a grant of £10,000. For businesses with a ratable value of between £15,001 and £51,000, they will receive a grant of £25,000.
This new loan scheme delivered by the British Business Bank will launch from 23 March 2020 to support small and medium-sized businesses to access bank lending. The government will provide lenders with a guarantee of 80% on each loan to give lenders further confidence in continuing to provide finance to SMEs. The Scheme will support loans of up to £5 million in value and will be interest-free for the first 12 months. The scheme applies to UK businesses with a turnover of no more than £45 million per annum.
The Bank of England will also buy short term debt from larger companies under a new COVID-19 Corporate Financing Facility.
If you would like to discuss with one of our accountants about how we can help you and your business during this current crisis, contact us contact form or call us on 0207 537 6628.