The long-awaited statement from the Chancellor, Rishi Sunak regarding COVID-19 support for the self-employed has been announced. The Chancellor said that the scheme will benefit some 95% of people whose main income source is derived from self-employment.

A list of the scheme features as announced, and published, are as follows:

• Those that qualify will receive a cash grant from HMRC based on 80% of profits, up to £2,500 per month,
• The initial grant will be for the three months, from 1 March through to the end of May 2020, but could be extended for a longer period.

To be eligible, the following conditions will be taken into account:

• Applicants must be self-employed or a member of a trading partnership,
• Have lost trading profits due to COVID-19,
• Have filed a tax return for 2018-19. Late filers will have four weeks from 26 March 2020 to do so,
• 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 2020-21,
• Have trading profits of less than £50,000 and more than half of total income 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.

There is no need to apply to HMRC as they will contact you if you are eligible. HMRC will use existing data to make this judgement. The initial three-month grant will be paid directly to a nominated bank account in a single lump sum. The grants are expected to be paid out at the beginning of June. The reason for this delay is likely down to three main factors: the 4 weeks additional filing time for late filers, the requirement to set up a complex new system at the same time as the Coronavirus Job Retention Scheme and to reduce the risk of fraud.

It is assumed that those self-employed who have experienced a significant drop in income due to COVID-19 disruption will need to apply for Universal Credits or Business Continuity Loans to tide them over until June. This will be a challenging time for those affected as the demand for help will place significant challenges on the institutions charged with providing this support.

CORONAVIRUS JOB RETENTION SCHEME (CJRS) – update for director shareholders

There has been uncertainty as to the position of director/shareholders claiming under the CJRS as their income is usually taken from their company as a combination of a low salary and dividends. In the news story published following the Chancellor’s statement on 26 March (regarding the Self-employed scheme) is a telling paragraph. It says:

Those who pay themselves a salary and dividends through their own company are not covered by the scheme (the Self-employed Scheme) but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.

This infers that directors will only be eligible for the CJRS based on their salary alone, and only if there is a proven PAYE record.

Further details of the CJRS are due to be published imminently and will be added to our newsfeed as soon as they are available.

As one of the additional measures to support businesses affected by the Coronavirus outbreak, Rishi Sunak announced last week that HMRC is to step in and pay up to 80% of furloughed staff wages up to a monthly maximum of £2,500 per employee.

Initially, this sounded as if HMRC was going to underwrite 80% of our salaries bill; let’s be clear, this is not what is on offer. What is on offer is the Coronavirus Job Retention Scheme. (CJRS) The following notes cover the basic terms and conditions.

What does “furloughed” mean?

Our first observation is that the word furlough has no legal significance. After reading the GOV.UK notes it is clear that this refers to staff that are laid-off as they cannot work during the current disruption to trade.

Ordinarily, business owners would probably be faced with offering these staff redundancy.

A furloughed worker is not someone who has been directed to work from home.

Furloughed can be defined, therefore, as an employee that is retained on your payroll but is unable to undertake any productive work.

What is on offer?

As noted above, HMRC will reimburse 80% of furloughed employees’ wages costs up to a maximum of £2,500 a month – this is the level of the national median wage.

Employers can make up any differential at their discretion, this is not compulsory.

The aim is to provide a basic income such that, when matters return to normal, staff can be recalled, resuming their normal duties.

How do we claim?

HMRC are building an online portal where employers can disclose the details of furloughed employees and make a claim under the CJRS scheme.

This is not presently available and best guess is payment will not be forthcoming from HMRC until towards the end of April 2020.

Action to take now

This scheme is a welcome addition to the other supportive grants and reliefs announced by the Chancellor in the past two weeks.

Business owners that were considering redundancies or more drastic measures may be able to use CJRS to retain their staff until the worst of the COVID-19 disruption has passed.

A word of caution. The details about the way in which the scheme will operate are sketchy at the time this update was written. As more information becomes available you will be the first to know. In the meantime, please call if you need our support to work through your options.

Further support to businesses and the self-employed, to delay the payment of various taxes was announced last week. They include:

VAT

Any VAT that falls 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 that falls 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 refunds due from HMRC will be paid as usual.

