This update is written and posted on 30 November 2020 and is likely to quickly become out of date.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.
As we wait to come out of lockdown and go back to the tier system, albeit the majority entering a higher tier than they were in before lockdown, the majority of businesses forced to close are now able to open, except hospitality businesses in tier 3. The business grants we have previously reported for businesses will continue to be available and most local authorities’ websites are now up and running for applications so that business who can now open will be able to claim for the period of the second lockdown.
To find if your business is eligible for a grant use the Government’s business support finder WEBSITE.
SELF EMPLOYED INCOME SUPPORT SCHEME (“SEISS”)
The SEISS claims portal reopens today (30 November), with a slight change from the previous two SEISS grants, in that you must declare your trade has been impacted by reduced demand.
Under the first two SEISS grants the applicant had to confirm that their trade had been adversely affected by the coronavirus pandemic, which it has been concluded was a difficult concept, and therefore it has been replaced with a more precise “impact on demand” test. The emphasis is on sales not costs. The previous “adversely affected” test was met if the business turnover had decreased, or alternatively if business costs had increased, due to the pandemic. There was no minimum threshold for the adverse effect, so even a small increase in costs or drop in sales meant the business would qualify, now it is simply all about sales. Guidance and examples for the new test are on HMRC’s website.
The applicant will receive one lump sum payment to cover the three-month period: 1 November 2020 to 31 January 2021, at 80% of the taxpayer’s average trading profits for 2016/17 to 2018/19, as calculated for the previous grants. The maximum grant payable is £7,500, or £2,500 per month, which is the same as applied for the first grant.
For this third grant the applicant must confirm:
- currently trading and has been “impacted by reduced demand”; or
- has been trading but the business is temporarily closed due to coronavirus.
The applicant must also confirm they are:
- intending to continue to trade (HMRC are now investigating grants 1 and 2 where the business has now ceased); and
- they reasonably believe that the impact on their business will cause a significant reduction in their trading profits due to reduced business activity, capacity or demand, or inability to trade due to coronavirus during the period 1 November 2020 to 31 January 2021.
You don’t have to have claimed the previous two grants to be eligible, just meet grant 3’s qualifying conditions.
To apply you need:
- Self Assessment Unique Taxpayer Reference (UTR);
- National Insurance number;
- Government Gateway user ID;
- UK bank details.
More details about the grant and making a claim can be found HERE.
There will be a fourth SEISS grant covering the three-month period from February 2021 to April 2021. HMRC will announce further details nearer the time.
As previously reported, the furlough scheme has been extended to 31 March 2021, although it is to be reviewed at the end of January. HMRC guidance on the scheme continues to be updated and those claiming should check the updates regularly. Per previous alerts, and not to sound like a broken record, please make sure you have letters of agreement in place with those employees furloughed, notes of meetings/discussions with employees and workings for claims.
We are getting a lot of enquiries re homeworking and the costs that can be claimed against tax, on which we will provide a more detailed fact sheet. However, we are also picking up that a lot of individuals are working overseas, taking advantage of a holiday home, a friend’s home, or similar and may have been there for a period of time. We flag that working in another country for a period of time can create tax issues re reporting and tax paying responsibilities in the host country. For an employer, they may have tax reporting responsibilities for their employees, or for the self-employed their own reporting requirements. Several countries have issued concessions in the light of Covid-19, but not all have done so, and it will be important to establish the rules in place in the relevant host country.
As a further support measure during the COVID-19 pandemic, and in a bid to encourage investment in UK manufacturing, the Government has announced an extension to the £1 million annual investment allowance (AIA) until 31 December 2021. The AIA had been set at a temporary level of £1 million since 1 January 2018 but was due to drop back to £200,000 from 1 January 2021.
We know that this is a very difficult time for all businesses, with constant change and some difficult decisions having to be made. Should you wish to speak to us about a specific matter, or just to be a sounding board or for a chat, please do not hesitate to give us a call - 01452 713277