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- Covid-19 - Support for businesses and employees
Some of the formatting may not work properly when copying and pasting but, hopefully, it will make sense.
As mentioned in the report, many of the schemes have not yet been finalised and the mechanisms for claiming the assistance are still being developed.
REPORT ON MATTERS RELATING TO COVID-19
1 1 CORONAVIRUS JOB RETENTION SCHEME (FURLOUGH)
2 2 DEFERRAL OF VAT PAYMENTS
2 3 DEFERRAL OF SELF-ASSESSMENT TAX PAYMENTS
2 4 SUPPORT FOR BUSINESSES WHO ARE PAYING SICK PAY TO EMPLOYEES 2 5 STATUTORY SICK PAY FOR EMPLOYEES
3 6 SELF-EMPLOYMENT INCOME SUPPORT SCHEME
3 7 HMRC TIME TO PAY SERVICE
4 8 SUPPORT FOR RETAIL, HOSPITALITY AND LEISURE BUSINESSES
4 9 SUPPORT FOR BUSINESSES THAT PAY LITTLE OR NO RATES
4 10 BUSINESS INTERRUPTION LOAN SCHEME
5 11 COMMERCIAL INSURANCE
5 12 IR35
5 13 PROTECTION FROM EVICTION FOR COMMERCIAL TENANTS
5 14 DOMESTIC RENT AND MORTGAGE PAYMENTS
5 15 COMPANIES HOUSE FILING DEADLINES
5 16 UNIVERSAL CREDIT AND EMPLOYMENT AND SUPPORT ALLOWANCE
6 17 ANNUAL LEAVE CARRIED OVER
6 18 MAKING TAX DIGITAL
6 19 CONTACTLESS PAYMENTS
6 20 SUMMARY
REPORT ON MATTERS RELATING TO COVID-19
AS AT 31 MARCH 2020
There have been numerous measures announced over recent days in relation to support for those affected in various ways by the effects of Covid-19. In many cases, full details have not yet been announced and further information is expected over the next few days.
This report is based on the position in England. The situation may, in some cases, be different for those in the other countries in the United Kingdom.
Please be aware that there are many instances of unscrupulous people trying to take advantage of the situation with various scams already appearing using telephone, text or email. If you are unsure whether a message is genuine, it is safest to assume that it isn’t. HMRC will not ask you to give bank details through a link in an email or by text or in a telephone call.
1. CORONAVIRUS JOB RETENTION SCHEME (FURLOUGH)
This is a temporary scheme which will, initially, be for a period of three months from 1 March 2020 to 31 May 2020. An employee can be furloughed at any time within that period. Once furloughed, the employee cannot undertake work for the business whilst they are furloughed. The
furlough must be for a minimum period of three weeks. Company directors are eligible for the scheme and will be allowed to do sufficient to ensure that they are complying with their statutory duties as a director but nothing else. Directors who take a mixture of salary and dividends will only be able to claim based on the salary part of their income.
This scheme allows employers to retain employees who would otherwise have been laid off. Employers can claim for 80 per cent of the furloughed employee’s normal wage subject to a maximum of £2500 per month. The employer will also be compensated for the Employer’s National Insurance Contributions on the 80 per cent of wages where applicable although, in many cases, this will be covered by Employment Allowance so no contributions would be due anyway. It will also cover the employer’s auto-enrolment pension costs on this 80 per cent but, where the employer contributes above the minimum required level, the scheme will only reimburse the employer based on the minimum amount payable.
The scheme applies to any employer that had created and started a PAYE payroll on or before 28 February 2020. Any employee taken on after that date will not be eligible for the scheme.
Employers should always discuss the position with employees before furloughing them and should ensure that they take into account the terms of the employee’s contract of employment. The employee should then be notified in writing that they are being furloughed and a copy of this should be retained by the employer.
The claims for this grant, which is treated as taxable income of the business, will be via an online portal which is currently being designed. It is expected that this will be available by the end of April 2020.
The employee should be paid in the normal way by the employer, deducting PAYE and NIC as normal. The funding from the scheme will be paid to the employer to reimburse the costs.
Whilst the employer must pay a minimum of 80 per cent of the normal salary, they may, if they wish, continue to pay the full amount covering the other 20 per cent (and associated Employer’s NIC and pension contributions) themselves.
2. DEFERRAL OF VAT PAYMENTS
If you have a VAT payment due to HMRC between 20 March 2020 and 30 June 2020, you may, if you wish, defer the payment until a later date. If you are able to do so, you can still pay this by the due date but, if you choose to defer the payment, there will be no interest or penalties charged.
Any VAT deferred in this way will need to be paid by 31 March 2021. Details of how to pay VAT that has been deferred will be announced in due course.