 

Second payment on account due 31 July 2020

It has been confirmed that self-employed persons’ self-assessment, second payment on account for 2019-20, due 31 July 2020, can be deferred until 31 January 2021.

Tax payers should be aware that as with the VAT offer, this is a deferral, not a cancellation of tax due. Those who take advantage will need to pay their second payment on account and any balancing payment for 2019-20 and any first payment on account – if any is due – for 2020-21.

Please call if you need to clarify which VAT payments can be deferred and the likely longer term cash flow effects if you defer the self-assessment payment on account in July.

In both cases there is no need to apply to HMRC to defer payments.

On Friday, the Chancellor went significantly further than in the history of this great country, with a series of unprecedented announcements in the Government’s support of businesses, employees and individuals.

The range of measures for UK businesses is significant and now includes the following:

• a Coronavirus Job Retention Scheme
• deferring VAT and Income Tax payments
• a Statutory Sick Pay relief package for SMEs
• a 12-month business rates holiday for all retail, hospitality and leisure businesses in England
• small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
• grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
• the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
• a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
• the HMRC Time To Pay Scheme
• insurance coverage

 

Readers who are anxious about their businesses in these fast-changing and uncertain times are advised to call so we can help you plan for the next few challenging months. This would include a review of the following reliefs and those that you will be eligible to claim.

Each of these items is now explained in more detail below.

 

Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

Eligibility: All UK businesses are eligible.

How to access the scheme – You will need to:

• designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
• submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required).

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month per employee. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

 

Deferring VAT and Income Tax payments

Government has announced that HMRC will allow you to defer Value Added Tax (VAT) payments for 3 months. The deferral period will apply from 20 March 2020 until 30 June 2020.

Additionally, if you are self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.

1. VAT Deferral. All UK businesses registered for VAT are eligible. This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020-21 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.
2. Income Tax. For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021. If you are self-employed you are eligible. This is an automatic offer with no applications required.

 

Support for businesses who are paying sick pay to employees

HMRC are bringing forward legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.

The eligibility criteria for the scheme will be as follows:

• this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
• employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020
• employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
• employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website
• eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
• the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible

You are eligible for the scheme if your business is UK based, small or medium-sized and employs fewer than 250 employees as of 28 February 2020.

A rebate scheme is being developed. Further details will be provided in due course once the legalisation has passed.

 

Support for businesses that pay business rates

Business rates holiday for retail, hospitality and leisure businesses

The government is introducing a business rates holiday for retail, hospitality and leisure businesses in England for the 2020-21 tax year.

Businesses that received the retail discount in the 2019-20 tax year will be rebilled by their local authority as soon as possible.

You are eligible for the business rates holiday if: your business is based in England and your business is in the retail, hospitality and/or leisure sector.

Properties that will benefit from the relief will be occupied premises that are wholly or mainly being used:

• as shops, restaurants, cafes, drinking establishments, cinemas and live music venues;
• for assembly and leisure;
• as hotels, guest & boarding premises and self-catering accommodation.

There is no action that you need to take. The relief will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.

 

Cash grants for retail, hospitality and leisure businesses

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

For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.

For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.

 

You are eligible for the grant if: your business is based in England and your business is in the retail, hospitality and/or leisure sector.

Properties that will benefit from the relief will be occupied premises that are wholly or mainly being used:

• as shops, restaurants, cafes, drinking establishments, cinemas and live music venues;
• for assembly and leisure;
• as hotels, guest and boarding premises and self-catering accommodation.

There is no action you need to take. Your local authority will write to you if you are eligible for this grant.

 

Support for businesses that pay little or no business rates

The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of up to £10,000 to eligible businesses to help meet their ongoing business costs.

You are eligible if: your business is based in England; you are a small business and already receive SBBR and/or RRR and you are a business that occupies property.

You do not need to do anything. Your local authority will write to you if you are eligible for this grant.

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

 

Coronavirus Business Interruption Loan Scheme

The new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch early week beginning 23 March 2020, to support primarily small and medium-sized businesses to access bank lending and overdrafts.

The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.

You are eligible for the scheme if: your business is UK based, with turnover of no more than £45 million per year and your business meets the other British Business Bank eligibility criteria.

 

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.

 

Support for larger firms – the COVID-19 Corporate Financing Facility

Under the new COVID-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.

