Measures to assist with Covid-19

Below we have summarised the latest position on a number of financial measures to assist businesses and individuals with Covid-19. Should you wish to discuss further, please contact us.

Self-Employment Income Support Scheme (SEISS)

The fourth grant will be available from late April 2021. Claims must be made on or before 1 June 2021.

HMRC will, in mid-April, contact taxpayers who, based on their tax returns, are eligible. Taxpayers will need to confirm that they meet the other criteria.

The amount received is 80% of 3 months’ average trading profits, paid out in a single instalment, capped at £7,500. This is based on the trading profits in the 2016/17, 2017/18, 2018/19 and 2019/20 tax years.

The grant is subject to Income Tax and self-employed National Insurance Contributions and must be reported on the 2021 to 2022 Self Assessment tax return. The grant also counts towards the annual allowance for pension contributions.

This grant covers the period 1 February 2021 to 30 April 2021 and is available to:

Self-employed individuals and members of a partnership;
Who traded in both 2019/20 and 2020/21 tax years;
The 2019/20 tax return was submitted on or before 2 March 2021
Intends to continue to trade;
Trading profits must be no more than £50,000 and at least equal to non-trading income.

Claims can be made if either:

Temporarily unable to trade due to COVID; or
Trading has continued but with reduced demand.

Being unable to trade includes:

Closed due to government restrictions;
Shielding or self-isolating in-line with NHS guidelines and unable to work from home;
Tested positive for COVID and unable to work;
Cannot work due to child care responsibilities.

However, having to self-isolate after foreign travel is not covered.

Reduced demand can include:

Fewer customers than normally expected, due to social distancing or government restrictions, resulting in reduced activity;
Contracts cancelled and not replaced;
Able to carry out less work due to supply chain disruption.

Claims cannot be made if the only impact is increased costs such as the purchase of face masks and cleaning supplies.

In addition, the claimant must confirm that they have a reasonable belief there will be a significant reduction in trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus between 1 February 2021 and 30 April 2021. For this purpose, trading profits does not include any other coronavirus scheme support payments received.

Claims cannot be made if:

Prices have been increased so that, despite a fall in quantity sold, there is no decline in profits;
Premises had to be closed for a short period (such as for a deep clean) but there will be no significant reduction in trading profits;
The individual was unable to work for a short period but contracts could be rearranged so there was no significant reduction in trading profits;
The individual does not seek to replace lost work.

Records should be retained showing how the business has been impacted by coronavirus resulting in less business activity than otherwise expected.

Further details for specific circumstances such as:

Return is late, amended or under enquiry
A member of a partnership
Had a new child
Have loans covered by the loan charge provisions
Claim averaging relief
Military reservist
Non-resident or chose the remittance basis

Can be found here: How your circumstances affect eligibility for the Self-Employment Income Support Scheme

Restart Grant

The Government has announced details of the one-off grant to support the non-essential retail, hospitality, leisure, personal care and accommodation sectors to reopen safely.

To be eligible, a business must be:

Based in England;
Rate-paying;
In the non-essential retail, hospitality, accommodation, leisure, personal care or gym sectors;
Trading on 1 April 2021.

Eligible businesses will be paid:

A one-off grant of up to £6,000 in the non-essential retail sector
A one-off grant of up to £18,000 in the hospitality, accommodation, leisure, personal care and gym sectors

Applications should be made to the local council.

Recovery Loan Scheme

The scheme has now launched. Further details can be found on the British Business Bank website: Recovery Loan Scheme for businesses – British Business Bank

Statutory Sick Pay

A reminder that, from 6 April 2021, the weekly rate increased from £95.85 to £96.35.

Corporate Insolvency and Governance

The previous measures introduced will be extended for a further two months from 30 April 2021 to 30 June 2021.

This includes:

Suspension of personal liability for wrongful trading
Extension for those facing winding up petitions
Termination clauses are still prohibited although small suppliers will remain exempt

Grant Application Deadlines

31 May 2021 for:

Grants relating to the National Lockdown 16 February to 31 March 2021

Workplace Coronavirus Tests

You must register by 11:59pm on 12 April 2021. If your business is closed or you cannot provide tests now, you should still register so you can order tests in the future.

Homeworking Expenses

Employees working from home due to the pandemic can continue to claim tax-relief on costs not reimbursed by their employer, but a new claim will need to be made for the 2021/22 tax year.

To find out more, visit: Claim tax relief for your job expenses: Working from home

Coronavirus Job Retention Scheme (CJRS)

The Government has announced that the scheme will be extended to 30 September 2021 with the current level of support continuing until 30 June 2021.