There is no need to notify HMRC that you are taking advantage of this option.
If you normally pay your VAT by Direct Debit, you will need to contact your bank to cancel the Direct Debit arrangement as, if you do not do this, payment will be taken in the normal way. You should, of course, reinstate the Direct Debit in time for subsequent quarters.
Whilst payment can be deferred, you should still submit your VAT Return as normal.
If you are in a refund situation this will still be processed and repaid as normal.
3. DEFERRAL OF SELF-ASSESSMENT TAX PAYMENTS
Anyone who has a tax payment on account that is due to be paid by 31 July 2020 can defer this payment until a later date. If you are able to do so, you can still pay this by the due date but, if you choose to defer the payment, there will be no interest or penalties charged.
Any tax deferred in this way will need to be paid by 31 January 2021 together with any balancing payment that may be due at that time.
It was originally thought that this deferral would only apply to those that are self-employed but it has now been confirmed that it will apply to anyone that is due to make a payment on account in July 2020.
4. SUPPORT FOR BUSINESSES WHO ARE PAYING SICK PAY TO EMPLOYEES
Any small or medium sized employer will be able to claim a refund of up to two weeks Statutory Sick Pay per eligible employee who has been off of work because of Covid-19.
This funding will be available to employers with fewer than 250 employees. This will be determined by the number of people employed as at 28 February 2020.
Employers should keep a record of staff absences and Statutory Sick Pay payments but they do not need the employee to provide a fit note from their GP.
The mechanism for claiming repayment will be announced once it has been set up.
5. STATUTORY SICK PAY FOR EMPLOYEES
Employees who are unable to work as they are self isolating due to Covid-19 will be eligible for Statutory Sick Pay immediately without the normal three day waiting period. If sick leave is due to any other illness the normal rules will apply and Statutory Sick Pay will only be due as from the fourth day of absence.
6. SELF-EMPLOYMENT INCOME SUPPORT SCHEME
This scheme is intended to support self-employed individuals who have lost income due to Covid-19. This includes those who are members of a partnership.
Full details have yet to be announced but it would appear that this scheme will be available to those who have lost income due to Covid-19 even if they have been able to carry out some work.
The scheme is currently in place for three months although this could be extended at a later date. Those who are eligible will receive a grant of 80 per cent of their average trading profits for the last three years up to a maximum of £2500 per month. This grant is taxable.
In order to be eligible, you must have submitted a 2019 self-assessment tax return. Anyone who has not done so must file their 2019 return no later than 23 April 2020 to be eligible. HMRC have said that late returns filed by that date will be “risk assessed in the normal way”.
In addition to filing a 2019 tax return, you must have traded in the 2019/20 tax year, be trading at the time of applying (or would be if it wasn’t for Covid-19), intend to trade in the 2020/21 tax year and have lost trading or partnership trading profits due to Covid-19.
In order to be eligible, more than half of your income must come from self-employment and your self-employment trading profits must be less than £50000. This will be determined by whether you meet at least one of the following conditions.
a) have trading or partnership profits in the 2018/19 tax year of less than £50000 and these profits constitute more than half of your total taxable income.
b) have average trading profits in the 2016/17, 2017/18 and 2018/19 tax years of less than £50000 and these profits constitute more than half of your average taxable income in the same period.
For anyone who started trading between 2016 and 2019 HMRC will only use those years for which you filed a self-assessment tax return.
The scheme to make these payments is currently being set up. It is not expected that this will be in place until June 2020 and there will be a single payment for the three months at that time.
You should not contact HMRC at this stage. If you are eligible, HMRC will contact you in due course and invite you to apply online. Once HMRC receive your application and confirm that you are eligible for this grant they will contact you to tell you how much you will get and the payment details.
Unfortunately, anyone who has commenced self-employment since 5 April 2019 will not be eligible for this scheme and will need to consider other forms of support such as Universal Credit.
7. HMRC TIME TO PAY SERVICE
Any businesses or self-employed people with outstanding tax liabilities who are having difficulty paying can apply to HMRC’s Time To Pay service. They will consider an arrangement for payment. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances. The number to ring is 0800 024 1222.
8. SUPPORT FOR RETAIL, HOSPITALITY AND LEISURE BUSINESSES
Any business in these sectors that pays business rates will be given a twelve month rates holiday for the 2020/21 rates year. If you are eligible, you do not need to apply as the local authority should issue an amended rates bill in due course.
For those receiving this report electronically, the following link provides guidance on which types of businesses are eligible.
Businesses in these sectors may also be eligible for a cash grant if their rateable value is under £51000.
Businesses in these sectors with a property that has a rateable value of up to £15000 may be eligible for a cash grant of £10000.
