As the Government guidance in response to the Coronavirus outbreak updates on a daily basis, we want you to know that at Evolve Tax & Accountancy LLP we are committed to ensuring we can continue to support our clients. We have closed our offices but our partners and staff are working from home to provide continuity of service.
In accordance with Government guidelines, all face to face client meetings will be cancelled, but contact continues via email, mobiles and offering the option for virtual meetings when suitable. If you are at all concerned about your own finances or those of your business, please don't hesitate to contact your usual Partner/staff member.
As we hope you can appreciate, we are working in line with advice from the Government. Things are changing quickly and full guidance isn’t necessarily released when measures are announced. We will continue to provide up to date information as it is received.
Please find below our business advice briefing regarding the current Coronavirus situation and other useful websites
Update as at 24/03/2020
Updated 28/03/2020 - Employee retention scheme & Help for the self-employed
Help for Business
Employee retention scheme
On Friday 20 March the Government announced a sweeping pledge to pay 80% of employees' wages if they are not working due to coronavirus. This scheme is open to employers of all types – companies, sole traders with employees, charities etc. the Government has pledged it will cover 80% of the wages of 'retained' employees – i.e., those who would otherwise have been laid off due to the knock-on effects of the coronavirus pandemic. The amount paid will be capped at a maximum of £2,500 per month per employee based on their regular salary and the money will be issued through grants, these are grants not loans so will not need to be repaid. It has not been confirmed how their regular salary will be calculated but it is expected to be linked to February 2020 payroll or an average of the previous few months.
To qualify, employers must keep the employee on the payroll and notify them in writing (email will be fine) that they are ‘furloughed’, this is subject to applicable employment law. The furloughed employee must not undertake any work for the business during this period.
The guidance for employers and employees has now been issued by HMRC please see the following links for full details:
The Chancellor says the scheme will be open “before the end of April”, and wages will be paid backdated to 1 March. However, these grants are expected to be received until into April at the earliest so cash flow planning in the interim period will be crucial. We're chasing more details on how this will work, there will be an online service (portal) created for these submissions. We will provide further details as these are released.
It has now been confirmed in the financial press that company director’s will be eligible for the furlough scheme. A director can be furloughed and still carry out their statutory duties in keeping the company running, however to be eligible to be furloughed they will not be able to carry out any income/fee generating duties for the company, i.e. they must not carry out any ‘work’ for the company whilst furloughed.
If you have any questions on this scheme or how it will effect you or your company please contact us.
Deferral of VAT payments
All UK VAT registered businesses are eligible to defer their VAT payments that are due in the period 20th March until 30th June 2020.
This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period but may need to cancel any existing direct debit arrangements. This does not apply to any historic VAT liabilities and those already in time to pay arrangements. Taxpayers will be given until the end of the 2020/2021 tax year to pay any liabilities that have accumulated during the deferral period.
VAT refunds and reclaims will be paid by the government as normal. As we understand it VAT returns are still required to be filed on time.
Business rates holiday for retail, hospitality and leisure businesses
HMRC will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. This will apply to those businesses that received the retail discount in the 2019 to 2020 tax year, and these businesses will be rebilled by their local authority as soon as possible. Additional guidance for local authorities details the businesses covered by this scheme and can be found here:
Cash grants for retail, hospitality and leisure businesses
The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property. This will apply for businesses in these sectors with a rateable value of between £15,000 and £51,000. For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.
You are eligible for the grant if:
your business is based in England
your business is in the retail, hospitality and/or leisure sector
Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:
as shops, restaurants, cafes, drinking establishments, cinemas and live music venues, for assembly and leisure
as hotels, guest and boarding premises and self-catering accommodation
How do you access the scheme? You do not need to do anything. Your local authority will write to you if you are eligible for this grant. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.
IR35 tax reforms have been delayed a year
Controversial reforms which will lead to tax bills going up for many contractors have been delayed a year as a result of coronavirus. Changes to IR35 'off payroll working' rules will now come in from April 2021 instead. However, while the delay comes as a respite for some, it's been made clear they will still definitely go ahead in April 2021.
Support for businesses through the Coronavirus Business Interruption Loan Scheme
The new Coronavirus Business Interruption Loan Scheme supports SMEs with access to working capital (including loans, overdrafts, invoice finance and asset finance) of up to £5 million in value and for up to 6 years. The government will pay to cover the first 12 months interest payments and any lender-levied fees, so smaller businesses will not face any upfront costs and will benefit from lower initial repayments.
