Coronavirus has brought business to a standstill. But what are your options if you want to seek financial support from the government? Here is a round-up for employers, employees and the self-employed.
Delay your tax payments
Businesses and the self-employed may be able to delay their tax payments.
Any VAT due for payment in the period from 20 March 2020 to 30 June 2020 can be deferred until the end of the 2020-21 tax year. This is not a cancellation of any liability due in this period, merely a deferral. Businesses will need to ensure that they have funds to settle any arrears on or before the end of March 2021 (5 April 2021).
Any direct debit will need to be cancelled and the return still submitted on time. Any refunds due will be paid as usual.
Self-Assessment Second Payments
If you are self employed and file your self assessment, any second payment on account for 2019-20 (due 31 July 2020) can be deferred until January 31 2021. Please be aware that as with the VAT offer, this is a deferral and not a cancellation of tax due.
Those who take advantage will need to pay their second payment on account, any balancing payment for 2019-20 AND any first payment on account – if any is due – for 2020-21 on this later date. There is no special application procedure for these; it is an automatic measure.
For further information, have a look at the HMRC website. If you would like to discuss your options in detail, call HMRC on 0800 0159 559. Remember, you will need to explain the impact of Coronavirus on your business, so you need to call prepared! Lines are open: Mon-Fri, 8am-8pm and Saturday 8am-4pm.
Look out for business rates relief
Businesses receiving small business rates relief can apply for a £10,000 grant in 2020/21 on top of existing relief.
If you contact the Council asap, you are able to delay your non-domestic rates payment date to begin on 1 July 2020. You are also able to pay any remaining instalments over 11 months.
To qualify for up to six months’ exemption, your property must be emptied of all equipment, furniture, fixtures and fittings and documentation confirming the removal date must be provided to the Council.
Hackney Council is automatically identifying eligible businesses. If you have not yet received a letter, you can download and complete an application form.
For more information on business rates and Hackney Council, see their FAQs page and call the Business Rates department on 0208 356 3466.
Get help if you’re self-employed
If you are self-employed, you can apply for taxable grants of up to 80% of your average monthly profits (max. £2,500 per month).
To qualify, you must:
- have earned more than half your total income from self-employment in 2018/19 or for the average of your tax returns over 2016/17, 2017/18 and 2018/19.
- have had an average annual trading profit of less than £50,000 in 2018/19 or for the average of your tax returns over 2016/17, 2017/18 and 2018/19.
- have filed a tax return for 2018/19. If you missed the deadline to file this year, you now have until 26 April to do so.
You will be contacted by HMRC if you meet the above criteria and one single payment will be made directly into your bank account in early June covering March, April and May. As things stand, the grant covers this 3-month period only (though this might change). You can continue trading as normal; the payment does not require you to stop work!
The grant is taxable and will count towards your taxable income when you file for this year.
NB: if you pay yourself a salary as company director or pay yourself dividends, then you cannot apply for the grants. You may be eligible for support through the Coronavirus Job Retention Scheme for employees if you operate pay-as-you-earn schemes.
You may also be eligible for:
- a ‘business interruption loan’. This gives you access to loans, overdrafts, invoice finance and asset finance of up to £5 million for a maximum six years. It is offered by most of the major banks.
- Deferral of income tax payments. If you were due to make a payment in July 2020 as part of self-assessment, you can defer this payment to January 2021.
- Full universal credit. The minimum income floor has been removed, with the standard allowance set to increase from 6 April (making the maximum monthly allowance for a single person £409.89).
Employed? An employer? Look at the Job Retention Scheme and furloughed employment
Any employees who are not currently working during this period but remain employed are deemed ‘furloughed employees’. The government has introduced the Job Retention Scheme to help employers pay their staff. The scheme has been extended to the end of June. The minimum furlough length is 3 weeks, and it can be extended in 3-week blocks thereafter.
The scheme applies to all employees, including directors, full and part-time staff, those on zero hours contracts and casual staff. If furloughed, employees cannot continue working though they can participate in ongoing training.
The scheme will apply if you keep staff on that you would otherwise have to lay off employees because of Coronavirus. If they stay employed as furloughed workers, the government will pay up to 80% of your employees’ monthly earnings (based on their annual salary on 28 February 2020), up to a maximum of £2,500. The employer may pay the remaining 20% if they wish.
Discretionary payments such as tips and commission are excluded from the scheme.
A further £300 per month may be given for pension contributions and national insurance payments. The scheme does not take into account bonuses, commission or other fees.
To apply for the scheme, please visit the government website.
To claim, the employer must:
- have had a payroll scheme in operation prior to 19 March
- have a UK bank account
- notify the employee in writing that they have been officially furloughed for at least 3 weeks (this can be extended for further 3-week periods). This written document must be kept on file for 5 years. Armstrong & Co. accountants have provided a template letter to employees here.
- process payments via PAYE
- gain approval from the member of staff to be furloughed
The employee must:
- have been on the payroll on 28 February 2020
The scheme opens on 20 April, with the first payments expected to be made to employers within six working days.
To submit a claim, employers must have the names of the staff to be furloughed, decided whether they are to be paid in full or just 80% (employees must agree to the latter), provide the start and end date (if known) for furloughing, and give the UK business account details for the grant to be paid.
To furlough a director, the board of directors must:
- agree to this by passing a resolution
- send a letter to the director
- receive a letter from the director in question agreeing to be furloughed
And finally… be explicit!
When you call creditors (banks, utilities, lenders etc), in order for them to enact their new policies you must explicitly state that the loss of income you are reporting is a direct result of Coronavirus. It is not enough to allude to the pandemic; you must use the keyword in order for the customer service advisers to trigger the new policies. You can also explicitly request fees to be waived for extensions, new payment plans etc.
More questions? Money Saving Expert has some very useful resources to guide you through the new schemes.
Disclaimer: the pandemic is changing day-by-day. All information above is correct at the time of publication, though we cannot guarantee the above schemes have not since changed. Please check with the relevant agencies before putting in your claim.