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Coronavirus - Practical Business Advice (Updated)

23-Jul-2020

As the British economy is slowly beginning to re-establish itself and businesses begin to open the UK governments continue to make tax and legislation changes to help business following the coronavirus pandemic. Some of the recent measures are noted below.

Please be aware that this note is based on the information published as at 20 July 2020 and is intended to provide guidance on how Foremans LLP believe at this juncture the schemes operate. The below is based on Foremans LLP’s interpretation of the available information and HMRC guidance.

Foremans will continue to update our clients as and when information is received from the Governments.

 

Coronavirus Job Retention Scheme (CJRS)

The Coronavirus Job Retention Scheme is now active and has been extended up to the end of October 2020.  

Original CJRS from 01 March 2020 to 30 June 2020

All UK employers with a PAYE scheme can access support to continue paying some of their employees’ salaries whilst they are unable to work during the crisis. Employers are currently reimbursed the lower of 80% of salary and £2,500 per month per employee. Employers NI and minimum employer pension contributions will also be reimbursed based on the furlough payment.

Prior to 01 July 2020 the minimum period of furlough is 3 weeks. The employee must not work for the employer in the period of furlough. However the employee can work through another employment whilst on furlough leave from a different employer. The payment is a grant rather than a loan. The salary is paid through the normal business payroll under the Real Time Information (RTI) system.

Please note that 31 July 2020 is the last day that employers can submit claims for periods ending on or before 30 June 2020.

Revised CJRS from 01 July 2020 to 31 October 2020

From 01 July 2020 employers will have more flexibility to bring their furloughed employees back to work part time whilst still receiving some support from the CJRS. This is known as ‘flexible furlough’. Only employees who were already furloughed for at least 3 weeks before 30 June 2020 can be furloughed after 01 July 2020.

For claim periods from 01 August 2020 to 31 October 2020 grants under CJRS will not cover national employers National Insurance or employer’s minimum auto-enrolment pension contributions.

For claim periods from 01 September 2020 to 30 September 2020 CJRS grants will be restricted to the lower of 70% of furloughed employees pay or £2,187.50 per month.

For claim periods from 01 October 2020 CJRS grants will be restricted to the lower of 60% of furloughed employees pay or £1,875 per month.

We are currently administering furlough payments for clients. Please do not hesitate to contact us if you have any queries regarding furlough payments to yourself or your employees.

 

Job Retention Bonus

 

On 08 July 2020 the Government announced plans for a Job Retention Bonus as part of its “Plan for Jobs”. The measures are intended to boost job creation in the UK.

UK employers will receive a one-off bonus for each furloughed employee who is still employed as of 31 January 2021. The details of how this bonus will be claimed have yet to be announced.

Kickstart Scheme

A £2 billion pound scheme is to be launched to create new jobs for young people. Anyone aged 16 to 24 years, claiming Universal Credit and at risk of long-term unemployment will be eligible. The funding is intended to cover 25 hours per week at National Minimum Wage for 6 months. Employers will be able to top the wage up.

VAT

 

Deferred VAT Payment

 

The temporary changes to VAT payments have not been altered since they were announced in March 2020.

All VAT registered UK businesses were eligible to defer any VAT payments due between 20 March 2020 and 30 June 2020.

Businesses could still pay any VAT due as normal.

VAT returns should still be filed by the due date.

The VAT payments deferral scheme ended on 30 June 2020. Any VAT deferred must be paid by 31 March 2021.

Temporary Reduced Rate of VAT

Organisations that make supplies of hospitality, hotel and holiday accommodation and admission to certain attractions can cut their VAT rate from 20% to 5%. The reduced rate will have effect from 15 July 2020 to 12 January 2021.

Eat Out to Help Out Scheme

 

The Eat Out to Help Out Scheme offers a discount to diners to encourage them to eat out at participating restaurants.

The scheme should operate as follows:

  • All day, every Monday, Tuesday and Wednesday from 03 August to 31 August 2020;
  • A 50% discount, up to a maximum of £10 per person, to each diner for food and/or non-alcoholic drink;
  • Eat/Drink in or out;
  • No limit to how many times a customer may use the scheme;
  • The scheme can be used in conjunction with other offers/discounts and there is no minimum spend;
  • Participating restaurant claims the discount money back from the Government.

In order to participate restaurants must register by 31 August 2020.