The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. This scheme is being delivered through commercial lenders, backed by the British Business Bank.
You are eligible for the scheme if:
your business is UK based, with turnover of no more than £45 million per year
your business meets the other British Business Bank eligibility criteria
The scheme is now open for applications. To apply, you should talk to your normal business bank as soon as possible, to discuss your business plan. You can find out the latest on the best ways to contact them via their websites. All major banks are offering this scheme.
If you have an existing loan, asset finance etc. with monthly repayments you will need to contact your lender to discuss options which may include repayment holidays to help with cash flow.
More information has been released here https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/
Support for businesses paying tax: Time to Pay Plus service announced
All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. If you have missed a tax payment or you might miss your next payment due to COVID-19 and deferral is not allowed under the recently announced measures please call HMRC’s dedicated helpline: 0800 0159 559 which is open Monday to Friday between 8am and 8pm and Saturday between 8am and 4pm
A time to pay arrangement allows a business suffering from temporary financial difficulties to pay its liabilities over an extended period rather than on the date they fall due. VAT, PAYE and Corporation Tax can be subject to time to pay arrangements and it is understood that HMRC are being understanding in the current circumstances.
It is understood that the same protection that has been afforded to residential tenants, that landlords won’t be able to start eviction proceedings for at least the next three months, will also apply to commercial tenants.
Make sure as far as possible that your business financials are up to date, this includes forecasts, cashflows etc. stress tested for the economic impact of coronavirus. The first step we would recommend is a short terms cashflow of between 4 – 6 months to identify the cash you expect to receive and pay out in this period and how this interacts with your current position and cash in the bank or overdraft headroom. This should highlight any short term difficulties that you may encounter and allow you to make decisions now about what the business might need in the future.
We would recommend that careful thought is given to any major expenditure planned, capital or otherwise, and that creditors are contacted to discuss any arrangements they would be willing to accept such as payment plans. Also ensure that your own invoicing is up to date, and with debt collection consider possibilities such as yourselves offering payment plans or potential early settlement discounts, finally keep stock levels at sensible levels where possible.
We would recommend that you review https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses and https://www.businesssupport.gov.uk/coronavirus-business-support/ for the latest updates.
Help for Individuals
The Government has announced that mortgage lenders will offer those experiencing financial difficulties a three-month payment ‘holiday’. For those in need of this support the mortgage provider should be the first point of contact. It is thought that you won’t have to ‘prove’ that Coronavirus has impacted your finances, however, to apply you’ll need to be up to date with all of your mortgage payments already.
It’s worth noting that if you take a mortgage holiday, you will still be charged interest for the time you’re not making payments, but you won’t have to pay it back straight away. It will be added on to the total cost of your mortgage and factored into repayments when you start making them again.
If you are on a tracker or variable rate mortgage, you should see a reduction in your monthly mortgage payment as the Bank of England has reduced the UK base rate twice in just over a week taking it from 0.75% to 0.1% a record low.
Landlords with Buy to Let mortgages will be entitled to the same three month mortgage holiday if they have tenants who are struggling to pay due to Coronavirus.
Help for renters
If you think you will struggle to pay rent during the outbreak, you should speak to your landlord as soon as possible to advise them of your situation. It could be you can agree a rent deferral and repayment plan. The Government has announced that landlords won’t be able to start eviction proceedings for at least the next three months, protecting private and social tenants.
It is also worth checking whether you are receiving all the financial help with housing that you are entitled to. If you have had to apply for Universal credit, for example, you may be able to claim housing benefit.
If you need to take time off work due to becoming unwell from coronavirus you’ll be entitled to your usual sick leave and sick pay arrangements, you will need to check your contract of employment to identify your rights.
If you're self-isolating on Government advice, you will be entitled to statutory sick pay from day one, not day four as previously – though employment body the Advisory, Conciliation and Arbitration Service (ACAS) says it's "good practice" for your employer to pay your usual sick pay as outlined in your contract. Statutory sick pay currently stands at £94.25 a week – you must be employed and earn an average of at least £118 a week to be entitled to receive it.
If you are off sick for any other reason, standard rules apply and SSP will be available from day four.