This will support your company if it has been affected by a short-term funding squeeze and allow you to finance your short-term liabilities.

It will also support corporate finance markets overall and ease the supply of credit to all firms.

All UK businesses are eligible.

The scheme will be available early in week beginning 23 March 2020. More information is available from the Bank of England.

 

Support for businesses paying tax: Time to Pay service

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.

You are eligible if your business pays tax to the UK government and has outstanding tax liabilities.

 

Insurance

Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met.

Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

 

APPENDIX 1 – REGIONAL VARIATIONS SCOTLAND

The following guidance is reproduced from the mygov.scot website

 

Help with non-domestic rates in Scotland during coronavirus (COVID-19)

Last updated: 20 March 2020

To help owners of non-domestic properties, including businesses, deal with the impact of COVID-19, the Scottish Government has made changes to non-domestic rates (business rates) for 2020-21.

The Scottish Government has introduced extra rates reliefs (discounts). It has also introduced a one-off grant for some businesses.

These reliefs will be available to non-domestic properties from 1 April 2020 to 31 March 2021.

It will be possible to apply for the grants from April 2020 and they will be available to 31 March 2021.

The non-domestic rates reliefs and grant funding measures announced by the Chancellor of the Exchequer in March 2020 apply only in England. They do not apply in Scotland.

 

Extra reliefs to help with COVID-19

All non-domestic properties in Scotland will get a 1.6% rates relief. This relief effectively reverses the change in poundage for 2020-21.

You do not need to apply for this relief, and it will be applied to your bill by your local council.

Retail, hospitality and leisure businesses

Retail, hospitality and leisure businesses will get 100% rates relief. To get this relief, a property has to be occupied.

The Scottish Government are working with Scotland's 32 Councils to make sure this relief is administered in the most effective way. You can check this page for updates, including information on any application process.

You can get these rates reliefs even if you already get another relief for your property.

Grants

Retail, hospitality and leisure businesses with a rateable value between £18,000 and up to and including £51,000 will be able to apply for a one-off grant of £25,000.

A one-off grant of £10,000 will also be available to small businesses who get:

• Small Business Bonus Scheme relief
• Rural Relief

You can also get this grant if you applied for Nursery Relief or Disabled Relief but are eligible for the Small Business Bonus Scheme.

You can only apply for one grant – even if you own multiple properties.

 

Applying for a grant and getting paid

The Scottish Government are working with Scotland's 32 Councils and other stakeholders to agree a common approach to the application process.

This should help make sure there's an effective and timely processing of grants as soon as possible.

Deferring payment of non-domestic rates

If you're struggling to pay your non-domestic rates bill you should contact your local council

Types of retail, hospitality and leisure businesses who qualify

This list is not exhaustive. If you think you may be eligible for this relief, contact your local council.

State Aid

State aid rules still apply in the UK until the end of 2020.

The European Commission are consulting with Member States on a number of temporary State aid measures. These measures aim to help with the financial pressures businesses face as a result of COVID-19.

The Scottish Government will work with the UK Government to make sure these measures can be adopted to help Scottish Businesses where possible.

 

APPENDIX 2 – REGIONAL VARIATIONS WALES

The following guidance is reproduced from the businesswales.gov website

The Welsh Government has announced a package of support worth £1.4bn for small businesses to help them during the coronavirus outbreak.

Retail, leisure and hospitality businesses with a rateable value of £51,000 or less will receive 100% business rates.

Expanding on this support a new package providing in 2020/21, retail, leisure and hospitality businesses in Wales with one year business rates relief and a grant of £25,000 for retail, leisure and hospitality businesses with a rateable value of between £12,001 and £51,000.

It also provides a £10,000 grant to all businesses eligible for Small Business Rates Relief with a rateable value of £12,000 or less.

Businesses that qualify for this support will not need to do anything to apply for this scheme. This will be administered through the Business Rates system. You do not need to contact your Local Authority about this, you will receive information in due course.