Establishments must:

  • Sell food for immediate consumption on the premises;
  • Provide its own dining area or share a dining area with another establishment for eat in meals;
  • Be registered as a food business with the relevant local authority before 07 July 2020.

An online service to help customers find a participating restaurant should be available the week of 20 July.

Businesses who have used other Coronavirus government schemes, for example CJRS and SEISS, can still register for the Eat Out to Help Out Scheme.

An Agent cannot apply on behalf of a business.

Grant Schemes

 

England, Wales and Scotland have different schemes.

England

Retail and Hospitality Grant Scheme - The Retail and Hospitality Grant Scheme will provide businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.

Business Rates Holiday for retail, hospitality and leisure businesses - Retail, hospitality and leisure businesses in England can apply for a holiday from business rates for the 2020/2021 tax year.

Small Business Grant - All Businesses eligible for small Business Rates Relief will get a grant of £10,000.

Further information is available at:

https://www.gov.uk/government/collections/financial-support-for-businesses-during-coronavirus-covid-19

Scotland

Pivotal Enterprise Resilience Fund - The scheme is now closed.

Creative, Tourism and Hospitality Enterprises Hardship Fund – The scheme is now closed.

Newly Self- Employed Hardship Fund – Available for the self employed not entitled to SEISS as they became self employed after 06 April 2019. The scheme is administered by local authorities through which any claim should be made.

Further information is available at:

https://findbusinesssupport.gov.scot/coronavirus-advice/sources-of-funding

Wales

Small Business Grant - All Businesses eligible for small Business Rates Relief will get a grant of £10,000.

Welsh Economic Resilience Scheme - paused on 27 April 2020 and reopened on 3 July 2020. Phase 2 of the scheme was open to applications until 5pm on 10 July 2020.

Further information is available at:

https://gov.wales/coronavirus-covid-19-support-businesses#section-38223

Coronavirus Business Interruption Loan Scheme

The scheme supports Small and Medium businesses with access to loans, overdrafts, invoice finance and asset finance of up to £5 million for up to 6 years. A business interruption payment will also be made by the government to cover the first 12 months of interest payments and any lender levied fees.

The governments will provide lenders with a guarantee of 80% for each lender. There are currently more than 40 accredited lenders able to offer the scheme which includes all the major banks. A list can be found at:

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/current-accredited-lenders-and-partners/

Eligibility:

  • Business is UK based
  • Turnover is less than £45 million per year
  • The business meets the British Business Bank Eligibility Criteria. Please follow the following link to assess your eligibility:

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/for-businesses-and-advisors/

Access:

The scheme is now open for applications. You should contact your business bank or one of the accredited providers to discuss your business plan and access to the loan.

Coronavirus Bounce Back Loan

A small to medium sized business affected by coronavirus may be able to borrow between £2,000 and 25% of its 2019 turnover. The maximum loan through the Bounce Back Loan Scheme is £50,000.

The Government will guarantee 100% of the loan and for the first 12 months there will be no fees, interest or repayments. Loan terms will be up to 6 years and the government has set the interest rate at 2.5% for the remaining period of the loan after the initial 12 months.

Property

 

Commercial Tenants Protection from Eviction

Commercial tenants who cannot pay their rent because of COVID-19 will be protected from eviction. No business will automatically forfeit their lease and be forced out of their premises if they miss a payment up to 30 June 2020. The government has an option to extend this period if needed but has not done so to date.

This is not a rental holiday. The tenant will still be liable to pay the rent.

Stamp Duty Land Tax (SDLT)

You must pay Stamp Duty Land Tax if you buy a property or land over a certain price in England and Northern Ireland. The SDLT threshold up to 07 July 2020 was £125,000 for residential properties and £150,000 for non-residential land and properties.

As of 08 July 2020, a Stamp Duty Land Tax holiday has been announced. If you purchase a property between 08 July 2020 and the 31 March 2021 the SDLT is only charged on the purchase price above £500,000.

Those purchasing an additional property will still need to pay the 3% higher rate of SDLT.

Please be aware these changes do not affect the equivalent taxes in Scotland and Wales. In Scotland the Land and Buildings Transaction Tax has not altered. In Wales the Land Transaction Tax also remains the same.

Companies House Accounts Filing

The Government has extended the Companies House filing deadlines. The measures are intended to relieve the burden on businesses during the COVID-19 outbreak.

