Covid 19 business support extended…
COVID 19 Update – What’s next?
As you head into the last month of an incredibly trying and tough year, this article is to help you and your business make informed decisions for 2021 and beyond.
Through the Coronavirus pandemic having a much larger impact than anticipated, the government is giving access to additional support for businesses.
The self-employed and employers have had access to help until October, but what is happening now?
Due to the November lockdown, schemes have been extended albeit with a few changes.
The revised schemes have been revised again in a very short window, so this is the latest:
Support for Workers – CJRS (Coronavirus Job Retention Scheme)
The CJRS Scheme was extended on the 1st November 2020 to run till 31st March 2021, but to be reviewed in January 2021. – 3rd Stage of CJRS.
• Employers can furlough or flexi-furlough their employees and have 80% of their average salaries, based on 2018/19 income (up to a cap of £2500pm) reimbursed by the government, in the same way as the previous two stages. Employers to cover staff pensions and Employers National Insurance Contributions.
• However, the 3rd stage requires the Employees to have been recorded as an Employee as of 30th October 2020 on the employers RTI submission.
• Therefore, new employees that were not furloughed previously and not on the employers RTI Submission in February 2020 can now be furloughed, if they have been on a RTI filing between 20th March 20 to 30th October 20.
• The scheme is open to businesses across the UK even if they had not previously used the furlough scheme.
• November claims and beyond – must be submitted by the 14th day of the following month. If this falls on a weekend, the deadline is the next weekday. So, all November claims to be made by 14th December. Further deadline dates for December onwards can be found on the GOV.UK website.
• You can claim before, during or after you have processed your payroll as long as the claim is submitted before the deadline.
• All records must be kept supporting the amount of CJRS grant you have claimed, just in case HMRC wish to check them.
• From 1st December, Employers cannot claim CJRS grants for any days that their employee is serving a contractual or statutory notice, including notice of retirement or resignation.
• HMRC will also be publishing the names, an indication of the value of claims, Company Registration Numbers and number of Employees who make CJRS claims for periods from December 20 onwards.
• For claim periods from December, employees will also be able to check if their Employer has made a CJRS claim on their behalf through their online Personal Tax Account.
• For further information to check eligibility, to use the CJRS calculator or to view examples, please go to GOV.UK and search ‘Job Retention Scheme’
• Due to this, the proposed Jobs Retention Bonus (£1000 paid per Employee retained as of 31st January 2021) has been delayed – further information will I’m sure follow regarding this in the future.
SEISS – (Self Employed Income Support Scheme)
This scheme has also extended and again been revised to provide a 3rd and 4th grant to the self-employed, requiring support. However, the eligibility criteria are different to the previous SEISS grants.
If you were not eligible for the 1st & 2nd grants, based on the information in your self-assessment tax returns then you will not be eligible for the 3rd grant.
The criteria are:
• You are a self-employed individual or a member of a partnership and must have traded in both tax years 2018/19 and 2019/20. Your 2018/19 return must also have been submitted before 23 April 20.
• You are currently trading but impacted by coronavirus or temporarily not trading because of coronavirus.
• You declare an intention to continue trading and believe the impact of coronavirus will cause a reduction in profits.
• Your business must have been impacted on or after November 2020. You should evidence how your business has been affected by coronavirus.
See the govt websites for more information and practical examples.
It stipulates reduction in profits due to increased costs (i.e., PPE Equipment) does not count for this purpose.
If you claim Maternity Allowance, this will not affect your eligibility for the grant.
HMRC are currently contacting all self-employed people in the UK that maybe eligible. To check eligibility to claim and for further information, go to GOV.UK and search ‘Self Employment Income Support Scheme’.
If you are eligible to claim, then.
• 80% of the 3 months average trading profits, capped at £7500 per quarter, paid in one single taxable payment
• This can be claimed from 30th November 2020 to 29th January 21 which covers the period Nov 20 to Jan 21
• As previously, the grant is subject to income tax and self-employed NI and must be reported on 2020/21 self-assessment tax returns.
