Coronavirus Information as of 29th June 2020
Where we are with Covid-19 support.........
This blog replaces all of the previous ones written since we started producing these updates on 21 March. It is up to date as of 27 June 2020.
Please note that we are continuing to provide the Q&A session via Zoom at 14:00 starting from Monday 29 June and continuing fortnightly, where we will go into more detail on this blog.
Job Retention Scheme
This scheme, known as the Furlough Scheme is available to employers who cannot maintain their workforce due to their business being adversely affected by Coronavirus.
We would advise extreme caution to employers who are continuing to furlough household family members and directors, whilst their business is continuing to trade albeit perhaps not as profitably as usual. We suspect that HMRC might regard this as abuse of the system. Please talk to us if you are not sure if you would still qualify.
From 1 July employers can bring employees back off furlough part time, so they can work some hours and be furloughed the rest of the time to maintain their usual wage.
New claims cannot be made from 1 July for employees who have been laid off after 10 June 2020. All furloughed employees from 1 July have to have been furloughed for at least three weeks before that date.
From 1 August employers will only be able to claim for 80% of the normal wage, up to £2,500 per month. They will no longer be able to claim for employers NI contributions or employer pension contributions.
From 1 September employers will only be able to claim for 70% of the normal wage. They will have to top up 10% of the wage cost and can opt to top up the remaining 20% if they so wish.
From 1 October employers will only be able to claim for 60% of the normal wage. They will have to top up 20% of the wage cost and can opt to top up the remaining 20% if they so wish.
The scheme is currently planned to close at the end of October.
Any claims relating to the period before 30 June have to be made by 31 July.
Statutory Sick Pay
Employers can claim for two weeks of statutory sick pay (SSP) paid to employees who are ill with Coronavirus or self-isolating.
This has caused much confusion as many employers did not realise that they would usually have to bear the cost of SSP. This has been the case since the Employers’ Allowance for NI was introduced, whereby small employers are exempt from the first £4,000 of Employers NI.
VAT payments which were due to be paid between 20 March 2020 and 30 June 2020 can be deferred without penalty until 31 March 2021.
If you have a VAT period end 31 May, where the VAT is due for payment by 7 July, or a 30 June period end where the VAT is due for payment by 7 August, you cannot defer this VAT payment under this scheme. If you are unable to pay you would have to ring HMRC on 0800 024 1222 to get help and time to pay.
We recommend taking steps now to consider how to save and ensure that the deferred VAT can be paid by 31 March 2021 as well as keeping on top of VAT liabilities that continue to arise over the coming months.
Self-Assessment Payment on Account Deferral
You can choose to defer your second payment on account for the 2019/20 tax year, which is due for payment by 31 July 2020. This can be deferred until 31 January 2021 and paid with the balancing payment due at that time.
You don’t need to apply. HMRC have been assuming that people will defer the tax and have been sending out statements with the second payment on account removed.
If you can pay, HMRC request that you do so.
Business Rates Relief
Businesses in the retail, hospitality and leisure sectors will not have to pay business rates in for the year 1 April 2020 to 31 March 2021.
This is an automatic relief. If you are in one of these sectors and have not received a replacement rates bill for £0, or are being chased for payment, you will need to contact your local authority directly.
Small Business Grant Fund and Discretionary Grants Fund
The small business grants fund was for businesses who had business rates relief or rural rates relief. In this case grants of £10,000 were being paid without the need to apply.
The Discretionary Grants fund is for businesses with fixed premises costs who did not qualify for the Small Business Grant. In this case, you need to check with your local authority to see if you qualify before applying. These grants are limited and are being dealt with in different ways between local authorities. The grants range from £2,000 to £10,000 and are only available for a short time.
Self-Employment Income Support Grant
The first trance of this grant ends on 13 July.
The Scheme allows for self employed people to claim for 80% of their average monthly trading profit for three months, up to a maximum claim of £7,500.
Their business has to have been adversely affected by Covid-19 to be eligible to claim.
There will be a second claim available from August for businesses which have been adversely affected from 14 July. Businesses who have been able to resume normal trading since the first grant will be unlikely to qualify, however those who continue to be unable to trade, or their income is a mere fraction of what it had been before, will be eligible.
Unfortunately, accountants are not able to help their clients with these claims and if HMRC believe they have, the claims will be treated as fraudulent and not paid out!
Taxation of grants
All non-refundable grants are taxable in the hands of the recipient as normal trading income. This means companies will pay corporation tax on the receipt and self-employed individuals will pay tax and NI.
Obviously if there has been a significant reduction in income because of Coronavirus, this may not make any significant difference as it will likely be offset against the business overheads and other costs.
Bounce Back Loans
The banks are encouraging small businesses looking for loan support to apply for the bounce back loan in the first instance. This is a loan of a maximum of 25% of the last year’s turnover, up to a maximum loan of £50,000.
It is interest free for the first 12 months, with no repayments due in that period either.
The interest rate will be 2.5% per annum after the first 12 months.
To apply, your business has to have been adversely affected by the Coronavirus. You cannot have already claimed under the CBIL facility but you can transfer an existing CBIL loan.
The application process for this loan is very straightforward with no need to provide any detailed financial information.
CBIL - Coronavirus Business Interruption Loan
This scheme provides loans of up to £5m.
Businesses have to demonstrate that they have been adversely affected by Coronavirus and that they would be a viable business if it was not for this situation. They also have to confirm that they were not in difficulty prior to 31 December 2019.
Applying for these loans is taking significantly longer than for the bounce back loans as the banks are asking for management accounts, forecasts and other information that they deem necessary.
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