Affected filings include accounts, Confirmation Statements, event-driven filings and mortgage charges.

The accounts filing deadlines have been extended by 3 months if the deadline falls between 27 June 2020 and 05 April 2021 inclusive. Please note that this is a temporary measure and filing deadlines that fall on 06 April 2021 or later will remain unchanged.

The normal 14 day deadline for Confirmation Statements has been extended to 42 days.

Please note that companies that have already extended their filing deadline or shortened their accounting reference period may not be eligible for an extension.

All companies should take appropriate measures to ensure accounts are filed on time as the law imposes an automatic penalty.

Late filing penalties will still apply where a deadline is missed but appeals will be treated “sympathetically”.

Companies House have also temporarily suspended the strike-off process to prevent companies being dissolved before Directors or potential creditors can submit the appropriate paperwork to prevent the strike-off.

Time to Pay

 

HMRC have also upgraded their time to pay service for businesses. If you have missed or are worried about missing a tax payment due to Coronavirus you should contact HMRC to discuss being allowed additional time to make payments. The HMRC helpline number is 0800 0241 222. The helpline is available Monday to Friday 8am to 4pm.

Exemption for COVID-19 Related Reimbursed Home Office Expenses

 

The Financial Secretary to the Treasury announced on 13 May 2020 that the reimbursement of expenses for home office expenses are temporarily exempt from income tax and National Insurance.

To be eligible for the exemption the expenditure must meet the following two conditions:

  • Equipment is obtained for the sole purpose of enabling the employee to work from home as a result of the coronavirus outbreak

And

  • The provision of the equipment would have been exempt from income tax if it had been provided directly to the employee by or on behalf of the employer.

 

Self Assessment Second Payments on Account 2019/20 due 31 July 2020

If you are due to make a self assessment payment on account on 31 July 2020 you can defer making the payment until 31 January 2021.

The deferment is optional and HMRC do advise making the payment on 31 July 2020 if you can.

This is an automatic offer and no applications are required. No penalties or interest for late payment will be charged if you defer payment until 31 January 2021.

You can set up a payment plan with HMRC for the deferred payment which may help with payment when it becomes due on 31 January 2021.

Self Employment Income Support Scheme (SEISS)

 

The Self Employment Income Support Scheme became open for claims on 13 May 2020. The aim is to support the self employed who have lost income due to coronavirus. The scheme includes members of partnerships.

You can claim if you are self employed or a member of a partnership and:

  • Traded in 2018/2019 tax year
  • Submitted your 2018/19 self assessment tax return on or before 23 April 2020
  • Traded in the tax year 2019/20
  • Intend to carry on trading in tax year 2020/21
  • Carry on a trade that has been adversely affected by coronavirus.

First Grant

The First Grant payment was the lower of 80% of trading profits and £2,500 per month. Initially the payments are for the first 3 months in one lump sum. The First Grant closed for applications on 13 July 2020.

Second Grant

The Second Grant payment will be the lower of 70% of trading profits and a maximum of £6,570 total. The Second Grant will be open from 17 August 2020 and close on 19 October 2020. You can claim the Second Grant if your business has been adversely affected by coronavirus on or after 14 July 2020.

You do not have to have claimed the first grant in order to make a claim for the Second Grant.

Taxpayers may wish to request a review of their entitlement to a SEISS grant where they have been told they are not eligible by HMRC or they wish to dispute the amount awarded. A review can be requested via the HMRC eligibility checker where there is an option to complete an online form requesting a review. Although only the taxpayer can apply for SEISS the review can be requested by either the taxpayer or their agent.

If you believe you are eligible for SEISS and have been rejected or that the amount you have been awarded is incorrect please contact Foremans for help with your review application.

Scam Calls

We are aware of a significant number of scam calls and emails saying that you are eligible for financial help or owed a tax refund. HMRC will NOT ask you to click on a link or give any personal information either over the phone or by email. Please do not respond to any such contact.

Please be aware that the advice and proposals regarding coronavirus are constantly changing and before acting on any of the above you should check the current situation with:

www.gov.uk

If you would like to discuss any of the issues noted above please contact us on:

01244 625 500 or 01978 364 000

contactus@foremansllp.com

Whilst all due care and attention has been taken in the preparation of these notes no liability can be accepted for any omission or item contained therein.

Foremans LLP

20 July 2020


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