Category: Covid-19

11th May
2020

Self-Employment Income Support Scheme:

On the 26th March 2020, the chancellor announced that the UK government would be setting up a scheme to help the self-employed who have been affected by the coronavirus outbreak.

This scheme is due to go live on 13th May 2020.

The scheme will allow individuals to claim a taxable grant of 80% of your average monthly trading profits, paid out in a single instalment covering a 3 month period, capped at a maximum grant of £7,500 (£2,500 per month). HMRC may extend this claim period at a later date.

Self-employed individuals are eligible to work and claim for the self-employed income support scheme.

Tax agents or advisors cannot make the claim on behalf of the tax payer. The individual must make the claim themselves online. If you are unable to make the claim online, HMRC will setup an alternative way to claim. 

Eligibility:

You can claim if you are a self-employed individual or a member of a partnership and:

  • You traded in the 2018-2019 tax year and submitted your Self-Assessment tax return on or before 23rd April 2020.
  • You traded in the 2019-2020 tax year.
  • You intend to continue to trade in the 2020-2021 tax year.
  • You carry on a trade which has been adversely affected by coronavirus.

To work out your eligibility, HMRC will first look at your 2018-2019 Self-Assessment tax return. Your trading profits must be no more than £50,000 AND at least equal to your non-trading income.

If you are not eligible based on your 2018-2019 Self-Assessment tax return, then HMRC will look at your Self-Assessment tax returns for 2016-2017, 2017-2018 and 2018-2019 and take an average of your trading profits.

You should not claim the grant if you’re above the state aid limits or operating a trade through a trust.

How HMRC will work out your eligibility:

HMRC will assess if you are eligible for the grant based on your trading profits AND your non-trading income on your Self-Assessment tax returns.

Trading Profits:

These include profits from your self-employment or partnership. This is after deducting capital allowances therefore your taxable profits.

HMRC will not deduct from your profits any losses brought forward from previous tax years or your personal allowance.

Non-trading Income:

HMRC will work out your non-trading income by adding together the following:

  • Income from earnings
  • Property Income
  • Dividends
  • Savings Income (interest)
  • Pension Income
  • Overseas Income
  • Miscellaneous Income

HMRC have developed a useful online tool to find out if you’re eligible to make the claim. Please click here to access this online tool.

To use the tool, you will need the following:

  • Your Self-Assessment Unique Taxpayer Reference (UTR)
  • Your National Insurance number

These can both be found in the bottom left hand corner of your tax calculation we send you yearly or on any correspondence received from HMRC.

How to make the claim:

The online service will be available from 13th May 2020.

In order to make the claim, you will need the following:

  • Self-Assessment Unique Taxpayer Reference (UTR).
  • National Insurance Number.
  • Government Gateway user ID and Password. If you do not have a user ID, you can create one when you check your eligibility online.
  • Bank Account number and sort code so HMRC can pay the grant into your account.

If you haven’t already set up a government gateway, then we suggest setting one up and linking your self-assessment to it prior to 13th May 2020 in order for you to be able to make the claim if you are eligible.

Once you have successfully submitted your claim, it will be confirmed straight away and HMRC will aim to pay the grant into your bank account within 6 working days.

You must keep a copy of all records including the amount claimed, the claim reference and evidence that your business has been adversely affected by coronavirus.

For more information on the Self-employment income support scheme, please click here to visit HMRC’s website which has lots of useful information and examples.

2nd Apr
2020

Covid-19 – An update on Government Grants, Furloughed Workers, the Self-Employed and Insolvency changes

As we all continue to live our life in ways we never anticipated, we wanted to offer our support during this challenging time.

As you are no doubt aware, we are seeing changes daily in how the Government are working hard to support us all. This is both on personal safety and also financial advice as well as support to help businesses through this unprecedented time.   

We are committed to keeping you up to date on any new developments that may affect you and therefore below have provided you some guidance which you may feel is beneficial.

Government Grants

All local authorities have said they will get in contact with those eligible for the grants, however some local authorities have set-up an online application process in order to speed the process up. We understand that we have clients all over the country however we have put a link to those local authorities close to where we are based and will hopefully be useful for the majority of our clients. If your local authority isn’t listed below then please either wait until they contact you or search for your own local authority online.

