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Goverment Updates

 

Our Website is being updated regularly regarding the following document in line with Government announcements. Please check www.tllaccountants.com
As uncertainty develops and businesses feel the impact of the behaviour changes across the UK as a result of the current pandemic of Coronavirus (COVID-19), businesses of all sizes need to consider the potential impact on their activities and finances and plan accordingly. In light of the current situation, the Government has announced a package of support for businesses ranging from supporting SMEs with payroll costs to the creation of temporary loan schemes.
https://www.businesssupport.gov.uk/coronavirus-business-support/

Below is a summary of the main support packages announced to date:

Self-employment Income Support Scheme

What is it?
The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) whose income has been negatively impacted by COVID-19. The scheme will provide a grant to self-employed individuals or partnerships, worth 80% of their profits up to a cap of £2,500 per month. HMRC will use the average profits from tax returns in 2016-17, 2017-18 and 2018-19 to calculate the size of the grant. The scheme will be open to those where the majority of their income comes from self- employment and who have profits of less than £50,000. The scheme will be open for an initial three months with people able to make their first claim by the beginning of June.

Am I eligible?
To be eligible for the scheme you must meet all the criteria below:
●Be self-employed or a member of partnership;
●Have lost trading/partnership trading profits due to COVID-19;
●File a tax return for 2018-19 as self-employed or a member of a trading partnership. Those who have not yet filed for 2018-19 will have an additional 4 weeks from this announcement to do so (i.e. by 23 April 2020);
●Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020 to 2021
●Have trading profits of less than £50,000 and more than half of your total income come from self- employment. This can be with reference to at least one of the following conditions:
●Your trading profits and total income in 2018/19
●Your average trading profits and total income across up to the three years between 2016- 17, 2017-18, and 2018-19.

 

Payroll

For the first time ever, the government is going to step in and help pay wages through a coronavirus job retention scheme open to all private employers regardless of size. Initially, this will be in place for five months (currently to 31st July 2020) and for a further three months from 1st August to 31st October on a reduced basis See link: https://www.gov.uk/government/news/chancellor-extends-furlough-scheme-until-october

The scheme will allow part-time furlough for employees who have already been furloughed for at least three weeks prior to 30 June, and the amount contributed by the Government will reduce from 1st August.  See link for more detail:  https://www.gov.uk/government/news/chancellor-extends-self-employment-support-scheme-and-confirms-furlough-next-steps

Government grants will cover 60% – 80% of the salary of retained workers up to a total of £2,500 (gross) per a month. The scheme will be backdated to 1 March 2020 for employees already not working. Employers’ NI and Employers’ Pension Contributions are also reclaimable. The Grants are taxable on the employers Accounts as income and wages paid are still subject to the normal Tax and National Insurance.
https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

We are happy to help our payroll clients with furlough claims – please see this link to how this will work.  There will be a small charge for the administration of this.  HMRC launched an online furlough calculator on 20th April   https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme#use-the-calculator   – if you use our payroll bureau, we recommend we submit the grant claim for you since you would otherwise need to set up a separate payroll scheme, which can take several days to process.  You may wish to use the calculator online and let us know how much you are eligible to claim, but again, if may be more straight forward for us to do this and our payroll bureau will work on this basis in order to progress these as soon as possible.

Government launched the Bounce Back Loan scheme for small firms.

The Bounce Back Loan scheme will help small and medium-sized businesses to borrow between £2,000 and £50,000. The government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. Loan terms will be up to 6 years. No repayments will be due during the first 12 months. The government will work with lenders to agree a low rate of interest for the remaining period of the loan. The scheme will be delivered through a network of accredited lenders. The paperwork should be very simple and funds released quickly.  Loans can be applied for from May 4th.

Government Income Support Scheme

This scheme refers to sole traders and partnerships grants based on 70% of their average profit, if affected by the lock-down and Coronavirus impact.  If this applies to you, you should provide HMRC with information directly – first of all they ask you to check online if you are eligible, and if so, to provide them with your contact and bank details in order for them to pay you the grant which they will calculate from your self-assessment history.