This grant will cover the 3-month period Feb 21 to Apr 21, further details of the amount and the rules for claiming are expected in January 21.
Tax cuts and deferrals
As previously announced, VAT payments due between 20 March 20 to 30 June 20 could be deferred until March 2021. Up to half a million businesses deferred their VAT bills.
There have been additional options added. The options are:
• Opt into the New Payment Scheme when it launches in 2021
• Pay your deferred VAT in full on or before 31st March 21.
• Contact HMRC if you need more help to pay
You do not have to contact HMRC if you pay in full by 31st March 2021.
If, however, you opt into the New Payment Scheme:
• you must opt in yourself, not your agent
• still have deferred VAT to pay
• be up to date with your VAT returns
• be able to pay the deferred VAT by Direct Debit
This scheme allows you to:
• pay your deferred VAT in instalments, interest free
• choose between 2 to 11 equal monthly instalments
• Must be paid by the end of March 2022
If you opt into the scheme, you can still have time to pay arrangement for other HMRC debts and outstanding tax
Deferring your Self-Assessment payment on account due to coronavirus
Jul 20 Self-Assessment payment on account
Previously, the July payment could be deferred until January 21, with no interest or penalties, with no need to apply.
It was then announced that a ‘Time to Pay ‘self-service facility’ would be introduced, allowing taxpayers to pay their taxes in instalments next year.
A recent update now means that around 11 million self-assessment taxpayers will benefit from a separate additional 12-month extension from HMRC on the Time to Pay self-service facility.
If you submit your 2019/20 Self-Assessment return early, the exact payment you owe will be known before the 31 January 2021 payment due date.
You will have to wait at least 48 hours before you can set up your Time to Pay arrangement online.
As long as you owe under £30k, you can apply for this online without having to contact HMRC directly.
Late payment penalties are charged if tax remains unpaid after 30 days, 6 months & 12 months after its due date, however, you can avoid these by entering into a Time to Pay arrangement before they become due, as long as you pay all tax owing under that arrangement, on time.
There will be however interest payable on these Time to Pay arrangements. From 7th April 2020, the late payment interest rate current is 2.60%.
This does mean though that payments deferred from Jul 20 and those due in Jan 21 will now not need to be paid in full until January 2022.
Reducing your 2020/21 payment on account
Your payments on account are based on your previous years tax bill. If your financial situation has been impacted by coronavirus, you may have a reduced tax liability arising for the 2020/21 tax year.
You can apply to HMRC to reduce your 20/21 payments on account either online or by post.
To apply online to reduce your payments on account:
1. Sign into your online account
2. Select the option to view your latest Self-Assessment
3. Select ‘reduce payments on account’.
4. To apply by post, send form SA303 to your tax office
Bounce back Loans
Previously, these were made available to small to medium sized businesses to borrow between £2000 and up to 25% of their Turnover up to £50k.
If you had borrowed less than you were entitled to, you can apply for a “bounce back top up”. You can top up your existing loan to the maximum level that you were eligible for.
Requests must be made by the 31st January 2021
To be eligible:
• Business based in the UK
• Established before 1st March 2020
• Have been adversely impacted by the coronavirus
Pay as You Grow flexible repayment system
The government is now giving businesses flexibility:
• Extend the length of loan from 6 years to 10 years, cutting monthly payments
• Interest only periods of up to 6 months (can use this option 3 times)
• To include payment holidays (pause payments for a period of 6 months after making at least 6 repayments)
• Extension to applications of government’s coronavirus loan schemes until 31st January 2021.
VAT – reduced rate to 5% for hospitality, Holiday accommodation & attractions
Previously, as from 8th Jul 2020, there was a temporarily 15% VAT cut for the tourism & Hospitality Sectors, until 13th January 2021.
This has now been extended till 31st March 2021.
The measure is to help protect 2.4 million jobs through the winter.
It is thought that this measure will support more than 150,000 businesses throughout the winter period.
The cut applies to food and non-alcoholic drinks, accommodation and admission to tourist attractions across the U.K
The amount of information here is not to scare you, it is to prepare you and your business to navigate the turbulent times ahead.