From 1 July 2021, employees on furlough will continue to receive 80% of their wages (up to £2,500 per month) but the scheme funding will reduce with the employer paying the balance.

For employees furloughed 100% of the time, scheme payments will be 70% of wages (up to £2,187.50) in July and 60% (up to £1,875) in August and September, meaning that the employer will pay 10% of wages (up to £312.50) in July and 20% (up to £625) in August and September.

For periods starting on or after 1 May 2021, the scheme can be used for any employee employed on 2 March 2021, provided the employee was included on a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021.

Further details of changes from 1 May 2021 can be found here.

VAT

The Government has announced that the 5% VAT rate on hospitality, holiday accommodation and attraction admission will be extended to 30 September 2021.

A new reduced rate, with the same scope, of 12.5% will then be introduced for the period to 31 March 2022.

In addition, a penalty of 5% (rather than the normal Default Surcharge) will be applied to any VAT still due under the deferral scheme at 30 June 2021 which isn’t covered by a payment arrangement.

Rates

The current rates holiday will continue until June with a subsequent two thirds discount being applied until March 2022.

Local Restrictions Support Grant (for closed businesses)

The Government has updated the guidance for grants to businesses required to close during the national lockdown covering the period 16 February to 31 March 2021.

This applies for businesses:

Based in England
Occupying property on which it pays business rates (and is the ratepayer)
Required to close because of the national restrictions
Has been unable to provide its usual in-person customer service from its premises

This includes, for example, restaurants limited to a take-away service.

Grants available under the scheme are per a property and based on the rateable value bands:

£2,096 for this 44-day qualifying period for property with a rateable value of £15,000 or less
£3,143 for this 44-day qualifying period for property with a rateable value between £15,000 and £51,000
£4,714 for each 44-day qualifying period for property with a rateable value over £51,000

Applications are through the appropriate local council.

Further guidance for closed businesses / Further guidance for open businesses

Personal Tax Returns and “Time to Pay” Arrangements

Whilst tax penalties for late returns will not be charged provided that the return is submitted by 28 February 2021, interest is still charged on late tax.

In addition, late payment penalties are charged for tax remaining unpaid for 30 days, 6 months and 12 months. These penalties can be avoided if Time to Pay arrangements are agreed with HMRC – although the interest will still be charged.

Provided that the amount of tax due is less than £30,000, arrangements can be made automatically online at least 72 hours after the return has been submitted.

In order to avoid the 30 day penalty, the arrangement must be in place by 1 April 2021. The subsequent penalties will then only apply if the terms of the arrangement are not kept.

As the payment due includes the first payment on account for the 2020 to 2021 tax year, taxpayers whose income has been significantly reduced can request that the payment on account be lowered.

HMRC have also noted that delaying payment may result in Class 2 National Insurance contributions (which are normally included in the January tax payment) being paid late and so having a detrimental effect on certain contributory benefits.

Further guidance on the above, including how to contact HMRC regarding Class 2 contributions, can be found here.

Extension of Insolvency Measures

The Government has announced that it will extend its power to make temporary amendments or modify the effects of corporate insolvency and governance legislation for an additional year until April 2022.

VAT Deferral New Payment Scheme

Registration for the deferral scheme is now open and can be accessed here.

Recap

HMRC has published additional guidance for opting in to the further deferral of VAT. The VAT deferral new payment scheme will open on 23 February and remain open until 21 June 2021.

If a business is on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, they will be invited to join the new payment scheme later in March 2021.

Any business that doesn’t opt into the scheme will need to settle its liabilities by 31 March 2021.

The date of registration will determine the maximum number of payments:

11 for those registering by 19 March
10 for those registering by 21 April
9 for those registering by 19 May
8 for those registering by 21 June

Further information can be found here.

Bounce Back Loan Scheme (BBLS) – Repayment Terms Extension

The government has introduced flexible repayment scheme Pay As You Grow (PAYG) which will allow:

The loan term to be extended to 10 years at the same interest rate
Interest-only payments for 6 months on 3 separate occasions
Pausing of repayments for up to 6 months

Lenders should contact borrowers to provide information on repayment schedules and flexible repayment options 3 months before their first payment is due. Find out more

Kickstart Scheme

The scheme has been amended so that, from 3 February, it is no longer necessary for firms creating less than 30 jobs to apply through an intermediary. Find out more

State Aid Restrictions

Government guidance has been updated to clarify that EU restrictions on state aid only apply for payments made before 1 January 2021.

