Help For Sole Traders and Freelancers
SEISS Grant 5 available later this month
You must be still trading.
Details of the much anticipated fifth grant under the Self-Employment Income Support Scheme were announced by HMRC on the 6 ||July . If you intend to claim what do you need to know ?
Slightly later than anticipated HMRC has released details of the fifth instalment of the SEISS. It hasn’t given a specific date when its online claims portal will open, but its guidance issued today says it will be available from late July 2021. Nevertheless, there are steps you can take so that you’re ready to make a claim as soon as the online service is available.
- If you haven’t done so already work out your turnover for the twelve-month period starting on any date between 1 April 2020 and 6 April 2020.
- Check your records and find your turnover from either 2019/20 or 2018/19. This will be needed as a reference year.
If you started self-employment or became a business partner in 2019/20, and you hadn’t traded previously at any time between 6 April 2016 and 5 April 2019, you won’t need to follow steps 1 or 2 to make a claim.
HMRC’s guidance stresses the importance of making the claim yourself. It says that if your accountant or anyone else makes the claim on your behalf it will trigger a fraud alert. That’s obviously bad news and is bound to delay your claim being processed.
So we can help you with the calculations but cannot make the claim for you . Please contact us if we can be of assistance .
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.
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
July 2021 sees changes to the furlough, these should not affect you as a furloughed employee as you will still be entitled to 80% of your usual salary.
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.
July 2021 sees changes which require you as employer contribute towards the furloughed pay of your employees non-working time as well as the employers NIC and pension elements of their pay. This means your employees’ pay for non-working time remains the same at 80% but the Government will only contribute 70%.
From August 2021 this will reduce to 60% for the months of August and September when the scheme is set to end and the employer 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