The links below will take you to further information on specific subject areas:

• Development Bank of Wales – Information of services available via the Development Bank of Wales
• Government Support – Information on support provided via the Welsh Government, including Business Rate Relief and Business Grant Schemes
• BEIS guidance to employers and businesses about COVID-19 – Link to information and guidance from the UK Government on areas such as Statutory Sick Pay, Advice for employees which have travelled to high risk areas and home working

To delay the spread of coronavirus, the government has instructed some businesses and venues including all pubs, bars and restaurants to close. Further information on which businesses need to close can be found at: https://www.gov.uk/government/news/government-announces-further-measures-on-social-distancing

 

APPENDIX 3 – REGIONAL VARIATIONS NORTHERN IRELAND

The following guidance is reproduced from the GOV.UK website

General guidance for employers

The UK Government has published extensive guidance for employers, including details on how to prevent the spread of COVID-19 and what to do if someone is suspected or confirmed to have the virus.

UK Government support for businesses

The UK Government has set out a package of measures to protect public services, people and businesses through this period of disruption caused by COVID-19. Businesses in Northern Ireland can access the following schemes and announcements:

• Businesses will receive government grants worth up to 80% of wages to keep workers in jobs. The Coronavirus Job Retention Scheme will pay up to £2,500 per worker each month, helping those who are self-isolating or caring for loved ones. This scheme will be open from Monday 23 March.
• Support for businesses through the Business Interruption Loan Scheme, which will provide loans of up to £5m, with no interest due for 12 months. This scheme will be open from Monday 23 March and will be delivered through the British Business Bank.
• Support for businesses who are paying sick pay to employees
• Support for businesses paying tax
• VAT payments for the next quarter will be deferred, so no business will pay any VAT for the next three months.

Northern Ireland Executive support for businesses

Invest NI have provided practical advice for business online here

Businesses in Northern Ireland can access the following schemes:

• COVID Small Business Grant – Small business grant of £10,000 to be issued immediately with a cost of £267m providing support to 27,000 businesses in NI. This is for all businesses with a NAV up to £15,000
• Hospitality, Tourism and Retail Sectors Grant Scheme – An immediate grant of £25,000 will be provided to companies in these sectors with a rateable value up to £51,000.

 

Information on these schemes will be made available at NI Business Info.

Further to this, the Department of Finance has announced a £100m emergency rates package for businesses. All NI businesses will pay zero rates for the next three months (April, May, June). This automatically reduces rates by 25%, in addition to any existing rate reliefs. This applies to all businesses and does not need to be repaid.

Business support helplines

HMRC tax helpline

HMRC has set up a helpline for businesses and self-employed people who are concerned about paying their tax due to COVID-19. Call 0800 0159 559 for help and advice.

Invest NI helpline

Get help with your business online, or by calling the Invest NI Helpline. Telephone: 0800 181 4422

 

The Chancellor, Rishi Sunak, outlined a raft of further measures to support the UK’s ailing businesses, those affected by the forbidding COVID-19 outbreak. The list that follows summarises his announcements in the order they were announced:

 

• The Treasury are making available £330bn of loan guarantees. These guarantees will underpin government backed bank loans on attractive terms. The loans can be used to support businesses through financial difficulties during the COVID-19 crisis. Note they are loans. At some point interest will be charged and repayments will have to be made. The Chancellor confirmed that if this level of support was insufficient, further guarantees would be forthcoming.
• Support for liquidity to larger firms will be provided by low-cost, easily accessible commercial paper. Support for smaller firms will be accessed via the Business Interruption Loan Scheme previously announced – the initial loan ceiling of £1.2m is to be increased to £5m and no interest due for the first six months. Both of these schemes are due to be up and running by the start of next week.
• Further measures are to be introduced to support airlines. No details as yet.
• Businesses in the hospitality, leisure and retail sectors who have made claims for business interruption from their insurers due to government interventions, may have had difficulties making a claim. Government have now intervened and the insurers have agreed to pay up in appropriate cases.
• Businesses in the retail, hospitality and leisure sectors with a rateable value below £51,000, will also receive – in addition to the 100% rates relief previously announced – a cash grant of up to £25,000 per business.
• In the same sector, the 100% rates reduction will be applied to all business irrespective of rateable value.

To clarify, the previous two bullet points mean that all businesses in the retail, hospitality or leisure sector – shops, pubs, theatres, music venues, restaurants etc – will have no rates to pay for 2020-21, and if the rateable value of their property is below £51,000, they may also be able to claim a cash grant of up to £25,000.