One-off grant worth up to £9,000

The Government has announced an additional grant for the retail, hospitality and leisure sectors forced to close due to the restrictions. The grant is per a property and based on the same rateable value bands, and in addition to, the existing grants for being closed.

The amounts paid will be:

£4,000 for property with a rateable value of £15,000 or less
£6,000 for property with a rateable value between £15,000 and £51,000
£9,000 for property with a rateable value over £51,000

In addition, extra funding will be provided to local authorities for discretionary grants to businesses not covered by this grant that are impacted by the restrictions.

Loan Schemes

Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) and Bounce Back Loan Scheme (BBLS)

Applications closed 31 March 2021.

Future Fund: Breakthrough

Launching in early Summer 2021, Future Fund: Breakthrough is a new £375m UK-wide scheme which will encourage private investors to co-invest with government in high-growth, innovative firms. Find out more: Future Fund: Breakthrough – British Business Bank

Extension of Insolvency and Regulation Relaxation

The Government has announced the extension of:

The removal of Director personal liability for wrongful trading has been extended to 30 April 2021.

Bounce Back Loan Scheme (BBLS)

The government has introduced flexible repayment scheme Pay As You Grow (PAYG). Find out more: Bounce Back Loan Scheme (BBLS) – Pay As You Grow – British Business Bank

Tax-Free Childcare

Full details can be found here.

Furloughed Staff – Salary for Redundancy

The Government announced that from 31 July 2020, statutory redundancy pay will be calculated based on an employee’s normal pay, rather than furlough pay. This also covers other employment rights that rely on average weekly pay, including notice pay, unfair dismissal, and short-time working. However, it does not apply to any enhanced redundancy pay under the individual’s employment contract.

Paying your employees’ personal fuel costs

Although the amount of fuel used is likely to be low in some cases, this does not reduce the income tax arising on the Benefit-in-Kind (BIK). Therefore, it is possible for the resulting tax liability to exceed the amount reimbursed.

If you wish to discuss this matter further please contact Steve Williams

Mini Budget 2020

In his Summer 2020 update, the Chancellor announced a number of measures to help businesses recover from Covid-19. Whilst further details are to be published, the schemes announced were:

Job Retention Bonus

Due to the extension of the CJRS, the JRB will not be paid in February 2021 but will be delayed to an “appropriate time”.

This is a one-off payment to employers of £1,000 for each eligible employee kept continuously employed until 31 January 2021. The money is for the employer and does not need to be paid to the employee. The bonus is taxable unless it relates to staff that are not employed as part of a business (such as nannies or other domestic staff).

Claims can be made between 15 February and 31 March 2021. Further details can be found here.

VAT Cut for Hospitality Sector

With the fall in the rate of VAT there may be situations where the customer has already agreed a fee/been invoiced/has paid for the service at the higher VAT rate. Further details can be found here. If you would like to discuss how these changes may affect you, please contact Paddy Behan.

Eat Out to Help Out Scheme

The Eat Out to Help Out Scheme closed on 31 August 2020.

Kickstart Scheme

The Kickstart Scheme aims to assist young people on Universal Credit aged between 16-24 in finding six month work placements – with the Government paying 100% of the age-relevant National Minimum Wage, National Insurance and pension contributions for 25 hours a week. Employers can top up this wage.

Details relating to apprenticeship funding can be found here.

Green Jobs

From September 2020, homeowners and landlords can apply for vouchers to make housing more energy efficient. The government will cover two thirds of the cost up to £5,000 per household, and the full cost up to £10,000 for those on low incomes.

Stamp Duty Cut

The Government has increased the Nil Rate Band of Residential SDLT, in England and Northern Ireland, from £125,000 to £500,000. This will apply from 8 July 2020 until 31 March 2021.

Short-Term Home Building Fund Extension

The Government will support small- and medium-sized housebuilders that are unable to access private finance by boosting the Short-Term Home Building Fund, providing an additional £450 million in development finance to smaller firms.

Statutory Sick Pay – TUPE

The Government clarified the guidance to confirm that claims can be made for employees who have transferred under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). Further details can be found here.

Statutory Sick Pay Rebate Scheme

The rules were amended so that claims can now be made for employees who are self-isolating because they’ve been notified by the NHS or public health bodies that they’ve come into contact with someone with coronavirus.

In order to claim, an employer will require their Government Gateway user ID. Further details of the scheme, including links to obtaining the Government Gateway user ID, can be found here.

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.

Business Rates Relief

More information can be found here.

Retail, Hospitality and Leisure Grant Fund (RHLGF)

The Retail, Hospitality and Leisure Grant Fund is now closed. You should have received your grant by 30 September 2020. Contact your local council if you think you’re eligible for a grant but have not yet received it.

