The Government have, over the last week, announced a number of measures to support businesses through the current difficult times. While they are by no means perfect, and a number of businesses have fallen through the cracks, it has to be said the government have acted quickly and 95% of businesses will be able to get support.
Here’s the Acumenica summary of the measures taken and the support announced so far:
Self Employment Income Support Scheme (SISS)
If you’re self-employed as a sole trader or partnership (specifically not limited company) then you may be eligible for for the SISS grant. The government will pay you 80% of your average trading profits up to £2,500 per month.
You can apply if you’re a self-employed individual or a member of a partnership and you:
- have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
- traded in the tax year 2019-20
- are trading when you apply, or would be except for COVID-19
- intend to continue to trade in the tax year 2020-21
- have lost trading/partnership trading profits due to COVID-19
- Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:
- having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
- having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period
If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.
The application process is not yet open and HMRC will be identifying and contacting those eligible in the next few weeks.
To be clear, you are not currently eligible for this scheme if you operate your business as a limited company.
Coronavirus Job Retention Scheme (JRS)
The JRS allows companies to reclaim 80% of the salaries of “furloughed” workers up to £2,500 per month. If you have employees who are furloughed, ie, not working, due to the Covid-19 outbreak, HMG will reimburse 80% of their basic wages or salary, up to a maximum of £2,500 per month per employee.
Only the payroll aspect of a director’s remuneration will be covered.
At the moment this is due to run for three months, but there is a good chance that this will be extended,
While it’s generally accepted that a furloughed worker can carry out absolutely no work, according to the Confederation of British Industry (CBI), directors will be able to carry on undertaking their statutory duties such as filing accounts etc.
Currently, the process for claiming the JRS has not yet been finalised, but it has been confirmed that employers will need to apply via an HMRC portal who will then process the application and pay the grant directly into the company bank account.
Deferral of VAT payment
If you have a VAT return due in the next three months, you won’t need to pay the bill until March 2021. There is no need to apply for this and all businesses are eligible. However, you will still be required to submit the returns and if you have a direct debit in place to pay your VAT, you must cancel this at your bank. If you don’t HMRC will likely collect the payment as normal.
You can, if you wish to avoid a debt build-up for example, continue to make payments as normal.
Self assessment bill deferral
Whether a sole trader or a company director, it is very likely that you will have a self assessment payment on account due on 31st July 2020. Due to the financial situation, HMRC will no longer expect this to be paid until 31st January 2021. Again, you can pay this as normal if you wish.
For the avoidance of doubt, both of the above measures are deferrals rather than write offs. You will still need to pay the VAT and tax due, just at a later date.
Business Support Grant / Rates Holiday
Businesses who have premises, but who pay little or no business rates because the premises’ rateable value is below £18,000, will be eligible for the business interruption support grant of £10,000.
If you’re in Retail, Hospitality or Leisure, then you can apply for the enhanced grant of £25,000 if your premises has a rateable value of between £18,000 and £51,000.
This grant is being administered by the local authorities on behalf of the Scottish Government (in Scotland) and HM Government (in other areas of the UK). You need to submit an application form to the local authority your premises are registered with. Here’s a list of links some of the local(ish) authorities’ application forms:
Statutory Sick Pay (SSP)
While not exactly a fortune, the self-employed (including contractors) who are ill and cannot work due to COVID-19 can claim Statutory Sick Pay (SSP) of £94.25 per week for two weeks. This covers individuals who have or believe they have contracted the virus and for those who are in self-isolation.
Extra time to file accounts
This is not financial support but a relaxation of your compliance obligations. If you have accounts due to be filed at Companies House, you can apply for a three month extension to file these. If you cite Covid-19 you will automatically be granted the extension. It’s unclear how long this relaxation will last but for now we expect any accounts due to be filed between now and 30 June 2020 to be included.
Please be assured that the team at Acumenica Group are continuing to work and continuing to support you throughout these uncertain times. While our offices are closed, all the team members are working from home and our phone lines and emails are operating completely as normal.