This update is written and posted on 7 May 2020 and is likely to quickly become out of date. We will endeavour to update information as it becomes available.
Previous updates and other useful information can be found at our WEBSITE.
We have spent the last week catching up with as many clients as we can, who we have not heard from over this testing time, even if only to say “Hi” and check they are OK!. We are delighted to have spoken to as many of you as we have - often it is the simplest of catch ups which are the most rewarding and helpful.
We know that this is a very difficult time for all businesses and some difficult decisions are having to be made. Please do not think you are bothering us if you want to run something past us or you need some information, we are here ready to help or just be a sounding board.
Self-Employed Income Support Scheme (SEISS)
Now that the employee furlough scheme is up and running, HMRC are turning their efforts to the self-employed scheme, which is to be launched sooner than originally anticipated. HMRC hope that the scheme will go live between 13 and 18 May, as opposed to June.
The scheme is to support the self-employed and partners of partnerships who have trading profits less than £50,000 allowing the self-employed to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month for 3 months, (March, April and May 2020).
You can claim if you are a self-employed individual or a member of a partnership and:
- you traded in the tax year 2018 to 2019 and submitted your Self-Assessment tax return on or before 23 April 2020 for that year;
- you traded in the tax year 2019 to 2020;
- you intend to continue to trade in the tax year 2020 to 2021;
- you carry on a trade which has been adversely affected by coronavirus
- your trading profits must be no more than £50,000 and you have made more than half of your total income from being self-employed for either:
- The tax year 2018/19; or
- The average of the tax years 2016/17, 2017/18 and 2018/19.
Your business could be adversely affected by coronavirus if, for example, you are unable to work because you:
- are shielding;
- are self-isolating;
- are on sick leave because of coronavirus;
- have caring responsibilities because of coronavirus;
- have had to scale down or temporarily stop trading because:
- your supply chain has been interrupted;
- you have fewer or no customers or clients;
- your staff are unable to come in to work.
Clients have already started to receive emails from HMRC advising of the scheme, how taxpayers can check if they are eligible and how to claim. To complete the eligibility checker, you will need to have your National Insurance number and your Self-Assessment Unique Taxpayer Reference (UTR) number – you can find these on the front page of your tax return. However, it is HMRC that makes the ultimate decision as to whether you are eligible. The checker can be found HERE
In addition to emails, we understand HMRC are contacting taxpayers via SMS and letters, please be on your guard for scams. HMRC will not send emails or SMS messages with active links or request any details, so don’t send any. Only claim via the process below.
To make a claim you will need a Government Gateway user ID and password – if you don’t have one, set one up now, as the authority code will need to be sent out by HMRC, which will delay payment of the claim.
How to make a claim
- HMRC will contact you with your claim date, once received, then you will need your Government Gateway user ID and password, bank account number and sort code, which you enter on the system;
- HMRC will calculate the income support you are entitled to, based on the information submitted in your previous tax returns;
- After the claim has been verified, HMRC will pay the money directly into your bank account within six working days.
Unfortunately, we cannot make the claim on your behalf, only the taxpayer can claim, so you need to set up the Government Gateway account, if you don’t have one already. We have contacted the clients we believe are eligible.
Top-up to local business grant funds scheme
As part of the initial Government support, grants were made available of £10,000 to any business which claims the Small Business Rates Relief, and up to £25,000 for retail and hospitality businesses. However, these grants are not available to all businesses and therefore a discretionary fund has been set up to accommodate certain small businesses previously outside the scope of the business grant funds scheme.
This additional fund is aimed at small businesses with ongoing fixed property-related costs and will be distributed by the local authorities in the same way as the business grant scheme. The priority is for businesses in shared spaces (paying a rent which includes an element of business rates), regular market traders, small charities occupying properties that would meet the criteria for Small Business Rates Relief and bed and breakfast businesses that pay council tax rather than business rates. However, local authorities may choose to make payments to other businesses based on local economic need. The allocation of funding will be at the discretion of local authorities.
To qualify the businesses must be small, under 50 employees, and they must also be able to demonstrate that they have seen a significant drop of income due to coronavirus restriction measures.
There will be three levels of grant payments. The maximum will be £25,000. There will also be grants of £10,000 and local authorities will have discretion to make payments of any amount under £10,000.
Bounce Bank Loans (“BBLS”)
The BBLS went live on Monday morning. This is the Government backed loan scheme for businesses who seek a loan of up to £50,000 backed 100% by the Government. Brought in to help small businesses get loan support as many were finding the CBILS difficult, with the majority not being successful.
On day one there were over 100,000 applications, some of which were our clients, who found the application process with their banks simple and straight forward. Generally, applications took 10 mins with decisions made within 24 hours and one business had the cash (£50k) within 24hrs!
Further details about the BBLS can be found in last week’s newsletter.
Job Retention Scheme (aka Furlough scheme)
Recent figures show that around 2.5 million people registered for the scheme, in which the Government pays 80% of wages up to £2,500 a month. This is estimated to be 23% of the employed workforce in the UK who are on furlough.
As we have flagged on numerous occasions, due to the generosity of the scheme and the self-assessment, HMRC have stated they will audit/check claims. We have been advised that HMRC have re-distributed a large proportion of their staff to the team operating the scheme to “police” claims so, as per our previous advice, keep paperwork in order and keep records of the workings used to submit claims. Ultimately, it is the employer's responsibility to make sure that claims are accurate.
HMRC has set up an online portal to enable employees and the public to report suspected fraudulent claims and already there are reports of large, well known employers making the press, who are possibly breaching the rules by getting employees to work while on furlough.
- Working Tax Credit (“WTC”) increase - As part of a number of the support measures, the Government has announced that WTC payments will be increased by £1,045 to £3,040 per year. The amount a claimant or household will benefit from will depend on their circumstances, including their level of household income. But the increase could mean up to an extra £20 each week. Further information on the increase, and how to claim, can be found HERE
In addition, the government has confirmed that people who cannot work their normal hours because of COVID-19 will still receive their usual tax credits payments. Those working reduced hours due to coronavirus or those being furloughed by their employer will not have their tax credits payments affected if they are still employed or self-employed. You do not need to contact HMRC about this change. HMRC will treat customers as working their normal hours until the Job Retention Scheme and Self-Employment Income Support Scheme close, even if they are not using either scheme.
We are not tax credit experts, so please check your position via the Government website.
- Child benefit claims – furloughed parents. If you have not previously been claiming child benefit due to your income being above £60,000 per year, but, have suffered a loss of income in recent times due to COVID19, you may wish to consider whether it would be beneficial to make a reclaim. It is only possible to backdate a claim by up to three months, so you may need to act now.
- Dairy Farmers - A new fund will enable eligible dairy farmers in England to access up to £10,000 each to help them overcome the impact of the coronavirus outbreak - see here.
More information of non-Government funding opportunities, which we update regularly, can be found HERE
We know that this is a very difficult time for all businesses and some difficult decisions are having to be made. We have spoken to many of you and for those we have not, we would like you to know that we are here ready to help if you need us to provide advice, deal with queries, or just be a business sounding board.
Contact us here
Stay Home, Stay Safe, Protect Our NHS!