York City Council- https://www.york.gov.uk/COVIDBusinessGrant

Leeds City Council- https://forms.leeds.gov.uk/SmallBusinessGrants/

Bradford City Council - https://www.bradford.gov.uk/business/help-for-businesses/coronavirus-covid-19-support-for-business/

In order to apply you will need:

  • a business rates reference number of your company
  • a name on a non-domestic rates account for your business
  • bank account details for your business
  • a company registration number (if a limited company otherwise leave this box blank)

It is our understanding that most local authorities have started processing the grant applications. However, funding has not been made available to them from the government yet, so there may be a delay between the application being accepted and the grant being transferred.

Please click here to be directed to the official guidance document regarding these grants.

Coronavirus Job Retention Scheme/Furloughed workers

We understand that directors of limited companies will be able to furlough themselves, as long as they only undertake necessary statutory duties. They will not be able to carry out any actual work whilst furloughed. We are still waiting for this to be confirmed by either the government or HMRC and therefore it is subject to change. The minimum period that someone can be furloughed is 3 continuous weeks.

We have also had it confirmed that employees that have been furloughed will still be accruing annual leave as they would be if they were actually at work.

The law has been changed so that employees can carry up to four weeks annual leave over to their next holiday year. This has been designed to ensure that once the pandemic is over it prevents businesses facing a shortfall in employees due to them all taking their annual leave allowance before they lose it. This will also give employers more scope to be able to deny employees annual leave requests on those grounds.

HMRC have announced the initial information that they will require in order for employers to claim reimbursement through the portal for the Coronavirus Job Retention Scheme, please see these listed below:

  • Your PAYE reference number
  • The number of employees being furloughed
  • The claim period (start and end date)
  • Amount claimed (per the minimum length of furloughing)
  • Your bank details (account number and sort code)
  • Your name
  • Your telephone number

It is likely that they will request additional information before the portal goes live. HMRC will retain the right to retrospectively audit all aspects of claims.

Self employed

We would like to highlight a few points on this as we are aware that it may affect many of our clients.  The HMRC are going to contact those that are eligible to claim. Therefore, as it stands, if you think you are eligible to claim then there isn’t anything that you can or need to do at this stage, just wait until HMRC contact you. The following points were announced last week:

  • Self-employed people will be able to apply for a grant worth 80% of their average monthly profits over the last three years, up to £2,500 a month.
  • At least half their income needs to have come from self-employment as registered on the 2018-19 tax return filed in January - anyone who missed the filing deadline has four weeks from yesterday to get it done and still qualify.
  • The scheme is open to those who earn under £50,000 a year (total income, not just self-employment income)
  • Unlike the employee scheme, the self-employed can continue to work as they receive support.
  • The money, backdated to March, will arrive directly into people's banks accounts directly from HMRC, but not until June. This is subject to change and Rishi Sunak said that it may be earlier if they could get everything set up before then, but as ever there is also a chance that if could be later if they suffer any problems or issues. 
  • The grants will be taxable, and will need to be declared on 2020/21 tax returns that have to be filed to HMRC by the end of January 2022.
  • HMRC would be getting in touch with those that are eligible and therefore you don’t need to do anything until that time.
  • Company owners who pay themselves a dividend are not covered.
  • The scheme does not cover those who became self-employed very recently. It is understood to be those that registered as self-employed within the last year, who did not have not complete a 2018-2019 tax return, however this will be something that will be clarified once the full information has been published.
  • Please click here to see the information as stated on the governments website.

Insolvency rule change to protect UK businesses
On Saturday Alok Sharma, the UK business secretary, announced new insolvency measures to prevent businesses unable to meet debts due to the impact of coronavirus from being forced to file for bankruptcy. He said the wrongful trading law would be suspended to protect directors during the pandemic. The move will allow directors of companies to pay staff and suppliers even if there are fears the company could become insolvent. Changes include a temporary moratorium for businesses undergoing a restructuring process, during which time they cannot be put into administration by creditors and will continue to be able to access all raw materials.

Alok Sharma said legislation, which would retrospectively apply from the beginning of March, would be introduced at the “earliest opportunity”. However, he cautioned that “all of the other checks and balances that help to ensure directors fulfil their duties properly will remain in force”.  Wrongful trading was introduced into UK insolvency law in 1986 and makes it an offence for a company director to continue to trade if they know the business is unable to avoid going into liquidation.

Latest government information and advice

The government is constantly publishing more information and advice. Please click here and follow the relevant sections that you require to see the latest information and advice.

Please do not hesitate to contact us, initially via email as this is the best way to reach us.   All contact details remain the same.