• The £3,000 grants to smaller business, announced last week, are to be increased to £10,000.
• Mortgage lenders have agreed with government that individuals disrupted by the Coronavirus can have at least a three-month holiday from making mortgage repayments.

The Chancellor also hinted that there would be further support for incomes and jobs. Perhaps an increase in statutory sick pay or increased access to State Benefits. Watch this space.

What is not clear is how we claim for the various loans and grants on offer. We offer the following suggestions although the actual processes finally agreed may differ from these:

• Rates reductions should be made automatically and revised statement sent by local authorities in the coming weeks for 2020-21. Contact your local rating department to clarify that this is so.
• It is not clear how qualifying businesses will claim the grants mentioned in the above list – those that range between £10,000 to £25,000 – could be applications need to be made to local authorities or another government department. We will confirm as soon as details are released.
• We assume that you will need to apply to your bank for the guaranteed Business Interruption Loan. It is likely that your bank will need up-to-date figures to back up your application. Please call if you need help preparing these.
• At the time this update was composed, the government had still not confirmed how employers can claim back the 14-day cost of Statutory Sick Pay paid to employees. Again, we will publish details as soon as they are released.

Although not part of the Chancellor’s presentation, Chief Secretary of the Treasury, Steve Barclay, made a further announcement to parliament last night (17 March 2020). The government are postponing the roll-out of draconian IR35 measures to the private sector that would have affected the tax status of many incorporated contractors across the UK. This a welcome change as it will defer much disruption in this sector until the worst aspects of the COVID-19 outbreak have passed. The new rules are now slated to come into effect from 6 April 2021, a year later than planned.

Our best wishes to all who are directly affected by this unprecedented outbreak. And please get in touch if you need more information or support.

There were a number of reliefs in the recent budget to support small business owners during the present Coronavirus outbreak. We have listed below some of the issues covered in a recent government news item.

Statutory sick pay (SSP)

The government will bring forward legislation to allow small- and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.

The eligibility criteria for the scheme will be as follows:

• This refund will cover up to two weeks’ SSP per eligible employee who has been off work because of COVID-19
• Employers with fewer than 250 employees will be eligible. The size of an employer will be determined by the number of people they employed as of 28 February 2020.
• Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19.
• Employers should maintain records of staff absences, but employees will not need to provide a GP fit note.
• The eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to self-isolators comes into force.

The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible. Existing systems are not designed to facilitate employer refunds for SSP.

NOTE: This final paragraph is significant. Initially, employers will not be able to reclaim SSP as there is no existing system to facilitate the process. Employers affected should keep adequate records to record SSP payments made so that as soon as a repayment process is announced claims can be made.

The Chancellor may not have gone far enough in offering this support as many employees asked to self-isolate and then get well if they do develop COVID-19 symptoms, will likely exceed the 14 day refund on offer.

 

 

Business Rates

The government will increase the Business Rates retail discount to 100% for one year, 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:

• Businesses that received the retail discount in 2019-20 will be rebilled by their local authority as soon as possible.
• 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.
• Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority.
• The government will provide an additional £2.2 billion funding for local authorities to support small businesses that already pay little or no Business Rates because of Small Business Rate Relief (SBBR). This will provide a one-off grant of £3,000 to around 700,000 business currently eligible for SBRR or Rural Rate Relief, to help meet their ongoing business costs. For a property with a rateable value of £12,000, this is one quarter of their rateable value, or comparable to 3 months of rent.

Business Interruption Loan Scheme

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch in a matter of weeks to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £1.2 million in value. This new guarantee will initially support up to £1 billion of lending on top of current support offered through the British Business Bank.

Extended payment facility for tax payments

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. To ensure ongoing support, HMRC have 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.

OUR SUMMARY

There has never been a time when British businesses have been subject to so many outside threats to their continuing business activities. Consequently, planning is absolutely key in order to survive the inevitable downturn and disruption.

No doubt, normal service will be resumed as soon as possible, in the meantime we will need to be vigilant and rethink our planning options if we are to survive the process. If you need help with this “re-think” please call.

In the face of Brexit uncertainties and the recent Coronavirus outbreak the new Chancellor, Rishi Sunak, was faced with falling economic indicators, the need to boost NHS services and was consequently limited in his options to spend on plans to improve business confidence and fund infrastructure projects.

