In recent days the team at Magpie Accountancy have had a significant increase in the volume of queries about allowances/grants and Government Schemes to support businesses during the COVID-19 pandemic.
Whilst we understand that everyone is concerned about how their business might weather the storm, please bear in mind that each time the Government announce a change or introduce a scheme we only have the same information that you have from media outlets. It usually takes some days for the exact details to be confirmed and in many cases the current schemes will take some time to implement, as such we are often unable to provide tailored/specific advice immediately.
We know that this is far from ideal, but it is necessary for us to get the information from HMRC/Central Government before we can be sure any advice we give is accurate/up to date. We will do our best to provide any information we can and ensure that, in particular payroll processing includes any claims that can be made.
In an effort to try to reduce the volume of queries, we have put together a short guide based on what is currently known. Not every section will apply to all our clients but we encourage you to read everything so that you are aware of the current situation.
Self Employed Income Support Scheme (likely to become ‘active’ in June 2020)
**Please note – if you are a Director of your own company you are not classified as self-employed. The limited company and you as an individual are separate entities. If you are paid a salary through PAYE you may be able to get support using the Coronavirus Job Retention Scheme, please see Employers section below. **
The new scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended at a later stage by the Government.
Who can apply?
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 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
Please note if you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.
How do I apply?
You cannot apply for this scheme yet.
HMRC will contact you if you are eligible for the scheme and invite you to apply online. If we submit your tax returns each year it is likely that we will also receive notification as we do with all your notifications from HMRC, however this has not been confirmed by HMRC. Once we have more information about how a claim can be submitted we will update you on the ways in which we can assist at the appropriate time.
HMRC has asked that you do not contact them now as doing so will only delay the urgent work being undertaken to introduce the scheme.
If you do not meet the above criteria there are other measures that you may be eligible for:
- Deferral of Self-Assessment Income Tax Payments & VAT Quarter Deferral CLICK HERE
- If you have business premises and receive Small Business Rate Relief you may be entitled to a Grant from your local council CLICK HERE
- Retail, Hospitality and Leisure Businesses who pay business rates may be entitled to a Grant from your local council CLICK HERE
- You may be entitled to Universal Credit CLICK HERE
- Contact your Bank Manager about the “Coronavirus Business Interruption Loan Scheme”
Employers (Likely to become ‘active’ by the end of April 2020)
If you are a Director of a company and we do your payroll/accounts but you’re not sure if we process a salary for you please email: email@example.com. We will respond as soon as possible with confirmation on this for you.
The Coronavirus Job Retention Scheme will be open to all employers with a PAYE payroll scheme that was created and started on or before 28 February 2020, including charities. Employers can apply for grants of 80% of furloughed employees’ (employees on a leave of absence) monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage, provided the employer keeps the worker employed. The scheme will cover the cost of wages backdated to 1 March 2020, if applicable.
The scheme is for reimbursement so employers will need to pay the furloughed employees then reclaim from HMRC.
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 (it would be advisable to speak to a HR specialist or employment lawyer on the best way to approach this)
- submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal
The online reimbursement portal is not yet up and running. HMRC are aiming to get the online portal accessible by the end of April. We will keep you updated on this.
If your staff are furloughed, please notify firstname.lastname@example.org and include details of any ‘top-up’ your business will apply. It is still important that for hourly paid staff that you notify Scott of the hours that would normally be paid while your staff are furloughed. Any staff on maternity leave or who are self-isolating due to Covid-19 symptoms should also be notified to him so that Statutory Pay can also be appropriately managed.
Some useful links/information
- Further guidance added about commercial insurance policies in relation to COVID-19 CLICK HERE
- Details about protection from eviction for commercial tenants CLICK HERE
Thank you all for your patience, please note that the team at Magpie Accountancy are all home based and are continuing to work, responses may take a little longer than usual but ALL correspondence will receive a response.