If you have any concerns regarding treatment by your employer please view https://www.acas.org.uk/ there is lots of useful guidance and explanations around employment law.
Help for the self-employed
Self-employment Income Support Scheme
You will be eligible if you’re a self-employed individual or a member of a partnership and you:
have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
traded in the tax year 2019-20 and are trading when you apply, or would be except for COVID-19
intend to continue to trade in the tax year 2020-21 (from 6 April 2020)
have lost trading/partnership trading profits due to COVID-19
You are not required to stop trading to be entitled to this income grant.
Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:
having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period
If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return. If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.
HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.
Unfortunately, if you are newly self-employed, i.e. commenced self employment after 6 April 2019 you are not currently eligible for this scheme. You will need to pursue the other announced income support measures such as Universal Credit.
How much you’ll get
You’ll get a taxable grant (this will need to be included in the computation of your profits) which will be 80% of the average profits from the tax years 2016 to 2017, 2017 to 2018 and 2018 to 2019, to a maximum of £2,500 per month for 3 months.
If you do not hold full trading history for these years, i.e. you were not self-employed for this entire period, HMRC will use the information for the periods that have been submitted. To work out the average HMRC will add together the total trading profit for the 3 tax years (or applicable period) then divide by 3 (or the number of applicable months), and use this to calculate a monthly amount.
The grant will be paid directly into your bank account, in one instalment.
This scheme is not yet open and HMRC are working on setting this up. They will contact you if you are eligible for the scheme and invite you to apply online.
If you have to take time off work due to coronavirus because you are sick or self-isolating, you might be entitled to claim benefits as follows:
Contribution-based employment and support allowance (ESA)
You can apply for this if you're directly affected by coronavirus or self-isolating according to Government advice. To be eligible you must have paid enough national insurance contributions in the last 2-3 years. You can get up to £73 per week – the amount won't be affected by either you or your partner's savings or income, though if you get a private pension worth more than £85 per week it'll be reduced.
As part of its response to the coronavirus pandemic, the Government is changing the rules so you're eligible to claim ESA from the first day of sickness/self-isolation rather than the eighth, as previously. This change has been announced but hasn't kicked in yet (the Department for Work and Pensions can't tell us currently when it will, but when it does the new rule will be backdated to Friday 13 March).
Given that payments are made fortnightly in arrears, claimants who meet the criteria should actually receive their first payment after around two weeks. To apply, call Jobcentre Plus – it's 0800 055 6688 (textphone 0800 023 4888).
Universal credit is a payment to help with your living costs – it's paid monthly. Some who are self-employed and unable to work due to coronavirus may be able to claim. You won't be eligible to apply if you have at least £16,000 in savings though.
The standard monthly allowances are as follows:
- If you're single and under 25: £251.77
- If you’re single and over 25: £317.82
- If you’re in a couple and both under 25: £395.20 (for both)
- If you’re in a couple and either of you is over 25: £498.89 (for both)
As part of its response to the coronavirus pandemic the Government is removing the minimum income floor, which means some claimants will get extra money to make up for lost earnings if they decrease due to coronavirus. On Friday 20 March the Chancellor announced that this will mean the self-employed can now access universal credit at a rate equivalent to statutory sick pay, which is currently £94.25 per week. To apply for universal credit, see the Gov.uk website. For help, call the universal credit helpline: 0800 328 5644.
It's also worth noting that the Government is boosting the value of some benefits as part of its response to the pandemic, increasing the standard universal credit allowance and the working tax credit basic element by £1,000/year each for the next 12 months.
Delay for self-assessment tax bills
The Government has announced it will defer the self-assessment tax payments previously due by 31 July 2020 to 31 January 2021, in a bid to help the self-employed. As such there will be no payment due by July this tax year, allowing people more time to pay their tax bill. However, please note that this is a tax deferral not cancellation and this tax will be due for payment by 31 January 2021 in addition to any tax ordinarily due at this date (per the current guidance).
It is not clear whether this only applies to the self-employed, or anyone who fills in a self-assessment form and we are awaiting confirmation.
We would recommend that you review https://www.gov.uk/coronavirus for the latest updates.
If you have any questions on the above or any other concerns that you would like to discuss with us please in the first instance email or call your regular point of contact in Evolve and we will assist in any way we can during these unprecedented times.