Interestingly, there were a number of measures that will directly benefit those affected by the current COVID-19 outbreak and these are reported in this update.

Details of other changes for 2020-21 – for individuals and businesses – are set out in our Budget Summary below.

Personal Tax and miscellaneous matters

 

Statutory Sick Pay (SSP)

SSP will be temporarily payable from day 1 instead of day 4 for affected individuals and will include those infected and those self-isolating, who are not infected.

Those who cannot claim SSP, the self-employed for example, are to be provided with easier access to Universal Credits and the Contributory Employment and Support Allowance.

Local Authority Hardship Fund

Government is providing a new £500m Hardship Fund so local authorities can support economically vulnerable people and households.

Most of this funding will probably support the extension of council tax relief.

Personal Tax allowance

The personal Income Tax allowance for 2020-21 is maintained at £12,500 (2019-20 £12,500).

Income Tax bands, rates and the dividend allowance

The Income Tax bands for 2020-21 have also been maintained at 2019-20 levels. They are:

• Basic rate band £37,500 (2019-20 £37,500)
• Higher rate band £37,501 to £150,000 (2019-20 £37,501 to £150,000)
• Additional rate, no change, applies to income of more than £150,000.

Consequently, the higher rate threshold will stay as £50,000 from April 2020. There is no change in Income Tax rates, and the tax rates applied to dividend income

Changes to these Income Tax bands apply to England, Wales and Northern Ireland. The Scottish parliament now set their own Income Tax bandings.

Earlier payments of Capital Gains Tax (CGT)

As previously announced, from April 2020, UK residents will be required to make a payment on account for CGT due on a chargeable residential property sale. For example, the sale of a buy-to-let property. A formal computation of any gains and payment of CGT due on the disposal will have to be made within 30 days of the property disposal.

The changes have applied from April 2019 for non-UK residents.

Capital Gains Tax Private Residence Relief changes

From April 2020, the government is making two changes to the private residence relief:

1. The final exempt period will be reduced from 18 months to 9 months, with no change to the 36 months available for those disabled or in care homes, and
2. Lettings relief will be reformed so that it only applies in certain circumstances where the property owner is in shared occupancy with the tenant.

CGT Entrepreneurs’ relief

One of the significant announcements in the budget speech was the reduction of the lifetime allowance for this relief from £10m to £1m. This will apply to all relevant business disposals on or after 11 March 2020. The Chancellor has avoided the abolition of the relief but has restricted lifetime claims to £1m.

Special provisions may apply to disposals contracted for sale before 11 March 2020, but when the sale was not completed at that date.

Business owners and their advisors will need to consider other options to reduce CGT on business sales in excess of this £1m limit.

CGT annual allowance

The annual tax-free allowance is to be increased to £12,300 for 2020-21 (£12,000 2019-20).

The equivalent allowance for trustees is £6,150 (£6,000 2019-20).

Tax benefit charges for low CO2 vehicles

In an attempt to support new regulation in this area, the listed benefit rates will be cut by 2% for vehicles that qualify for the new standard (Worldwide harmonised Light Vehicle Test Procedure (WLTP) for all new cars registered from 6 April 2020).

Tobacco Duty Rates

All tobacco products will see an increase in duty by 2% above the current rate of inflation.

Hand-rolling tobacco will see an increase of 6% above the rate of inflation.

These changes will impact prices from 6pm, 11 March 2020.

Vehicle Excise Duty

Rates are due to be increased in line with the Retail Prices Index from April 2020.

Fuel Duty

Is frozen for another year.

Alcohol duty rates

Alcohol Duty rates remain unchanged for 2020-21. This will be welcome news for pubs and bars.

ISA limits 2020-21

Adult savings limits remain unchanged at £20,000.

Junior ISA limits are increased to £9,000.

Zero-rating of VAT for women’s sanitary products

This measure is to be introduced from 1 January 2021.

Bank support from mortgage lenders

Although not a budget announcement, a number of banks and other mortgage lenders are offering a moratorium on mortgage repayments to those directly affected by the Coronavirus. This is welcome support for individuals whose income may be diminished by absence from work. At least one High Street lender has committed to a three-month moratorium.

Banks are also considering increasing credit card limits and cash withdrawal limits.