Businesses in these sectors with a property that has a rateable value of over £15000 and less than £51000 may be eligible for a cash grant of £25000.
Guidance issued to local authorities says that properties used in this sector “which on the 11 March 2020 had a rateable value of less than £51,000 and would have been eligible for a discount under the business rates Expanded Retail Discount Scheme had that scheme been in force for that date” are eligible for the grant.
Government guidelines say that you do not need to do anything as your local authority will contact you if you are eligible for this grant but I recently received a Bedford Borough Council newsletter which said that those who think that they are eligible for the grant should apply online. The link for those in the Bedford Borough Council area is below for those that are receiving this electronically. I would suggest that anyone in other local authority areas who thinks that they may be eligible should contact their local authority to check if they need to submit an application.
9. SUPPORT FOR BUSINESSES THAT PAY LITTLE OR NO RATES
In the recent Budget, the Chancellor announced that all businesses that already pay little or no business rates because of Small Business Rate Relief or Rural Rate Relief are to receive a one-off cash grant of £3000. This grant has now been increased to £10000. As with the grants for those in the retail, hospitality and leisure sector referred to above, Government guidelines say that the local authority will contact those that are eligible but it is not clear whether this is actually the case. See section 8 above for details.
10. BUSINESS INTERRUPTION LOAN SCHEME
This scheme is designed for businesses with a turnover of under £45 million. It is intended to provide access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to six years. The Government will cover interest for the first twelve months and any fees levied by the lender. The Government will guarantee up to 80 per cent of each loan.
If lenders consider the proposition to be viable, they will provide funding on normal commercial terms wherever possible rather than using this scheme. Further details can be provided upon request.
11. COMMERCIAL INSURANCE
Most business insurance policies will not cover pandemics or unspecified notifiable diseases such as Covid-19.
Any business that normally operates from commercial premises but is not doing so at the moment should consider notifying their insurance company or broker in writing. The conditions relating to unoccupied premises vary considerably so it would be wise to advise them accordingly to ensure that cover is not voided due to the property being unoccupied.
The proposed changes to the IR35 regulations that were due to come into effect on 6 April 2020 have now been deferred for twelve months although, in many cases, this will be too late as the changes will already have been made.
13. PROTECTION FROM EVICTION FOR COMMERCIAL TENANTS
Commercial tenants who are unable to 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. This date may be extended in due course.
This is not a rental holiday and the tenants remain liable for the rent.
14. DOMESTIC RENT AND MORTGAGE PAYMENTS
Tenants can apply to their landlords for a three month payment holiday if they are unable to pay their rent due to the current situation. Landlords will not be able to evict tenants for non-payment of rent for at least three months at the end of which landlords and tenants are expected to work together to agree a reasonable repayment plan to clear the backlog.
Those with mortgages, including buy-to-let mortgages, can apply to their lender for a three month mortgage payment holiday. It is important to discuss this with your lender before cancelling a direct debit.
15. COMPANIES HOUSE FILING DEADLINES
If a company is having problems meeting the filing deadline for their accounts they should contact Companies House to request an extension. The maximum extension is three months and the application must be made before the date on which the accounts are due to be filed.
16. UNIVERSAL CREDIT AND EMPLOYMENT AND SUPPORT ALLOWANCE
Those that are self-employed or employees earning below £118 per week (£120 per week after 5 April 2020) can apply for Universal Credit based on the usual eligibility criteria. You may, depending on circumstances, be able to claim Employment and Support Allowance as well as, or instead of, Universal Credit.
As from 6 April 2020 the Minimum Income Floor will be temporarily relaxed for all Universal Credit claimants and this will last for the duration of the outbreak.
For those receiving this report electronically, further details are given in the link below.
17. ANNUAL LEAVE CARRIED OVER
In normal circumstances, employees can only carry forward a maximum of eight days out of the usual statutory minimum of twenty eight days annual leave. This rule is to be relaxed to allow up to four weeks of unused leave to be carried over into the next two leave years.
18. MAKING TAX DIGITAL
The “soft landing period” during which penalties will not be charged for failing to use digital links for VAT Returns has been extended by twelve months to the first VAT quarter starting on or after 1 April 2021.
19. CONTACTLESS PAYMENTS
With effect from 1 April 2020, the maximum amount for contactless payments is to be increased from £30 to £45.
The situation is being updated on a regular basis. This report has been prepared for information purposes only and solely for the use of clients of this firm. Whilst every care has been taken in preparing this report, we are unable to hold ourselves responsible for any losses which might occur as a result of any errors being included in the report. Due to the rapidly changing position, we would strongly recommend that clients contact us for specific advice.
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