The last couple of weeks have seen an enormous amount of information sent out by HMRC and we’ve been answering your questions as quickly and thoroughly as we’re able, but it is changing all the time, so please bear with us. We will try to keep the website as upto date as we can.
The retail and hospitality sectors have a rates holiday for 2020/21, and businesses within these sectors with rateable values below £51,000 will receive cash grants. These schemes will all be automatically administered by your local authority you do not need to make a claim.
VAT payments for the three months to June 2020 are deferred to 31 March 2021, don’t forget to cancel your direct debit if you wish to use this deferral.
The 31 July Self Assessment payment on account may also be deferred until 31 January 2021, but don’t forget you’ll still have make the payment in January along with any balancing payment due for 2020/21.
If you need time to settle any tax liabilities there is a special Covid 19 Time to Pay facility ring 0300 0159 559 to get help.
There are also schemes to help fund the self-employed and employees and you can read more on the links below.
Remember we’re always available to assist you and your business.
Help For Sole Traders and Freelancers
The Government has announced a package it calls Self Employed Income Support. In order the qualify
- You must be still trading and intend to trade in 2020/2021
- You will be paid an initial taxable grant of 80% capped at £2,500 per month of your average profits over the last three years. Deadline for claiming is 13 July 2020.
You may also claim a second grant of up to £6,570, or 70% of your average monthly profits for June – August 2020. New invitations will be sent out by HMRC.
- There is a £50,000 profits cap, this is by reference to either your 2018/19 profits or the average over the last three years (or such period as you have been trading if less).
- You must have filed your 2019 tax return, if you haven’t you have 4 weeks from 26 March to do so.
- More than half your income must come from self employment
- Your business, must be suffering losses due to Coronavirus
- You need to make your claim via your Government Gateway login.
Frequently Asked Questions
I started my new business in June 2019, am I covered?
No, you must have filed a 2019 tax return including self-employment. If you do not have accounts or a tax return showing self-employment you do not qualify and should apply for New Job Seekers Allowance or Universal Credit.
How will I get the money?
The money will be paid to you for an initial 3 months. You will be contacted by HM Revenue & Customs asking for your banking details, please ensure you take care as fraudsters also do this. If in doubt set up a Personal Tax Account and communicate securely with HMRC. The initial claims process will be open from 13 May – 13 July 2020 and you will need to login to your Government Gateway account.
The second claim portal will be available soon.
HMRC have asked that you don’t contact them as they cannot speed up the process.
When does the scheme start?
When you log in you will be given a date to make your claim, you should be paid 6 days after you make the claim.
I started my business in October 2017 how, much will I get?
HMRC will average your accounts from October 2017 to April 2019.
If I am given this money as a grant why is it taxable?
The grant is designed to replace your lost income and therefore it is part of your turnover and is taxable.
I closed my business and set up a limited company in June 2019 what am I entitled to?
Your business is not still trading, and you are not covered by the Self-Employed scheme. You may be covered by the Jobs Retention Scheme; see Help for Employers. If not, then you should claim New JSA or Universal Credit.
What do I live on until June?
Unfortunately, this is going to be very complex for HMRC to administer and will take time for them to contact everyone. You may be able to access a loan from your bank or the Loan Scheme which went live on Monday. If you have the cash put away for a July tax payment that has been deferred this could be used. You should also consider making a claim for New JSA or Universal Credit.
If you claim Universal Credit or New JSA during the initial 3 months you should be paid your entitlement until the lump sum is paid to you, at that point the income is likely to negate your claim. If the support scheme continues beyond the end of June then the grant income will be taken into consideration when calculating your benefits.
Help For Employees
If you’re employed and your employer has to lay you off due to the Coronavirus outbreak then you can be paid up to £2,500 or 80% of your normal basic salary each month. You must have been in employment at 28 February 2020 to qualify. The qualifying date has now been extended to those on the payroll at 19 March provided they have been included in a payroll run.
Frequently Asked Questions
How do I claim?