 

Business Tax changes

 

National Insurance

It was confirmed that the tax threshold for National Insurance Contributions will rise to £9,500 from April 2020 (was £8,632). This should save £100 a year in National Insurance contributions for some 31 million people.

Relief for Statutory Sick Pay payments

Small and medium sized businesses, those with less than 250 employees at 28 February 2020, will be able to reclaim any approved SSP payments. The actual method for making a claim is yet to be agreed as current payroll processes cannot accommodate this type of refund.

Watch this space as this is a welcome cost saver for smaller businesses.

Business Rates Retail Discount Scheme

The government has already announced that, for one year from 1 April 2020, the business rates retail discount for properties with a rateable value below £51,000 in England will increase from one third to 50% and will be expanded to include cinemas and music venues.

To support small businesses, in response to COVID-19, the retail discount will be increased to 100% and expanded to include hospitality and leisure businesses.

The government previously committed to introducing a £1,000 business rates discount for pubs with a rateable value below £100,000 in England for one year from 1 April 2020. To further support pubs, in response to COVID-19, the discount will be increased to £5,000.

Affected businesses should receive amended rates bills for 2020-21 from their local authority. Regional variations may apply.

One-off grant for small businesses

The government is to provide a £3,000 grant to businesses that presently qualify for the Small Business Rates Relief or Rural Rate Relief.

Businesses that think they may be eligible should contact their local authority.

Coronavirus Business Interruption Loan Scheme

The government will launch a new, temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, to support businesses to access bank lending and overdrafts.

Government will provide lenders with a guarantee of 80% on each loan (subject to a per lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £1.2 million in value. This new guarantee will initially support up to £1 billion of lending on top of current support offered through the British Business Bank.

HMRC’s Time To Pay Scheme

HMRC are expanding the number of operatives that manage calls from taxpayers that are unable to pay their taxes on time. If readers are concerned about meeting tax payments call the dedicated help-line 0800 0159 559.

 

Corporation Tax

The previously announced reduction in Corporation Tax from 19% to 17% – from April 2020 – has been scrapped. Corporation Tax rates are to remain at 19% for the financial year beginning 1 April 2020.

Structures and Buildings allowance

The annual writing down rate is to be increased from 2% to 3% from April 2020.

Digital Services Tax

Despite opposition from various quarters it looks as if the new Digital Services Tax of 2% will be applied to digital businesses from April 2020.

This will be a major revenue raiser for HMRC.

Capital loss restriction from 1 April 2020

For accounting periods ending on or after 1 April 2020, companies making capital gains will only be able to offset up to 50% of those gains using carried-forward, allowable capital losses.

Employment Allowance

The present £3,000 relief that reduces employer’s NIC contributions is to be increased to £4,000 from April 2020. From 6 April 2020, you will only be able to claim if your Class 1 NIC bill was below £100,000 in the previous tax year.

Car and van benefits charges

Van benefit charges and car and van fuel benefit charges will be increased to account for inflation from April 2020.

R&D expenditure credit

This “Above the line” expenditure credit is currently 12% of qualifying R&D expenditure. This is to be increased to 13% from 1 April 2020.

Zero-rating of e-publications

From 1 December 2020, e-books, e-newspapers, e-magazines and academic e-journals will be zero-rated for VAT purposes.

VAT reverse-charge for the construction sector

A reminder that the domestic reverse charge process will apply to the construction sector from 1 October 2020.

Affected contractors that are still unsure of the changes they will need to make are invited to call so we can help you set up the relevant systems.

VAT registration threshold – no change

The present VAT registration limit (£85,000) and deregistration limit (£83,000) will continue to apply for a further two years; until 31 March 2022.

Clamp-down on tax evaders

As is usual, the budget includes a number of provisions to reduce the successful application of tax avoidance strategies.

Bank support for small businesses

In concert with the flexibility being offered to individuals, banks are looking at relaxing their criteria that would allow small businesses affected by Coronavirus disruption to obtain loans on favourable terms.

Climate issues

The government will also invest in the natural environment: planting enough trees to cover an area the size of Birmingham, restoring peatlands and providing more funding to protect the UK’s unique plants and animals.

The government will also go further to tackle the scourge of plastic waste by introducing a Plastic Packaging Tax, as well as providing further funding to encourage producers to make their packaging more recyclable.