Support for Nursery Businesses that pay Business Rates

A business rates holiday will apply for nurseries in England for the 2020 to 2021 tax year. Further guidance for local authorities is available in the nursery discount guidance.

Support for Businesses that pay little or no Business Rates

If your business is eligible for SBRR or rural rate relief, you should be contacted by your local authority and do not need to apply.

Covid-19 Corporate Financing Facility (CCFF)

Under the CCFF, the Bank of England will buy short-term debt from large companies. More information is available here and on the Bank of England website.

Coronavirus Large Business Interruption Loan Scheme (CLBILS)

The deadline for applying for the CLBILS has been extended to 31 January 2021. Further details can be found on the British Business Bank website.

Support for Businesses Paying Tax

If you have missed a tax payment or you might miss your next payment due to Covid-19, you should call HMRC’s dedicated helpline: 0800 024 1222. Further details can be found here.

Coronavirus Job Retention Scheme – Flexible Furlough

Protection from Eviction

Under measures to be included in the Coronavirus Bill, no business (in England, Wales and Northern Ireland) will be forced out of their premises if they miss a payment in the period to 30 June. Tenants will still be liable for the rent after this period.

Empty Business Rates Relief

Further guidance can be found here.

Employee Expenses

If you wish to discuss matters relating to the taxation of staff expenses further, please contact Steve Williams Stephen.Williams@sgllp.co.uk

Further details of the taxation of staff expenses can be found here.

Additional guidance can be found here.

Insolvency Rules

The Government has published a number of factsheets offering an explanation of the measures in the Corporate Insolvency and Governance Bill 2020. The bill introduces a series of amendments to insolvency and company law in response to the coronavirus outbreak.

Workplace Pensions

Further information can be found here.

Future Fund

The deadline for applying for the Future Fund has been extended to 31 January 2021. Further details can be found on the British Business Bank website.

The British Business Bank has also issued some Frequently Asked Questions to assist investors providing the funds to be matched by the loan.

Support Finder Tool

The ‘support finder’ tool aims to help businesses and the self-employed identify what financial support is available to them.

HMRC Video Resources

HMRC has produced a number of videos to help businesses understand the assistance available to them.

Coronavirus Bounce Back Loan

From 10 November 2020, companies which previously borrowed under the scheme at less than the maximum amount can apply for a top up which must be done by 31 January 2021. Further details can be found here.

Pension Schemes

Small Self-Administered Schemes (SSAS) and Self-Invested Personal Pensions (SIPP)

HMRC have announced a number of measures to assist Pension Schemes. In particular:

Pension Scheme Returns will NOT be required for the 2019/20 tax year due to difficulties in obtaining the required valuations.
If a valuation is required (for example, when funds are designated for a drawdown pension), then HMRC will accept that special circumstances exist if, due to COVID-19, trading in the share has been suspended or the closing price is not a proper measure of value. This would allow an alternative method of valuation to be used.
HMRC will accept payment holidays on loans to connected parties and rent holidays on commercial property as arm’s length commercial decisions (and so not giving rise to an unauthorised payment charge) without a valuation. The Scheme should still be able to demonstrate that the decision was on an arm’s length commercial basis.

Further details can be found here.

Additional Funding to Local Councils

Details of allocations of additional funding to local authorities can be found here.

Tax-Free Childcare and 30 hours Free Childcare

HMRC have issued guidance on temporary changes during Coronavirus. Further details can be found here.

Governance Changes

The Government has published a number of factsheets to explain the changes being introduced. The legislation will also ease the administration burden by allowing companies to hold closed AGMs, conduct business and communicate with members electronically, and extends filing deadlines, during the period of the pandemic.

Local Authority Discretionary Grants Fund

The existing local authority grants are to be replaced with a new Restart Grant – a one off cash payment.

Guidance on Assessing Going Concern

The ICAEW has prepared a short document to guide businesses in assessing the Going Concern status of their enterprise. Whilst it is written for directors of limited companies (for whom this is a statutory obligation), the points made on forecasting would also be relevant to other business structures considering the impact of Covid-19.

Military Reservists

The Coronavirus Job Retention Scheme guidance on military reservists has been clarified here.

Support Package for Arts & Culture

The government has announced a £1.57bn package to support Britain’s arts, culture and heritage industries including theatres, heritage, historic palaces, museums, galleries, live music and independent cinema. Further details can be found here.

Regional Assistance

Should you wish to discuss matters further, please contact us mail@sgllp.co.uk

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