Government guidance is that where possible employees should work from home. If your job is of a type where this is not possible then your employer will notify HMRC that you have been furloughed, they will pay you as normal either in full or up to the 80% they will be repaid by HMRC. The payments are subject to tax, national insurance and pension in the same way as your salary.
How much will I get?
The Government will reimburse up to 80% of your normal gross earnings, your employer can top this up to your normal salary level if they so choose.
If your pay varies because of additional elements then they may not all be calculated when assessing your normal gross earnings, things like variable commission might not be included. HMRC will use the higher of your basic salary for the same month in 2019 or your average monthly salary during 2019/20.
I was made redundant in March am I entitled to anything?
If your employer made you redundant before the scheme was announced but after 28 February you can ask your former employer to reinstate you for the purposes of furlough. This also applies if you left voluntarily but your new employer then had to close down too. In order to be covered your employer must have made a valid claim for your salary by 10 June,.
What if I’m off sick?
If you’re off sick due to Coronavirus you should be paid at least statutory sick pay from day 1 for up to 14 days. This applies if your experiencing symptoms or self-isolating because a member of your household is sick.
If you were already sick with something else, then once your sick period has ended your employer can if necessary furlough you.
Can I be furloughed if I have a long term health condition?
Yes your employer can furlough you if you should isolate yourself due to a health condition or indeed if you need to isolate because a member of your household has a condition that requires shielding. You can continue to be furloughed provided your employer has made a previous claim covering you as a furloughed employee.
I’m claiming Universal Credit what should I do?
You should tell the benefit office about the payments from your employer, they may affect the amount of UC you are entitled to.
Help for Employers
The Government announced the Coronavirus Job Retention Scheme and this will go live on 20 April 2020 and it will come to an end in October 2020. There is a phased withdrawal of funding over the coming months.
From March 2020 you will be able to recover 80% of your furloughed employees’ salary up to £2,500 per person, as well as the employers national insurance and the minimum employer pension contributions you must make. Staff cannot work during a furlough period and the minimum period of furlough for this period is three weeks.
From July 2020 your workforce may come back to work part time, that is the minimum three week period will be dispensed. So if you need a member of staff back for 2 days a week, and they usually work five days, you will pay them as normal for the two days worked and the Government will pay furlough of 80% of the three days cost. You can vary these proportions as you wish, paying the staff for the worked hours and claiming furlough for the balance. You must renew the furlough agreements if you bring staff back part time.
This scheme closes to new entrants on 30 June so you may only furlough employees who have already been on furlough for three weeks, meaning they must have been furloughed by 10 June to qualify.
From August 2020 the Government will continue to pay 80% of the furloughed pay, but the employer will the Employers’ NICs and the pension contribution on that amount.
From September 2020 the government contribution will reduce to 70% (capped at £2,187.50) and in addition to the NICs and pension the employer will pay 10% of the furlough payment.
From October 2020 the government contribution will reduce further to 60% (capped at £1,875) and the employers’ furlough contribution will increase to 20%.
You can find the detailed guidance here.
Frequently Asked Questions
All employers who had created and used a PAYE scheme before 28 February 2020 and there are no restrictions on the type of business than can apply, so charities, partnerships, agencies who employ workers and of course sole traders who employ staff.
Who doesn’t qualify?
If you have an annual scheme set up before 28 February but hadn’t yet run the 2019/20 payroll run, then you won’t qualify.
Which employees qualify?
You can furlough any employee who isn’t immediately required for the operation of your business during the Coronavirus outbreak. They can be:
• Full time
• Part time
• On agency contracts
• On flexible or zero hours contracts
If you had to lay off staff in March then provided they were employed by you at 28 February 2020 you can reinstate them on your payroll and furlough them if they request this. You may also reinstate staff who voluntarily left your employment on or after 28 February for the purposes of furlough.
Recent changes have also confirmed you may furlough staff who are required to shield or who have family members who need to shield for health reasons. This applies even if your business is not suffering a downturn due to the Coronavirus outbreak.
What is a furloughed Employee?
If you furlough an employee, they cannot do any work for you at all. If they are an agency worker, they cannot do any work at all.