Here is the link to the online eligibility checker:  https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference

Please note they will ask for three items of information to start this process:-

  1. Your Unique Taxpayer Reference (UTR) – this is a 10 digit number you can find on any correspondence from HMRC or on personal tax returns;
  2. Your National Insurance Number;
  3. Your Government Gateway ID and password – this is your own personal Government Gateway and not something your Accountant would have a record of.  If you don’t know it / don’t have one set up you can apply on the screen for one.

Please note HMRC will contact you by email.  If no email they will text you.  If they don’t have your mobile number they will write to you.  They will just tell you to be ready, but we understand will not provide a link to the eligibility checker within that email/text.  You can use the link we have provided above.  The only site you should go to is an official Gov.UK site – beware of scams if a third party asks you to go via another link, ignore it.  Accountants / Agents will not be given access to your application site.

Please feel free to contact us if you don’t use a computer (and don’t have anyone in the family you can ask to do this for you) or have any questions that might stop you applying for a claim.

Please note HMRC have stressed that your Accountant cannot make this claim on your behalf – doing so will trigger a fraud alert and delay your claim.  

For more information about the grants scheme, please see this link: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

Personal Tax
HMRC have announced that for personal tax instalments due on 31st July 2020, these can be delayed until 31st January 2021 when the next payment is normally made.  Whilst you should still be able to make a payment on account if you prefer to, if you don’t please ensure you keep this put aside, where possible for  when it is due.  If a loss is incurred in the coming months leading up to 31st January 2021, it may be that you have less tax to pay or even a refund due which we will calculate for you in the normal time-scale.

VAT
VAT payments for in the coming few months will be deferred until the end of March 2021.
The deferral will apply for VAT payments normally due between 20th March and 30th June 2020 (i.e. quarters ending Feb, Mar, Apr ’20). Later VAT periods will currently be paid on the normal due dates. Refunds will be processed as normal. VAT returns still need to be filed on time.

The VAT decision was welcomed as it provides an immediate cash benefit to businesses, but it is difficult to properly assess the mechanics until the HMRC technical guidance is issued.

Clients who pay their vat by DD need to cancel the arrangement or the next payment will be extracted from your account

Company directors (including directors of their own Personal Service Companies)

As Office Holders, salaried company directors can be furloughed.

Because Company Directors owe duties to their company (per Companies Act 2006) they are permitted to fulfil such statutory obligations (e.g. filing Company documents) provided they do no more than is judged necessary in this regard. They cannot undertake work to generate commercial revenue or provide services if they wish to qualify for the furlough grant.

The amount of grant available applies only to the directors usual salary calculated by the same rules that apply for employees. Dividends are not considered by the scheme.

For more detail on how to claim see updated issued 6 April: https://www.ekwgroup.co.uk/blog/2020/04/09/important-changes-to-how-a-cjrs-claim-will-be-processed-through-your-payroll-provider/?utm_source=EKW%20Group&utm_medium=email&utm_campaign=11471345_EKW%20Group_%20Weekly%20roundup%2010April&dm_i=172I,6TVCH,RRV18N,RD4BB,1

Relief for self employed and benefit claimants
There were a couple of measures targeted at the self employed;
Self-assessment tax payments will be deferred until January 2021.
The self employed will be able to access statutory sick pay through the benefit system at the same rate as that paid to employees. There was no mention of whether SSP would be extended to the lowest earners who do not qualify. For benefit claimants, Sunak announced a £7bn package to ‘support the safety system’, increasing Universal Credit standard allowance and working tax credit by £1,000 for one year, a move that will reach four million.

Help with business rates
1. The government will increase the Business Rates retail discount to 100% for one year and expand it to the leisure and hospitality sectors and increase the planned rates discount for pubs to £5,000.
Taken together with existing small business rate relief (which provides full relief for businesses using a single property with a rateable value of £12,000 or less), an estimated 900,000 properties, or 45% of all properties in England, will receive 100% business rates relief in 2020/21.
2. Businesses that received the retail discount in 2019-20 will be rebilled by their local authority as soon as possible
3. Those businesses eligible for the newly expanded retail discount and/or the new pubs discount may need to apply to their local authority to receive the discount.
4. Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority.

