Covid-19 updates
Self Employed, Business Owners & VAT Registered Businesses
As you are likely to be aware we have now had news of the support package that will be available to self employed individuals.
What is available for self employed individuals:
HMRC will pay a taxable grant which will be 80% of your average monthly profits over the last 3 tax years (2017, 2018 & 2019) up to a maximum of £2,500 per month.
This is currently planned to be paid for 3 months but may be extended.
If you haven’t traded for the full 3 years listed above then HMRC will calculate the average based on the figures that have been submitted. If you commenced trading after 6 April 2019 you will not qualify for this scheme.
If you are yet to submit your 2018-19 tax return you have until 23 April 2020 to do so and should contact us urgently.
HMRC will contact those eligible directly and invite individuals to apply on online. HMRC will calculate average profits and so any grant available before payment of any monies can be made.
It is currently stated that grants should be issued by June 2020, of course HMRC is working to do this sooner, if possible.
To qualify you need to meet the following conditions:
– Are a self employed individual (sole trader) or partner in a partnership.
– Have traded in the current tax year (2019-20) and intend to continue trading even if currently effected by Covid-19.
– Your earnings have been affected by Covid-19.
– Have traded between 6 April 2016 and 5 April 2019.
– Had average profits of no more than £50,000.
– Earn at least 50% of your income from self employment.(this is based on taxable profits which is the figure included on your tax computation for each tax year)
Here is the link to the Government’s detailed guidance: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
Business Owners: Director of your own company?
Guidance for if you are a Director of your own Company has been difficult to navigate.
It is now our understanding that Directors can be classed as ‘furloughed’ and so qualify for the Job Retention Scheme: https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme
For Directors receiving low annual salaries in order to fulfil National Insurance Contributions an average monthly salary will be calculated to enable 80% of salary to be reclaimed.
Furloughed Directors are still able to carry out their legal duties to facilitate Companies continuing but should not undertake work or any activity that gives rise to revenues being earned in order to make a legitimate claim.
If you do not fall into either of the above groups.
If neither of the above apply to you or you do not meet the conditions there is still help available.
These include the following:
Business Interruption loan scheme:
As a temporary measure the Government will guarantee up to 80% of loans (up to a maximum loan of £5M) so that lenders will feel secure to make loans to affected businesses.
Universal credit:
https://www.gov.uk/universal-credit
Deferred Self assessment income tax payment:
HMRC have confirmed that all July 2020 payments are to be automatically deferred without interest or late payment penalties applied. The amounts due in July should instead be paid by 31 January 2021.
Grants for businesses that pay little or no business rates:
Cash grants are being made available for businesses operating in the retail, hospitality and leisure industries. Grants are made per property and are based on the ratable value as follows; 1) Below £15,000 can receive up to a £10k. 2) Between £15,001 and £50,000 can receive up to £25K in grants.
VAT Registered Businesses.
HMRC have confirmed that all business that are VAT registered will automatically qualify for a payment deferral between 20 March and 30 June 2020. VAT returns should be prepared and submitted by the normal filing deadline.
Please note that if you normally pay your VAT by direct debit then in order to qualify for the VAT payment holiday you MUST cancel you direct debit before payment is due to be taken. Otherwise payments will be collected as normal. If you normally make a payment to HMRC then you can simply not make the payment.
Refund will be repaid as normal.
Time to pay measures.
HMRC are increasing support to individuals and businesses that need to access their time to pay services due to Covid-19. If you or your business are in financial distress then HMRC will assess on a case-by-case basis. Contact them directly on their dedicated line: 0800 0159 559.
Payment holiday for Business Rates.
There are payment holidays available for business rates for many businesses for the 2020-21 year. Your business may qualify if you fall into one or more of the following categories:
1. You already qualify for small business rate relief.
2. You are an OFSTED early years registered nursery.
3. Are operating in retails, hospitality or Leisure industries.
Insurance.
Businesses with insurance to cover Pandemic and Government ordered closures should be covered under Covid-19 regulations imposed so long as any other specified conditions are met. HMRC have advised business owners to check their cover details.