If you decide to reduce staff hours, then they are NOT furloughed, and you must pay their salary as normal. You may only use this scheme to recover the costs for employees who are NOT doing any work for you. Please note this rule changes from 1 July 2020.
If you have staff who were on unpaid leave before 28 February 2020 you may not furlough them until their period of unpaid leave has ended.
Staff on Statutory Sick Pay may be placed on furlough once their self-isolation or sickness period has expired.
You can furlough staff for any of the following reasons:
• They or a member of their family are in the shielded category
• They have caring responsibilities including while their children cannot go to school
• There is no work for them to do.
How Long does Furlough last for?
from 1 July your staff may return to work on a part time or shift rota basis. you will pay them at the appropriate rate for hours worked and the Government will pay furlough for their normal hours unworked. The rate reimbursed under the furlough scheme will reduce each month as businesses get back to normal, see above for the rate you can recover each month.
What about Company Directors?
Directors can furlough themselves provided they do not carry out any fee generating work or provide any services to the company. There must be a board minute to confirm this action and of course in the case where there are multiple directors the decision must be properly communicated to the relevant directors. See above if you operate an annual payroll scheme.
Directors will be permitted to carry out statutory duties as required.
What do I need to tell the furloughed staff?
You are changing their terms and conditions and so you should negotiate and discuss furloughing with your employees and ensure if not all employees are being furloughed that it is done with regard to equality and discrimination law. You should also give them a letter confirming they are furloughed and keep copies of all correspondence. This written correspondence must be retained for 5 years.
Staff on Maternity Paternity and Adoption Leave
There are no significant changes to the statutory maternity pay provisions but of you offer enhanced maternity pay, over and above SMP you may claim this element via the portal.
The paternity and adoption leave schemes mirror the maternity scheme.
How do I claim?
You make the claim via a new dedicated HMRC portal. You have until 31 July 2020 to claim for periods ended 30 June 2020.
What if an employee is paid a variable wage?
If someone has been employed for at least 12 months you should use the higher of:
• The same month’s earnings for the previous year
• The average monthly salary for 2019/2020
If you do not have a 12-month employment period then use the average for the period of the employment.
If they started in February 2020 use a pro-rata amount.
What if 80% takes an employee to below National Minimum Wage?
NMW/NLW does not apply as the employee is not actually working. However, if you require employees to do training while on furlough, they must be paid at the appropriate rate for the hours worked.
Can I deduct an admin fee for processing what is essentially a state benefit?
No, you must pay your employee the full amount due to them, you may only deduct the usual statutory deductions. You cannot charge a fee.
How do I treat the grant in my accounts?
The grant is a taxable replacement for income you will lose due to Coronavirus. It should be included as income in your business accounts. It is also subject to the normal tax and NI rates in the hands of your employee.
Other Help for Business
Frequently Asked Questions
There is a rates holiday for 2020/21 covering all retail, hospitality and leisure businesses irrespective of size.
This covers businesses in England (if you’re in another home country separate announcements have been made by the devolved administrations).
This includes hotels and guest houses as well as self catering accommodation.
You do not need to take any action the Local Authority will rebill you in due course.
A Retail and Hospitality Grant Scheme was announced to provide a cash grant of up to £25,000 per property. This is dependent on the rateable value of their trading property.
Under £15,000 will receive £10,000
Between £15,001 – £51,000 a grant of £25,000 will be available.
• Based in England
• Retail, hospitality or leisure sector business.
Your Local Authority will contact you if you are eligible for this grant.
Support For Nursery Businesses
A rates holiday for 2020/2021 provided the business is based in England and occupied by
• providers of Ofsted’s Early Years Register
• Wholly or mainly used for the provision of Early Years Foundation Stage.
AS with the previous schemes the Local Authority will contact you in due course
Other Small businesses with Rent Relief
If you already receive Small Business Rent Relief or Rural Rate Relief you will receive a one off grant of £10,000 to help with other ongoing costs.
The Local Authority will write to you if you are eligible.
Please see our page on Government Loans and Grants