See link for details of local Authorities 

Guidance for local authorities on the application of the expanded retail discount will be published by the Ministry of Housing, Communities & Local Government by 20 March.

VAT deferral
VAT payments due between 20 March and 30 June 2020 will be deferred until the end of March 2021 That is a direct injection of £30bn of cash to employers, equivalent to 1.5% of GDP. Again, HMRC and software providers will need to update Making Tax Digital (MTD) for VAT software programmes so there is a new dual system for those who do not use the waiver.
The VAT decision was welcomed as it provides an immediate cash benefit to businesses, but it is difficult to properly assess the mechanics until the HMRC technical guidance is issued.

The change to MTD to increase electronic links on VAT returns, originally due to be introduced this June has been moved back one year, to VAT period commencing on/after 1st April 2021.

Government-backed funding
Loans
The temporary Coronavirus Business Interruption Loan Scheme supports small and medium-sized businesses with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to six years.
The Government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
The scheme will be delivered through commercial lenders, backed by the Government-owned British Business Bank.
There are 40 accredited lenders able to offer the scheme, including all the major banks.

You are eligible for the scheme if:
your business is UK based, with turnover of up to £500 million per year your business meets the other British Business Bank eligibility criteria You should apply via your lender’s website or through one of the 40 accredited finance providers offering the scheme (and not the British Business Bank).
Please note that branches may currently be shut down to enable social distancing.
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website.

The Government have ‘banned’ banks from slowing this process by asking for Personal Guarantees of Directors of limited companies.
Small business grant

(Please note applications for this grant must be made by 30th June 2020)
The government also plan to provide an additional £2.2 billion in funding for local authorities to support any small businesses with property that already pay little or no Business Rates This will provide a one-off grant of £10k to businesses currently eligible for SBRR or Rural Rate Relief, or taper relief to help meet their ongoing business costs.  For those with rateable value, per premises in the retail / leisure / hospitality industry, of under £15k a grant of £10k; for rateable value between £15k and £51k a grant of £25k.

How do I get this support?

Local Authorities are writing to qualifying businesses to inform them of eligibility and obtaining bank details to make the grant payment.  If you qualify for the £25k grant and the LA are not aware your building is being used in the retail / leisure / hospitality section – contact them using the link above (help with business rates section).

Help with tax liabilities
All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. These businesses can contact HMRC’s new dedicated COVID-19 helpline from 11 March 2020 for advice and support.
It was also announced on 17 March 2020 by Chancellor Rishi Sunak that HMRC will waive the 3.5% annual interest on deferred tax payments. This should alleviate some cash flow issues for businesses in the short term at least.
To ensure ongoing support, HMRC has made a further 2,000 experienced call handlers available to support firms and individuals when needed. For Time to Pay support if you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.

Charities

The above information relates to charities as it does other businesses.  This link to the Charity Tax Group website words things more in the context of charities (such as grants for charity shops):

https://www.charitytaxgroup.org.uk/news-post/2020/retail-hospitality-leisure-grant-fund-guidance-published-cash/

For information on the latest funding announcement see this link: https://www.gov.uk/government/news/chancellor-sets-out-extra-750-million-coronavirus-funding-for-frontline-charities?utm_source=EKW%20Group&utm_medium=email&utm_campaign=11471345_EKW%20Group_%20Weekly%20roundup%2010April&dm_i=172I,6TVCH,RRV18N,RD4BA,1

Supporting our clients

TLL Accountants can provide the support and guidance to help review your business, provide advice on accessing support and assist with identifying options for cash flow needs.
A key review is to revisit current forecasts/projections for the year ahead and consider the impact the
current business environment may have on these forecasts and more importantly cash flow, the lifeline of any business.
We can provide support in preparing forecasts/projections to assist with decision making and applying for financial support where needed.

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