The government has published a number of measures to support individuals during the current Coronavirus outbreak. We have summarised below some of the issues covered in a recent post-budget press release.

Statutory Sick Pay

Statutory Sick Pay (SSP) will now be available for eligible individuals diagnosed with COVID-19 or those who are unable to work because they are self-isolating in line with Government advice. This is in addition to the change announced by the Prime Minister that SSP will be payable from day 1 instead of day 4 for affected individuals.

Sick notes from 111

People who are advised to self-isolate for COVID-19 will soon be able to obtain an alternative to the fit note to cover this by contacting NHS 111, rather than visiting a doctor. This can be used by employees where their employers require evidence. Further details will be confirmed shortly.

Support for the self-employed

Those who are not eligible for SSP, for example the self-employed or people earning below the Lower Earnings Limit of £118 per week, can now more easily make a claim for Universal Credit or Contributory Employment and Support Allowance

Hardship fund

The government has announced a new £500 million Hardship Fund so Local Authorities can support economically vulnerable people and households. The government expects most of this funding to be used to provide more council tax relief, either through existing Local Council Tax Support schemes, or through similar measures.

Problem paying tax

If you fall behind paying your taxes HMRC should be approached to organise a staggered repayment plan – based on your reduced capacity to meet any payments due.

And finally, if you need more information on any of these issues please call.

Many employed persons are drawn to the idea of running their own business. This short article sets out a few of the pros and cons of this change in status.

The advantages:

One of the major advantages of being self-employed is the opportunity to secure more than one income stream. When employed, we normally work for one employer and thus all eggs are in one basket – lose your job and you lose your monthly income.

Self-employed persons have the opportunity to secure multiple customers – lose one customer and you will lose some but not all of your income.

To some extent, as a self-employed person, you may have more freedom to choose when you work although this can be a double-edged sword, business owners may get demands from clients out of hours and it may be difficult to resist their demands if they are big spenders.

Contrast these advantages with some of the less advantageous demands that may be made if you become self-employed.

The disadvantages:

• As an employee you should have no personal, financial liability for your employer’s debts or guarantees. This may not be the case if you are running your own business. There are ways to organise your business structure to minimise these risks but adopting them comes at a cost.
• You won’t get a payslip and have your taxes and NIC paid by deduction if you are self-employed. You will have to maintain proper accounts and make returns to HMRC to determine your liabilities.
• If your turnover is over the present £85,000 registration threshold, as self-employed you may have to register for VAT and make regular, on-line returns to HMRC.
• You will need to fund any investment required to set-up and run your business.
• NIC contributions by the self-employed may not create sufficient State Pension funding and private schemes may need to be considered.
• Instead of benefitting from benefits attached to employed status: holiday pay, statutory sick pay, most State benefits; you will have to guarantee these benefits for your employees.

Finally, as self-employed, you will have to budget and meet all of the costs associated with your business activity.

How we can help

We have been supporting new business set-ups for a number of years and can help you address all of these concerns. Running your own business may not be for the faint of heart, but with adequate planning and support, setting up and building a business can be immensely satisfying and rewarding.

Please call if you want to explore your options.

In a month’s time, 5 April 2020, the 2019-20 tax year expires. After this date many of the options to utilise allowances and claim reliefs to reduce tax for 2019-20 will disappear.

A number of the reliefs to consider are listed below. This is by no means an exhaustive list. Any numbers quoted refer to the tax year 2019-20.

• Have you utilised your £12,000 tax-free allowance for Capital Gains Tax purposes?
• You are entitled to make a number of small gifts that will not be taxed under the Inheritance Tax rules.
• Have you reviewed your pension contributions for 2019-20? According to the pundits, higher rate tax relief may be reduced in the budget next week. In which case, 2019-20 may be the last year to claim those higher rate reliefs.
• If you and your married partner are basic rate tax payers and one of you has not earned enough to cover their basic Income Tax personal allowance – £12,500 for 2019-20 – it may be possible to transfer part of the unused allowance to their partner. Check out the Marriage Allowance.
• Do you have an opportunity to draw up to £2,000 tax-free from your company in dividends? No additional tax to pay. Only applies to the first £2,000 in dividends you take.

The above list does not include other strategies for business owners and many more complex options for high income earners. Please call if you would like us to review any last minute options for you.